SaaS Sales

SaaS Sales Tips | Accelerating Revenue Growth

This is the third post in a series of tips for SaaS sales executives. The first two posts focused on designing an effective SaaS sales organization and sales process efficiency, respectively. This post is concerned with accelerating revenue growth. The final post will discuss scaling the sales operation profitably in a high growth environment. Enjoy!

In its simplest mathematical form, revenue is equal to quantity of units sold times unit price.

revenue = volume x price

Strangely enough, this basic formula captures the essence of the SaaS sales challenge. Accelerating revenue growth amounts to increasing volume and increasing price. For most software-as-a-service businesses, volume equals the number of paying customers that are using the product and price equals the lifetime value of each customer’s subscription.

SaaS Sales Tip #7 – Lever-up through Marketing
In SaaS, particularly in a SaaS startup, it is very difficult and expensive to drive revenue by sales reps working alone. Outbound calling and offline meetings explode acquisition costs by applying too much sales investment where there is too little prospect commitment (see SaaS Sales Tip #6). The price point and complexity of the typical SaaS deal imply an extremely tight integration between sales and marketing. As a SaaS sales executive, you should never go it alone.

Marketing activities provide leverage to your sales investment, because they move customers through the purchase process many at a time, whereas sales moves them though one at a time. You should work closely with the marketing organziation to provide the feedback and direction necessary to create programs and content that bring in high quality leads, automatically nurture less committed prospects and accelerate active opportunities through to close.

SaaS Sales Tip #8 – Simplify, Standardize and Automate
In the Top Ten Dos and Don’ts of SaaS Success, I claim that you should accelerate organic growth by encouraging and enabling your customers to buy from you even if no one shows up for work. In this context, organic growth is defined as revenue aquired with zero marginal cost, now that is leverage! When you have achieved this level of marketing proficiency, then the SaaS sales executive can take a step back and apply precious sales resources to only the highest value activities for highly qualified prospects–those places where your prospects and your pipeline benefit the most from a personal touch to move a deal along or increase its value.

However, the principles of simplification, standardization and automation that enable your customers to serve themselves should also be used to empower your sales team. Accelerating and scaling sales volume requires streamlining the entire purchase process from click to close, regardless of who is performing the activities: the customer, the sales rep, marketing, pre-sales services or support. Simple pricing and contracts, standard qualification criteria, opportunity scoring togther with automated tools for pipeline management, forecasting, ROI calculation, competitor intelligence, etc. will make your team more efficient and effective, allowing them to focus their precious time and energy on the most critical aspects of the most critical deals.

SaaS Sales Tip #9 – Maximize Customer Lifetime Value
One of the great benefits of the SaaS subscription model over licensed software is that you don’t have to re-book every dollar you made last quarter before you can grow revenue this quarter. Every new booking leads to increased revenue, because it is layered on top of renewal dollars. That is, if you maintain a low rate of attrition. For the SaaS sales executive, responsibility for revenue does not end once a deal is closed. It has only just begun. Don’t expect your customers to hang around if they suffer from poor ongoing customer service, technical support or product quality. While you may not have responsibilities for all these areas, you definitely have an interest and you should cooperate with the rest of the executive team to ensure that your customers receive the ongoing care that they need after the initial deal is done.

It is always easier to sell to an established customer than to a new prospect. Therefore, you should put in place programs for up-selling and cross selling to your current customer base. Targeting specific market segments with enticing discounts, bundles and upgrade programs can double and triple the lifetime value of your customers, depending on your product line. But, if you don’t put in place the right process, tools and training for your sales team, they will just wing it and are unlikely to realize more than a fraction of the potential. In addition, it is important to provide feedback to marketing and product development about where these opportunities lie. No one knows better than the sales rep speaking with a loyal customer with budget who is looking to buy something that you just don’t have to sell.

Note: The other three posts in this series are now available and focus on  SaaS organization strategy, accelerating revenue growth, and scaling profitably.

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  • Excellent points here, Joel, that SaaS providers’ success depends on the marketing organization’s effectively supporting sales.

    Building on that point, I’d say that the SaaS model puts particular pressure on marketing to spend extremely carefully on lead generation and lead cultivation programs. Unlike the on-premise model, SaaS marketers don’t have the luxury of large, up-front license payments to cover under-performing marketing programs.

    FYI, I looked at how efficiently some of the largest SaaS providers are spending their sales and marketing dollars here:

    As much some marketers might prefer to be immersed in web site animation, tag lines, booth layouts, and the creative process, a big part of their job is to manage the costs of customer acquisition.

    And good point on the need to sell to the installed base, something that’s typically not done in the on-premise world. Marketing programs to keep existing customers informed and engaged can be very effective at reducing churn.

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