Selling B2B SaaS can be challenging.
First, you have to generate leads, but not any kind of leads. It needs to match your buyer personas. Then you begin the nurturing journey to tempt your qualified prospects to try out your product, and finally (if everything goes to plan), you convert the account into a paying customer.
Sounds like a basic formula, right?
Step 1 + Step 2 = A sale.
SaaS sales is more complex.
Over the last 15 years, it's become a lot more nuanced. The shift in the market has created product-led growth, and new consumer behaviors add another layer of challenges for sales teams.
This article is for you if you're struggling with:
- Adapting to non-sequential selling.
- High customer churn rates.
- A disconnect between your sales and CS teams.
- Converting free users into customers.
Below, you'll find out how to overcome these SaaS sales challenges through the power of your data with advice from your industry peers and leaders.
The old school approach to sales
Back in the day, B2B sales followed a predictable rinse-and-repeat deal cycle.
- A sales rep uses an outreach tactic like cold calling to find leads.
- If the lead wants to know more, your rep will educate the prospective customer on your company and products.
- A meeting is set up, you pitch your product demo, and a proposal is sent out.
- If all goes well, your rep overcomes any objections, drafts the final quote, and the deal moves from opportunity to closed won.
While there is nothing wrong with the traditional sales approach, it no longer works in the modern world.
It's all about the "push."
Traditional B2B sales relies on the assumption that your customers have little knowledge of your company, product, and their problem.
That's not the modern buyer.
End users no longer require a sales rep to make a purchasing decision, turning the linear B2B module on its head.
Instead, the customer is at the center of the selling process, ushering in the next stage of SaaS sales.
The evolution of SaaS sales
Today, the SaaS sales process is customer-centric, with a self-serve model and a bottom-up approach. Search engines empower users to research, compare options, and self-checkout without speaking to a single salesperson.
"43% of B2B buyers would prefer a rep-free buying experience if given the option. For those who do want to work with a sales rep, their interaction preferences are changing — they typically prefer digital interactions versus in-person.
Craig Riley, Chief of Research and a Director Analyst with Gartner for Sales Leaders.
How do you sell to a customer base who understands their problem better than you?
With non-sequential selling.
It's a "pull" tactic that relies on salespeople meeting users wherever they are on the buyer's journey.
What does that mean?
If a lead skips steps 1-3, your reps need the right data to start the conversation at step 4 without creating a disconnect by making the user conform to a linear selling process. You're creating a customer self-service SaaS sales model where your reps are there as a sales assist.
Then there's the shift in purchasing power.
In the past, reps had to woo the budget holder. Today, the target of your affection is the end user. These are your product champions, investigating solutions, driving product adoption, and campaigning for a company-wide license.
The evolution of SaaS sales shifts the conversation from "How do I get buy-in from the budget holder?" to "How can I empower the end user and generate demand to sell across both the employee and group levels?"
The answer to that question is the key to a successful enterprise sales model.
You want to identify a true champion and arm them with what they need to get the purchase done. At Parabol, we offer a free one-month extension if the user can move the deal upwards to the decision-maker. Laser in on that champion; the rest is fool's gold.
5 of the biggest challenges in SaaS sales and how to use data to overcome each one
We live in a data-rich world. Here's how to use your greatest asset to overcome your biggest challenges.
Wasting time on the wrong leads
When you're not careful, it can become a vanity sales metric.
Let me explain.
Over the weekend, 100 new leads filter into your CRM. You're excited. Some of the companies have massive potential to land and expand. All you have to do is focus on nurturing these product-qualified leads (PQLs) and step in when the moment is right for an upsell motion.
Sounds like a great situation, right?
Well, it depends.
If none of those new leads fit your ideal customer profile (ICP), what's the point?
Those leads will likely never convert from a freemium package to a paid plan, and the few that do are high churn risks.
Your product is built to solve a specific problem for a specific group of people in a market.
If your end user doesn't meet your ideal client criteria, they won't see value in your product and will jump ship.
Churn can be a huge issue that isn't necessarily considered in the sales process but is still critical. When it comes to a lead, I would probably audit where they're coming from. Is our product aligned with their intent or problems? If not, then it's probably best to find a higher quality source of leads.
To avoid wasting time on the wrong leads, do the following:
- Research your customer and market attributes to develop an ICP.
- Create a sales funnel that attracts, nurtures, and converts your ICP.
- Develop a customer fit score to help your sales development representatives focus on the leads most likely to convert
- Use data enrichment to find the best accounts to land and expand.
Think of it this way.
Would you rather focus your resources on a lead with a 56% customer fit score who has an entire company size of 10 users or an account with an 87% customer fit score who can expand into 100 users?
The latter makes the most business sense. When you connect and unify your CRM data, you'll automatically start to uncover those golden nuggets and spend more time on the users who will move you closer to your monthly revenue sales goals.
Not integrating customer success into your sales cycle
Ask a customer success manager: "What's your biggest headache when it comes to your job?" and chances are they'll say:
"There isn't a central knowledge base for each customer."
The culprit? Your current PLG tech stack.
CRM tools like Hubspot and Salesforce were never built with customer success in mind. The result is a clunky handoff between sales and CS that leads to lost information and CS managers having to spend hours setting up a new account and understanding a customer and their story.
The solution? A CRM without data silos.
Your customer success team needs to work with sales to prevent churn, identify expansion opportunities, and reduce time-to-value (TTV) for the customer.
Product-led teams need a collaboration tool to surface the right data at the right time to achieve synergy between the different departments. As soon as CS receives an account, the manager should have answers to critical questions like:
- Who is the customer and key contacts?
- Which metrics is the customer measuring for successful deployment?
- Which pain point led the customer to sign up?
The integration between sales and CS empowers your CS manager to ensure the customer sees value in line with their goal by providing the right education, training, and consulting services.
Turning free users into paid customers
Are you struggling with turning freemium or free trial users into paying customers? You're not alone.
A high percentage of the new users found our free version to be sufficient and not worth upgrading to a paid subscription. After realizing that this was the case, we worked on resolving this by adding more product features that would attract the basic free users to upgrade their subscriptions.
Nahla Ibrahim, Business Developmet and Marketing Manager at Kotobee
It's one of the toughest and most expensive SaaS sales challenges.
New users increase your infrastructure and support costs, which is a sign you're growing, but when the bulk of your sign-ups aren't paying, it can steer your product and company toward an iceberg.
But I have a secret to share with you.
When you put your data to work, converting free users into paid customers after the trial period is much easier.
What does that look like?
When you unify your data, you can find the answers to questions like:
- What is the best engagement strategy to lure users onto a paid subscription?
- When is the right time for CS to engage with a lead?
- What actions do conversions have in common?
- Are you giving away too much for free?
- What educational materials will fill knowledge gaps and improve your conversion rate?
All this data doesn't come from a single source. It's an intricate ecosystem where everything relies on and works together.
- You need product usage data. It helps you understand your customer experience better, ensures you're not giving way too much for free and helps you know which product features drive users to click "Subscribe."
- You need to talk to your customers. Whether you're sending NPS surveys or your CS team is hopping onto calls, one-to-one communication is how you'll find out what your current customers want (e.g., additional features) and give you the green light to tweak your sales strategy to meet their needs.
That's why consolidating and unifying your data from internal and external sources is crucial for figuring out your unique game plan to convert free users into paying customers.
Forecasting sales revenue accurately
You've saved up for years. You've climbed the corporate ladder. You're finally ready to bite the bullet and put down a deposit for your dream home.
But there's a problem.
The bank only has access to your financial data from two years ago. According to their records, you need to earn more to afford the monthly repayments.
The bank only has access to old data and can only make decisions based on the past. It doesn't matter that one year ago, you were promoted to CFO and can easily afford the repayments with your new salary.
Your real-time data doesn't count.
Sales organizations face the same problem with forecast accuracy.
Calculating quotas without looking at what front-line salespeople are outputting in real-time is fundamentally flawed because you're not factoring in current output.
Werner Schmidt, Co-Founder at Lative
Our CRMs are set up to create sales quotas from the past. Without a real-time view, you can't make decisions based on what is currently happening in your business or measure the true productivity of your team.
As a result, quota attainment is low. Sales representatives feel discouraged and quit, and your ramp-up period is anywhere from six to nine months.
So, what's the solution?
A sales tool like Lative's Growth Efficiency Metric. The software plugs into your existing CRM and uses data to give you attainable quotas and accurate forecasts by measuring the true sales efficiency of your team.
Now, your targets are based on what your team can produce, not guesswork or industry best practices.
Lack of urgency
There are two types of urgency in B2B SaaS sales.
- Internal urgency: This refers to your sales teams converting the right leads at the right time.
- External urgency: The prospective buyer is stalling and needs to make a decision to move the deal forward.
The latter is the big challenge for SaaS sales teams.
- You book your meeting and communicate the value of your product.
- You connect the dots between the pain points and the transformation.
- You leave the meeting with a verbal confirmation from the decision maker with a purchase date.
Yet, the weeks roll on. Your purchase date comes and goes, and you hear nothing from the prospect.
Zero. Zilch. Nada.
What went wrong?
You should have created a stronger sense of urgency by scheduling a meeting in their calendar.
"Phone calls and emails are easily ignored. You need to book a meeting from a meeting (BAMFAM)," says Matt Bunston, Head of Sales for A2Z. "It's a strategy professionals like dentists and doctors have used for years, and it's a valuable tool for sales professionals."
I know what you're thinking.
Does this BAMFAM strategy work?
Yes, it does. Here's why:
The psychology of agreement. As a salesperson, you're creating a chain of small yesses. It starts with the potential customer agreeing to take your quick five-minute phone call or replying to the initial cold email.
These small yesses are building blocks to your big yes that closes the deal.
Each one you get builds goodwill, disarms your SaaS prospect, strengthens your business relationship, and shifts the conversation from opposition to collaboration.
But the most important thing?
A small yes encourages reciprocity.
When you get to your final meeting with the decision maker and have verbal confirmation that the deal is closing, use all the goodwill you've built up to schedule a follow-up meeting.
If you've done your job and demonstrated how you can add value to the prospect's business, the decision-maker should agree because it's human nature to reciprocate. After all, you're helping the prospect solve a massive pain point, and scheduling the next meeting adds the urgency you need to close the deal.
Implementing the BAMFAM strategy helped to shorten our sales cycle and increase sales velocity by 30%.
Matt Bunston, Head of Sales at A2X
Defending your value
There are dozens of other SaaS sales challenges, but I'd like to leave you with one that is the backbone to all your strategies working out.
Between buyers, procurement teams, and the general marketplace, everyone wants to erode your value. Potential buyers want to pay as little as they can for maximum return. So, as sellers, you have to not only believe in the value of your product, but you must also be ready and willing to defend it on a daily basis.
Think of it this way.
You can have:
- The right PQLs filling up your sales pipeline
- Alignment between sales and CS
- A strategy for converting free to paid users
- A tech stack to fix your forecast accuracy
- The BAMFAM strategy to create a sense of urgency
Yet, if your sales team doesn't believe in your product enough to sell it with conviction, your pipeline will remain stagnant. In B2B sales, your product is challenged every day from users to stakeholders, and if you can't back it up, why are you selling it?
What I find helps our sales team is recognizing that we're not just closing deals. We are involved in a continuous cycle of educating stakeholders about everyone's social value, why we exist, and how we can help them achieve maximum ROI. That builds confidence in the product, which is essential to SaaS selling success.
Getting your team to a place where they can sell, price, and negotiate confidently is the key to success and, in turn, can help you navigate the most common and difficult SaaS sales challenges.