The SaaS Sales Method differs from traditional sales methodologies in several distinct ways. In addition to the transition from qualification-driven sales to impact-driven sales and the creation of an ongoing relationship with the customer, there are seven key moments during the SaaS sales cycle that are critical to its success.
SaaS vs. Traditional Sales Methodologies
The SaaS Sales Method is a modern sales approach developed in response to the SaaS business model. With a SaaS methodology, profit generation shifts from 30 to 60 days after “closing” the client to a time later in the future, sometimes years, as the solution provider delivers the impact the customer anticipated. In many cases, persistent use of the service and growth are needed to achieve profitability. Three different selling methodologies – the Consultative Method, the Provocative Method, and the SaaS Sales Method – are displayed in Figure 1 and described in detail below.
Figure 1. Visualization of different selling methodologies
Transition from Qualification to Impact Driven
In the traditional sales process, marketing and sales operated in silos. This resulted in hand-off points where a particular qualification criteria was used. For example, consider the Sales Qualified Lead (SQL) which often uses a version of BANT. See Table A for the differences in qualification driven (BANT) and impact driven sales approaches.
Figure 2. The difference in qualification based on budget (one-time) vs. priority (anytime)
Table A. BANT Qualification vs. Impact Driven
Seven Key Moments in the SaaS Sales Cycle
There are a few specific moments in sales that require special attention. If you and your team perform well during these moments, they will work in concert to generate success. Specifically, there are seven key moments in the SaaS sales cycle that matter most; these are displayed in Figure 3 and explained further below.
Figure 3. Seven key moments that matter most in sales
Moment 1: Focus on business results, not fit. Before talking to a single customer, sending an email, or showing any advertising, the sales leader, team, and each individual salesperson must develop a true understanding of the customer’s pain and how the company’s product can deliver real business results against that pain. In the SaaS Sales Method, the concept of “fit” is reframed by “impact.” As an example, a car salesman needs to understand that he is not selling a car, but rather the ability for his customer to get to work and provide for his family. In fact, in this very situation, Uber realized that this impact could be unbundled from the car itself. In a perfect example of the modern sales approach, Uber now sells pure impact to its customers.
Moment 2: Conversation, not qualification. Depending on your team size and structure, you may have SDRs working to determine whether a given prospect is “qualified” for your product. Instead of qualification, a SaaS model focuses on developing the fundamental skill of conversation. Having a conversation is more natural than qualifying, and it connects with the prospect on an emotional level as you uncover their real, pressing problems — a key SaaS selling technique. At the end of Moment 2, your SDR should have a very clear idea of whether, when, and how your product can have an impact on the customer’s business. More importantly, the SDR should manage the conversation in a way that the customer himself has verbalized the problem and envisioned a potential solution for himself.
Moment 3: Diagnosing, not pitching. Consider the saying, “Prescription without diagnosis is malpractice.” At this particular moment, the customer already realizes they have a problem, and the conversation they had with your SDR helped crystallize that fact. The traditional sales process views this as the right time to make a clear sales pitch. However, the SaaS sales process recognizes this is not the time for a hard sell – nor is it ever. The more a salesperson can do to understand the customer’s pain and its potential business impacts, the better he or she will be able to recommend a solution within the company’s range of products that has a major impact on the customer — and the more likely they’ll stick around.
Moment 4: Trading, not negotiating. This single change in emphasis and wording has one of the greatest effects on cumulative sales [Ref. 1]. When salespeople begin to negotiate with a customer, they tend to think in terms of increasing and decreasing numbers and percentages. In the traditional sales cycle, salespeople give away discounts at this point, and they end up doing this more often than they should, often receiving little in return. Research shows that most deals that reach the negotiation stage seldom turn on price [Ref. 2]. Part of the SaaS sales methodology hinges on reframing this stage. At this moment, salespeople should think of negotiation as “trading,” a process in which both parties give up something of value in order to better themselves. There are any number of things a customer can trade for, like saying or doing something that will significantly help the salesperson’s business. For example, references, case studies, social media mentions, PR quotes, and other items can form a menu of trading options available at different discount levels. This puts a price on discounts, and when people pay attention to the price of something, a market is created and its value becomes clear. For instance, when a customer is not willing to do a PR mention and turns down the discount, the average discount rate for the team goes down. This single change causes the average discount to drop from 20% to 10%.
Moment 5: Orchestrating, not onboarding. The term “onboarding” has lost much of its meaning due to overuse as part of the traditional sales cycle. Following a sale, the immediate concern of both the seller and the buyer might be the technical setup of the product. However, this does not take advantage of the larger opportunity available at this moment. If it hasn’t been made clear by now, the sales methodology for SaaS views the customer relationship in longer terms. Instead of simply onboarding the customer into the product or service, this engagement is an opportunity to orchestrate the entire business relationship going forward. During onboarding, while the customer is still sold on the product, you can guide how the relationship will develop, set the milestones upon which the customer will judge success, and, ultimately, solidify the relationship so that it has a real impact on the customer’s business.
Moment 6: Results, not usage. Many customer success software platforms track product use. They may measure it in terms of percentage of seats used, number of logins per time, or number of features used. Typically, product usage is the proxy for success. However, these metrics actually measure the product’s success rather than the customer’s success. A more impact-focused approach — and thus an approach more in line with an SaaS model — would be to explore whether the customer is getting the results they need and want from the product. The right sales methodology recognizes that, from a customer’s viewpoint, they ideally want to solve their pain with the minimum amount of effort and exertion possible. Customer Service Managers (CSMs) and Account Managers (AMs) should focus on the fact that the customer is buying impact, not usage.
Moment 7: Growing, not upselling. A critical SaaS selling technique that in many ways defines the SaaS sales process. The term “land and expand” is a popular sales buzzword and metaphor rooted in conflict. It implies that the customer is a territory to be mapped, flanked, and conquered. However, the customer likely does not view your relationship this way. Instead, use expansion teams (usually AMs) to grow the relationship and grow the customer’s business by expanding the positive impacts that your solution provides. Whether that impact is lower costs, higher revenue, or an improved customer experience, impact matters most to the customer. An SaaS sales methodology emphasizes the fact that the more impact you deliver, the more the customer will want to use and buy your product.
While it is difficult to comprehend the compound impact that would result from each department in your organization adopting an SaaS methodology and making a small improvement, every executive team should perform this exercise. It often gets everyone on the same page so that you can then come up with a plan to improve each of your conversion rates using basic actions, a key tenet of the sales methodology for SaaS.
See the exercise below for an example of how to accomplish these incremental and cumulative improvements.
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