You can't "just wing" SaaS sales.
Even if you have plenty of traditional sales experience.
Because, within a SaaS sales cycle, customer lifetime value (CLV) and potential churn rates are as important – if not more important – than closing a sale.
After all, SaaS isn't about selling to customers once. It's about making sure they purchase an ongoing subscription and stick around with your company for the long term.
This means that you, as the SaaS salesperson, need to:
Oh, SaaS…
But don't get discouraged – all you need to succeed (apart from a can-do attitude) is a better understanding of the SaaS sales cycle.
And we're here to help.
So keep scrolling, and we'll equip you with the knowledge you need to become the Michael Scott Dwight Schrute of SaaS sales!
A SaaS sales cycle is the visual representation of the stages that, as a whole, form the entire process of selling web-based software. In essence, this framework shows you all the different steps a person – in B2C sales – or a company – in B2B sales – takes on their journey from a lead to a loyal customer.
SaaS sales cycles are framed from the perspective of the sales agent (what the salesperson needs to do), and they help you better understand and track your prospects' buying process.
This methodological approach enables you to map your actions back to what your customers need at a specific moment in time, leading to an optimized sales process and a high-performing outreach strategy.
But how is a Saas sales cycle different from a traditional sales cycle?
We alluded to it in the introduction, but here's our complete answer:
This is what the typical SaaS cycle looks like (and notice how the last stage is "nurture" and not "close"):
Let's explain these seven stages in a quick table:
SaaS sales cycle stage |
Brief explanation |
Find leads |
Engage in lead generation activities (i.e., research or content marketing) to create a database of contacts potentially interested in your solution |
Connect |
Reach out to your leads Pro tip: use a lead information system to prioritize those with the highest lead score |
Qualify leads |
Evaluate if your leads are a good fit – ensuring you don't waste time and resources |
Present your solution |
Show your qualified prospect the value of your SaaS app Pro tip: make sure to personalize your demos and presentations |
Overcome objections |
Use your sales skills and your company's playbook to confidently answer your prospect's questions and move closer to a sale |
Close the deal |
Nurture your prospect until they're ready to sign a contract and get started with your web-based software |
Nurture new customers |
Don't stop after you've dotted the i's and crossed the t's on the contract – check in with your new customers and make sure they're getting the most out of your solution Pro tip: identify potential upselling and cross-selling opportunities |
Quick digression – if you're looking for actionable tips on how to excel at each stage, bookmark this blog post and return to it after you've finished this post.
Now back to our discussion of SaaS sales cycles:
You have a choice between three major SaaS sales cycle models:
And there's no "right one." It all depends on the nature of your SaaS solution.
Let's briefly check them out.
This product-led approach relies on marketing efforts to drive traffic to your sales pipeline.
Or in other words, you won't be proactively selling.
Many B2C SaaS brands (like Spotify) use a freemium model to attract customers. They rely on users signing up and upgrading by themselves via an online onboarding process.
This model is ideal for simple, lower-priced, high-volume SaaS apps that can leverage a fully automated funnel.
Most B2B SaaS companies follow this sales-led approach (even us!).
This model uses a mixture of sales reps and content marketing to nurture leads as they progress through the sales cycle.
Human interaction is required because customers gradually become less willing to purchase through an automated funnel as prices increase.
They want to experience your company before deciding to sign up – and you need to demonstrate that:
This last model is generally reserved for high-ticket, specialized software aimed at enterprises (hence, the name).
Think Oracle and Microsoft.
All the sales techniques you follow need to focus on breaking through the various levels of bureaucracy and reaching the final decision makers.
This means this model comes with long sales cycles and many stakeholders.
Your sales reps and their extensive product knowledge are crucial to success.
Alright, so now you know what a SaaS cycle is and the three major models, we can:
Onwards and upwards.
According to research by Hubspot, the average SaaS software sales cycle is 84 days long. However, the average length changes if we take annual contract value (ACV) into account, becoming 40 days long if the ACV is less than $5K (or $416 a month) or 170 days long if the ACV is more than $100K (or $8333 a month).
Quite a difference, right?
And price is only one of the five factors influencing the length of a software sales life cycle…
This means the more honest answer is, "SaaS sales cycles usually last for multiple months, but it's different for every company."
To help you determine your sales cycle's ideal length, we'll break down the five influencing factors to consider.
Price
This one is a bit of a "no duh" factor.
It's evident that the higher the price point, the longer your SaaS sales cycle will be.
Expensive solutions take up a significant portion of your client's budget and typically involve multiple decision-makers.
Type of customer
Your target customer persona also influences your sales cycle:
Product or deal complexity
Another obvious one:
If you're selling a complex SaaS application, you'll need to spend more time educating and guiding your prospects before they feel comfortable enough to sign a contract.
Trial periods
Many SaaS companies offer a free trial to convince prospects to become paying customers.
While this is an excellent idea for showcasing your product's many benefits, you'll need to factor the trial period's length into your sales cycle.
So, for example, you'll have a longer cycle if your free trial lasts 14 days rather than 7.
P.S. Don't shorten your trial period just because you want a shorter sales cycle – use a data-driven approach to determine the shortest free trial that still delivers on your KPIs.
Experience in the market
If you decide to enter a new market, you should expect a longer sales cycle (at least until enough industry players get to know your company and your software).
But enough about how long software sales cycles are. You get it; they're long and complex.
So instead, let's dive into the actionable tips and show you…
First, a quick TL;DR overview of the nine tips:
And now the details:
Before doing anything else, you need to be clear on which of the three sales cycle models you want to implement.
Pick the wrong one, and your entire sales cycle will be out of tune with your product.
So, if you're still unsure, head back to the SaaS Sales Cycle Models section and find the one that fits your company best.
You can't sell and nurture your prospects through a sales cycle if you don't have an ideal customer profile.
You need to know:
Here's a great example to follow when you build your own:
Once you know who you're targeting and what they're looking for, you should develop a value proposition perfectly aligned with your target audience's needs.
Remember to focus on the benefits your SaaS solution delivers rather than the fancy features or technical details that sound cool (to you).
At this point, you'll also need to decide on two important factors:
To shorten your sales cycle and make sure no leads fall through the cracks, you need to equip your team with the right sales tools, including:
Psst – Ringy is an all-in-one sales CRM with built-in communication and automation features, so you can simplify your tech stack and save on subscription fees.
Just saying 😃
Your inbound marketing and outbound prospecting efforts will bring in a lot of leads (if you’re doing lead gen right).
And you won't be able to contact them all without hiring a sales team that looks like this:
You'll need to prioritize your leads to nurture the right ones, and that's why we recommended lead scoring tools in the previous point.
However, sales cycle software won't do you much good if you don't have a solid set of qualification criteria that help the AI decide whether a lead is a good fit or a waste of time.
You can rely on one of three frameworks to qualify leads:
SaaS is hard. We've already determined that.
So don't abandon your reps to their fate and place your company's future in their hands alone.
Instead, support them by building a sales playbook and integrating it with your CRM and sales automation software.
This will help your sales team:
There's nothing like good old-fashioned motivation to get your team selling and nurturing.
And by good old-fashioned motivation, we're referring to SMART sales goals.
You can break them down into:
Activity goals |
Revenue goals |
|
|
SaaS isn't about making one-off sales – the initial sale is only the first handshake.
You need to keep your customers happy long-term because if not, they'll churn and take their business to another SaaS company that cares about customer success.
So what do you need to do?
Build customer success into your sales approach so that you:
You can't succeed in sales if you don't track your performance and commit to improving your results.
And in a SaaS company, these are the KPIs you should be watching like a hawk:
For more details about these metrics, we suggest you check out this article by Cloudzero.
In SaaS sales, practice makes perfect.
So don't just leave our nine tips as words on a webpage – put them into action by reviewing your current sales cycle and determining where you can improve!
And, if along the way, you decide you need better sales tools to help you achieve your goals, don't hesitate to reach out and request a demo of Ringy.
We'll be more than happy to show you how an all-in-one sales CRM can help your SaaS business have better conversations with your prospects and customers at every stage of the SaaS sales cycle.