How to Sell B2B SaaS More Effectively
When a customer has a real problem, they only care about solving it. When buying SaaS, customers are buying a service that solves their business problems. They are not buying software. If SaaS customers are not buying software, why do sales reps spend so much time selling software features? This article explores how leading SaaS companies approach sales and what SaaS sales reps can learn from them.
If you ever had the mind-numbing experience of sitting through a software presentation where the sales rep only talked about software features, you understand the problem. The SaaS sales rep becomes hypnotized by their own voice and dives through an entire demo without coming up for air. Their first question is, “So what did you think?” at the end of their demo.
The average sales rep hopes that if they cover enough software features, the prospect will figure out how the software will solve their business problem. The best SaaS sales reps, on the other, hand are masters at solving business problems and executing presentations demonstrating proof of value (POV). Let’s explore this deeper.
Expected Return vs. Investment
The sale will close itself when logical buyers believe their expected return will be greater than their investment. In other words, the seller has to demonstrate enough proof, so that the buyer says yes because the proof of the expected return is greater than the investment.
Believe it or not, there are SaaS companies that struggle to sign-up customers with free service. Why? Because the buyer does not believe the value is worth the cost to switch.
For example, we recently worked with a potential client considering us for sales training and our sales reinforcement service, Janek Xpert. We provided a proposal for $40,000, which their CFO said was out of budget. The first question we asked was, “How familiar are you with the business issue we’re solving with this proposal?”
His response was, “I’m very familiar. We are looking for a sales training company to help us onboard our new sales reps. But it’s not worth $40,000.”
“Okay, let’s double check our proposal,” we asked. “Can we walk you through how we came up with the number working with your VP of Sales?
“Sure,” was his reply.
“Your VP of Sales said that your current sales rep onboarding process takes six months. After six months, your average sales rep produces about $10,000 in monthly recurring revenue, which is break even on the hiring investment for your company. Is that correct?” we asked.
“That sounds about right,” he responded.
“Your VP of Sales also informed us of your plan to scale your sales team by a minimum of 40 new reps in the next six months.”
“Correct. That’s the plan.” was his reply.
“So, if we onboard those 40 new sales reps two months faster using our sales coaches, sales trainers, and Janek Xpert, that would result in an expected return of 40 sales reps x $10k MRR x 2 months faster. Our math says that will be an $800,000 revenue increase compared to a $40,000 investment.”
As you can see, we had a quantified business problem. The math checked out with the CFO, and they felt the pain of doing nothing with their current challenges.
Because our presentation was focused on their challenges and how we could solve their business problem, the contract was signed the same day. When the expected return is 20x greater than the investment, even the most frugal CFO will have difficulty saying no.
When presenting proposals to SaaS buyers, very often, buyers are shocked at the price. Where does this price resistance originate? When we break it down, price resistance can only arise from one of three sources:
- Lack of belief that the return can be delivered
- Negotiating a better deal
- Inability to pay
The best SaaS companies are masters of proving they can deliver that value. The best SaaS sales reps are masters at discovering business challenges. The better the sales rep discovers real business challenges, the fewer negotiations are necessary. We have found that an in-depth discovery process and fewer negotiations are linked. Here’s how:
Very often, organizations come to us and say, “Our sales reps need help doing a better job negotiating. We have a lot of deals in the pipeline, but we are getting beat up on price.”
Once we audit their entire sales process, we often find the root cause is in their discovery process. The symptom of a poor discovery process are drawn-out negotiations. Discovery includes ensuring the sales rep identifies the ideal customer and organizes their proposals in such a way as to articulate the proof of value to the organization.
The result of getting these two steps right are shorter sales cycles. Prospects tend to move quickly when they believe you can solve their business problems. The less belief they have in the company’s ability to solve the business problem, the more negotiations will be required by the sales rep.
Shorter Sales Cycles
The best SaaS reps have shorter sales cycles. It’s not that they can type quicker, talk faster, or have more sales activity. The highest-performing sales reps we’ve worked with don’t write perfect emails or have an irresistible secret voice-mail script. Most importantly, they are not the ones with the most activity logged in the CRM. This is what we call the mistake of more activity.
The best-performing SaaS sales reps move with precision. They have a system, and they follow a process. This framework provides efficiency. They also realize that their efficiency suffers if they deviate from the process.
They realize there is too much on the line to ramble through the sales process. This requires discipline, which is the intangible to high-performance sales, not just more activity.
Yet, all too often, average sales reps ramble through the sales process. They receive a lead from marketing, do very light discovery and even less qualifying, and jump into a sales presentation. They have a pipeline full of late-stage deals that don’t close. The only thing that fixes this is accountability. Otherwise, it becomes ingrained into the sales culture.
This is where a lot of sales organizations stay average. They underestimate the cost of doing nothing. They either rely on a sales process that was not planned with precision, or they slacked on accountability and created a culture that tolerates mediocracy. It’s a commitment to accountability that solves this dilemma.
SaaS Sales & Marketing Mix
The best SaaS companies have tightly aligned sales and marketing operations. Sales need a steady stream of qualified leads while adhering to their sales process. Marketing needs to attract the ideal customers, not just any customer. When these two departments work in sync, hockey stick revenue growth is the likely result.
Synchronizing sales and marketing requires a clear understanding of each other’s goals and how they can help each other achieve those goals. When everyone is on the same page, achieving growth targets is much easier. When sales and marketing are not on the same page, sales struggle.
Very often, what marketing views as the total addressable market and what sales views as their ideal customer profile are two different numbers. This means that salespeople are often working with leads that should not be in their pipeline. The undisciplined sales rep might even close the lead at a discounted price.
However, this customer churns 2x faster than average because they were not a good fit. If the sales team is going to be held accountable for adhering to the sales process, the marketing team must be held accountable for delivering qualified leads.
SaaS buyers are buying a service, and the service is problem-solving, not software. The sales cycle is short when the buyer believes the expected return is greater than their investment. When they question the expected return, sales reps find themselves in the “we need to think about this” stage of selling.
Great negotiation skills are superfluous if the SaaS sale rep has great discovery skills. The key to great negotiation starts with great discovery. When great discovery skills are combined with the discipline to follow a precise sales process and a well-synchronized marketing mix, high performance is the outcome. When these attributes are missing, SaaS companies find themselves swimming in a sea of mediocracy.
- Account Planning (15)
- Awards (39)
- Client Testimonial (35)
- Personal Branding (20)
- Podcast (11)
- Research (66)
- Sales Career Development (89)
- Sales Coaching (164)
- Sales Consulting (140)
- Sales Culture (181)
- Sales Enablement (372)
- Sales Leadership (100)
- Sales Management (265)
- Sales Negotiation (21)
- Sales Prospecting (128)
- Sales Role-Playing (18)
- Sales Training (241)
- Selling Strategies (282)
- Soft Skills (79)
- Talent Management (106)
- Trusted Advisor (29)
- Virtual Selling (59)
- Webinar (11)