So you got your first gig in SaaS sales—congratulations!
You are now part of a growing professional field focused on providing tangible, long-term value to your clients and their bottom line.
But before you pick up the phone and start selling (we get it, you’re eager!), it’s important to understand some key differences between SaaS and other types of sales—both from an organizational and sales perspective.
Trust us, it’ll make your onboarding a whole lot smoother.
Key characteristics of SaaS sales
From an outsider’s perspective, SaaS sales may appear quite similar to other types of sales; however, there are some important differences to be aware of if you’re new to the vertical.
SaaS sales cycles
The biggest difference between traditional sales cycles and SaaS cycles is that SaaS sales cycles are usually longer and more complex, thanks to many companies offering free trials of their products.
The trials typically last between 14 and 30 days, with some outliers on either end. It’s so commonplace now—everyone from Shopify to Unbounce is doing it—that you almost can’t get away with not offering a free trial.
Because trials are relatively low-risk, it’s really important that the prospect sees value within the trial period, otherwise they’ll cancel their account (a.k.a. churn) and move onto one of your competitors.
Learn strategies to reduce churn and keep customers longer with this handbook.
For self-serve customers (a.k.a. the large segment of customers on your free or lower tiered plans), this means implementing a kick-butt ramp-up process, thorough documentation, and a first-class support squad.
For full-serve customers—that is a small segment of enterprise-level customers paying the big bucks—this means providing your customer with tailored, in-depth use cases and hands-on onboarding assistance.
A word on Freemium plans: Some companies will offer Fremium plans—that is, free plans with limited features and functionality. Zapier is one of those companies.
Zapier allows Freemium users to start using the product and automating their workflows quickly, demonstrating instant value. According to Sujan Patel in a recent Forbe’s piece, Zapier makes their Freemium plan work for them because they know “once you have automated a few things in your business, you will have a hard time not automating even more things.”
So again, the key to SaaS sales, even within a Freemium model, is to help customers see value in a short period of time, so that upgrading becomes a no-brainer.
But free trials aren’t the only reason SaaS sales cycles are typically longer—another key reason is there are often more people involved in the signoff process.
Enterprise companies, for example, may require signoff from the C-suite, while smaller companies may need signoff from members of the finance team.
In any case, it’s important that you—as a SaaS sales rep—make sure you’re speaking with a decision-maker or someone who has the ability to influence the decision-makers in the company.
If there are multiple people who should be involved in the process, find that out early on with some intelligent probing questions, and get them on the phone or in the room to avoid any blocks down the road.
Your return on investment (ROI) can be easily calculated by taking your net profits and dividing them by the initial investment.
For those selling physical products or services in a single transaction, ROI can be calculated almost immediately, but for SaaS it’s a bit different, since payments are often made monthly.
In order to calculate ROI for SaaS sales, you need to understand two other key metrics:
- Cost acquisition cost (CAC). This is the total spend required to acquire a customer, including marketing and ad spend, marketing and sales salaries, events and gifts, CRM and other software costs, etc. CAC is calculated by taking the total sales and marketing costs and dividing it by the number of new customers.
- Lifetime value (LTV). This is the total lifetime value of a customer. In the SaaS model, the longer a customer sticks around, the greater the LTV will be.
Because the SaaS sales cycle is typically longer and often includes dozens or more touchpoints, the initial investment (a.k.a. CAC) of a SaaS customer can be quite high.
Everything pre-purchase is part of the initial CAC investment. And if your company offers a free trial, you can expect additional spend during the trial period.
And because access to the product is billed on a monthly basis, it can be a while until the customer actually becomes profitable. That’s where LTV comes in to play.
To accurately calculate ROI then for SaaS sales, take the customer LTV and divide it by the CAC. Unfortunately, that means you have to wait until the customer churns to get an accurate figure, or you can estimate the customer’s LTV based on similar customer characteristics.
By digging into customer data, you may reveal certain types of customers have a similar LTV so long as X, Y, and Z criteria are met—like medium-sized companies who can attribute at least $1000 of new sales to your tool within the first 60 days.
Don’t worry if this feels a bit beyond your skill level—unless you’re a data analyst, this is something you’ll need support with.
SaaS sales commission and salary
According to Indeed, the average salary for SaaS sales reps is $57,640 USD. This tracks with the Bridge Group’s findings based on their survey of 384 B2B technology companies, which show that SaaS account execs make a base salary of $62,000 USD.
Notice the cell in orange labelled “Average Base Salary.” This figure represents SaaS account execs and inside sales reps combined.
As for commission, SaaS commission (like most other verticals) is awarded once a rep closes a new business deal, upsells, or renews an existing account.
The amount of commission is typically awarded based on monthly recurring revenue (MRR), since LTV is unknown. However, if the customer pays up front annually, it’ll be based on the annual contract value (ACV).
Typically, organizations will use one of two commission models:
- The accelerator model. For every percent a sales person makes over quota, there commission rate increases by the same. So if a rep hits 25% over quota, they’ll receive 25% more commission.
- The tiered model. Commission rates are determined by tier—so for example, a rep will receive X% commission for the 100-110% tier, X+Y% commission for the 110-120% tier and so on.
In any case, being a SaaS sales rep can be pretty lucrative—that is, if you have the right qualities.
3 qualities that make a successful SaaS sales rep
As a new sales rep, your leader likely saw something (or ideally things) in you that made them think you’d be a good fit for SaaS sales, but do you know what those qualities are?
To be successful in SaaS sales, you need all the same qualities the average salesperson needs, plus a few extra. Honing and developing the following qualities will be key to your success in SaaS sales:
1. You know the product inside and out
Being able to list off key features isn’t enough when it comes to SaaS sales—you need to know your product inside and out, and be able to demonstrate its value to your customer based on their unique needs and use cases.
Every customer is going to be different, and you therefore need to know how your product will make their lives easier.
Let’s say you’re selling a CRM. On a general level, it provides (mainly) sales teams with an easy way to track, manage, and communicate with leads. However, a good sales rep will be able to identify the unique challenges the customer has and make specific recommendations for how they might set up their pipelines—because a real estate agency will need something different from a small ecommerce business.
Speaking your prospect’s language can do wonders for your conversion rates. For realtors, that’s “new listings,” “open houses,” and “repeat clients.”
2. You work well with others
SaaS sales reps simply cannot live in a silo, or their sales numbers will suffer. The reason being is that high-value prospects often require customizations that you’ll neither be able to promise, nor implement without the help of other teams such as engineering and product marketing.
Because of this, it’s not uncommon for members of other teams to join some of your sales meetings, so that they can properly assess the client’s challenges before coming up with a workable plan for solving them.
As such, the ability to collaborate and rally other team members is a must-have characteristic for SaaS sales reps. Here are a few ways to brush up on your team selling skills.
A CRM built for collaboration (like Copper!) can help you communicate and work better with your teammates.
3. You are eerily in tune with your customers
SaaS sales doesn’t always involve selling to new customers—some of it is upselling to existing customers. Which is why you have to have your finger on the pulse of every customer (or at least the mid- to high-value ones).
By keeping a close watch on your customers’ usage and behaviors, you’ll be able to identify genuine upsell opportunities that will help the customer take their business to the next level.Rather than coming across as pushy, this approach leverages real customer indicators so you can present the right offer at the right time—like a SaaS fairy godmother.
Their gain is your gain
Although we’d never advocate for bait and switch sales tactics (eww), SaaS sales reps especially need to approach their position as salespeople with thoroughness, care, and respect, since ROI is accumulated over time vs. a one-time transaction.
Doing so will ensure your prospect sees value during their free trial, gets up and running successfully, and becomes a longtime customer with a high LTV.
Your reward is not only a fair base salary and hefty commission cheque, but also the satisfaction of knowing you’ve helped a person, department, or perhaps even company do better, more impactful work.