Stay in the latest updates. Get the latest tips and advice delivered straight to your inbox. Email Guy Nirpaz | December 5, 2010 | 3 Essential Tips for Sales in a SaaS Model SaaS forever changes how software is developed and delivered to customers. This shift is well understood, frequently discussed and represents a major shift in the way software is built by vendors of all sizes. Often less discussed is the impact the service model has on the way software is sold. In our discussions with SaaS providers, big and small, we see a growing understanding of the need to define sales strategy and processes while taking into account the full life-cycle of a customer. It’s not about making a sale, it’s about making your customer successful. It’s useful to compare SaaS and enterprise sales to appreciate this: Enterprise software sales are a high-touch activity. Opportunities are identified, tracked, and closed by a direct sales force or resellers. This cycle is what makes a good enterprise software company tick. And it’s why successful enterprise software vendors like HP and IBM are so sales-driven. Their culture must be very sales-oriented in order for them to succeed. Selling SaaS is different. SaaS solutions are fundamentally ‘self-service’, relying on a large quantity of (hopefully qualified) leads funneled to the web-service through inbound marketing activities. In an ideal world, these leads pick up the solution and turn into happy customers by themselves. But in practice, for all but the most simple and commodity software, cultivating customers and growing the business requires direct interactions with the customer. We call this model medium-touch. It is a sales model that puts more onus on marketing and the product’s self-service to move large quantities of prospects through the sales funnel, but also assumes a level of direct engagement of a sales and support team. The trick is to identify the right touch points to make the system work. Here are some tips we’ve learned from SaaS vendors on how they build their sales process differently than traditional enterprise sales: Successful customer onboarding is critical: in a SaaS model, because switching costs are low, “closing the sale” is not nearly as important as it used to. The vendor must ensure he’s doing everything possible to help customers adopt the solution rapidly and with ease. Otherwise, customers are likely to churn shortly after they subscribe, resulting in loss of revenue and reputation. Don’t bother top-selling: in SaaS product-usage and its sales are always intermixed. Customers first look at your site, then they try the software, then they decide to buy it. In enterprise sales, the same process may be reversed, and a sale can occur before even one user tried the product. That’s why “top-down” selling isn’t a useful strategy for SaaS and investment must be made in reducing usage-friction at every junction. Focus on up-sell : In traditional enterprise sales, customers often pre-budget and pay for what they (think) they will need in a few years. With SaaS, customers tend to buy what they need and buy more when they feel they need to. Therefore SaaS is as much about up-sell than the initial sale. For a SaaS salesperson, a large chunk of energy need to go to cultivating existing customers and identifying up-sell opportunities. The reality is that implementing these sorts of practices isn’t as straightforward as it looks. It often spans different organizations such as sales, customer-support, product development and operations — and it involves aligning goals and pulling in expertise from many disciplines. More than anything, it involves getting a very good understanding of what customers are doing so you can properly prioritize and streamline the process. More and more SaaS providers are building “Customer Success” teams that focus on just that: making the customer successful. We’re building software to make it possible for them. Popular Posts A day in the life of a Customer Success Manager: What do they do? 15,902 views The difference between Customer Success Managers and Account Managers 12,963 views Your 90 day plan as a new VP of Customer Success 5,518 views Guy Nirpaz Guy Nirpaz is a Silicon Valley-based Israeli entrepreneur and CEO of Totango, a Customer Success software platform. A pioneer in the Customer Success field, Guy established the Customer Success Summit and is a well-regarded industry speaker and community contributor. Guy loves people and technology and has dedicated his career to improving the way in which business is done through innovation. Fun Facts: Guy moonlights as the lead guitarist in a rock band based out of his garage in Palo Alto and used to command a tank battalion...as well as having grown oranges. Pingback: Best of 2011: SaaS Sales Models Tips() Slaw Very good article, but I got one question: With SaaS, customers tend to buy what they need and buy more when they feel they need to, isn’t it cross- selling, not up-selling? Regards You might also like You might also like BACK TO BLOG | NEXT ARTICLE Let's stay in touch! We’re passionate about customer success. Sign up to get the latest in thought leadership and to follow our adventures.