SaaS is here to stay. Organizations across the world continue to realize the benefits of SaaS. As a result, the development of traditional “on-premises” enterprise software is expected to decline.
But how do you know what SaaS sales model is right for you?
Choosing the right model for your business will tell you how many salespeople you need to hire, how you will contact and interact with customers, who your potential customers are, and how you can successfully close the deal.
No pressure, right?
Just in case you were looking for a little guidance, we’ve compiled a ‘how-to’ on selecting your SaaS sales model. Let’s dive in.
How To Pick A SaaS Sales Model
Below are three common SaaS sales models that you can choose from to help you plan your strategy. Each model considers price and complexity—more complex services have a higher price than less complex services.
This is also known as the higher-volume, lower-price method. It’s a method designed to achieve significant revenue at a low average selling price (ASP—more on that later), with a self-service model that uses free trials or freemium offers to lure customers. If you use this method, be sure your free trials are not being taken advantage of using disposable emails!
When you leverage a self-service model you’re able to keep the prices and complexity low because you don’t have to hire as many developers to create the product or salespeople to sell it. There is a catch: in order to reach your revenue goals, your sales volume will need to be very high.
The transactional sales model is characterized by efficient, high-volume sales and support operations, short sales cycles, and rapid onboarding. Customers may expect to sign contracts, receive periodic updates, comprehensive documentation, and access to service reps when problems arise.
Transactional sales models tend to be high-risk and high-reward with a higher volume of sales. If your product is suited to it, the transactional method can give your business the best of both worlds.
Also known as the lower-volume, higher-price method, enterprise sales focuses on providing sophisticated, cutting-edge solutions that justify their high price tag. SaaS companies that use this method are defined by having sales teams in the field that explain the concept in depth in order to show the customer why such a high outlay is expected on their part.
‘While most SaaS startups gravitate toward transactional sales or customer self-service, some SaaS startups have products that provide so much value per customer and are so complex to buy that their natural starting point is traditional enterprise sales,’ writes Joel York.
‘Two good example categories are cutting-edge Internet marketing tools employed by big-brand consumer marketers… and feature-rich suites that automate strategic, core business processes for mid-to-large enterprises.’
Avoiding Common Pitfalls
As so often in business, the key with SaaS models is to keep things as simple as possible for the client. An overly complex model isn’t just confusing for the customer — it’s curtains for your business, too, especially if you’ve chosen the customer self-service route.
Here are a few more tips to remember when implementing your SaaaS sales model.
Don’t Undervalue Yourself
Undervaluing one’s services is a common mistake made by many starting out in business, and one not confined to SaaS. Have confidence in your services and charge for value. An active sales team can help educate your prospects and sell at non-discount rates.
Don’t Just Find New Clients, Retain Existing Ones
The best way to for a SaaS startup to make the move from the customer self-service model to the more lucrative transitional model is by not only gaining new clients, but by persuading existing ones to stay loyal—and to upgrade.
A high premium needs to be placed on customer loyalty, as not only will they remain with you when new SaaS companies come to market but they’ll also be evangelists of your software.
Don’t Give Customer Support Away For Free
The customer self-service model requires that customers know how to use the software themselves—but they often don’t know how to do so. Consequently, B2B startups sometimes offer customer support and training for free to those who need it as an incentive to buy.
Don’t do this. Charging for customer support is a great way to generate revenue and customers are generally happy to pay for quality, expert advice. ‘Savvy clients will understand that, in order for you to provide quality service, they have to be able and willing to pay the costs associated with it,’ writes Steli Efti. ‘You’ll eliminate time- and resource-wasting users that never provide you with actual revenues.’
It has another value, too—it puts the kibosh on salespeople who are inclined to throw in a few too many freebies in an attempt to close a deal.
Choose your model wisely and your business will stand a far better chance of being successful as SaaS booms over the next few years.