Entrepreneurs startups

How to Sell SaaS If You Are a Startup

SaaS (software as a service) is an incredibly lucrative business. However, if you’re just entering this industry, it can be difficult to stand out from the competition. Even if you have an ingenious software that solves a common problem, your product won’t sell itself. You have to put in the work and have a thoughtful approach to selling SaaS.

Here, we’ll provide you with everything you need to know how to sell SaaS as a startup.

Don’t Underestimate the Value of Your Product

Especially if you’re just starting out, it can be tempting to make your prices as low as possible. Seemingly, you’ll get a head start in the industry and make yourself more appealing than your competitors.

However, this strategy can backfire. With prices that are too low, customers may begin to question the value of your product and if it can fulfil their needs.

Understand the value of your product. Be confident in your product’s capabilities and price it accordingly. If you stand firm by your product and all that it can do, your potential customers will too.

Establish what your unique selling proposition (USP) is and show that it brings you a positive ROI. If you can’t provide prospects with evidence of your product’s success, spend some time working out your USP.

Don’t Offer Long Trial Periods

Offering a trial period is a great way to let customers see if your product is the right fit for them.

However, when establishing the specifics of your trial period, don’t make it too long. Typically, a 7-day trial period should be enough time for customers to test out all of your software’s features.

Avoid making your trial period last any longer than 14 days. A longer trial removes the sense of urgency that helps you close the sale. Make sure your product and its innovation stay fresh in your prospects’ minds.

With a shorter trial period, you keep your customer acquisition costs low. This helps drive up your ROI exponentially!

While a shorter trial period is beneficial to you, it also helps your prospects out. Most users don’t use a free trial period for its entire duration. You’re saving potential clients time and helping them streamline the process of getting an effective software that will meet their needs.

Send Emails to Encourage Prospects

A lot of users forget about their free trial within hours of signing up. Facilitate their memory with an effective email campaign. Keep these tips in mind when crafting your email campaign:

  • Don’t be afraid to send out a lot of emails. While some people may call it spam, sending a lot of emails can be effective when done correctly. You want to get your clients’ attention and remind them to give your product a thorough look.
  • Don’t use a department email. Clients are more likely to take your email seriously if it comes from a “human” address. Avoid “marketing@company.com” emails. Instead, send your emails through a name-based email, like “john@company.com.”
  • Keep your emails activity-based. Encourage clients to take action. Also consider adding useful information to each email, like when they signed up and if their trial is about to expire.

Try Not to Give Discounts

Though you want to give your customers the best experience possible, discounts are not the way to go.

Companies often offer discounts as a way to encourage customers who are on the fence to take the plunge with their product. However, discounts in SaaS cause a high loss of revenue because they compound over time.

For example, let’s suppose you charge $150 a month for your software. If you offer a 10% discount, you’ll miss out on $180 for one customer in a year. While this may not sound too bad, this lost revenue adds up quickly.

If your average lifetime value (LTV) is 7 years, you’ll lose $1,260 per customer that received a discount. If 1,000 of your customers receive this discount, you’ll miss out on $1.26 million over the course of 7 years.

In some cases, offering a discount is sensible. For example, if a large business wants to use your software, you can reel them in with a long-term contract at a discounted rate. This is a great way to generate revenue for years to come.

What About Smaller-Scale Clients?

For mid-sized operations and individual customers, it’s best to limit discounted rates to annual or prepaid plans.

Discounted annual or prepaid revenue isn’t as profitable as monthly recurring revenue (MRR). However, with MRR, several missed payments can be a hassle to deal with.

With annual or prepaid plans, be aware that your monthly cash flow will be affected. Because you’re receiving a year’s worth of payments upfront, you won’t get payment from that customer for a whole other year. Be sure to spend your money appropriately and take prepaid revenue into account when you plan your company’s budget.

Hire a Sales Team

Even if you think you can handle the sales process yourself, it will be beneficial to hire a sales team. A dedicated salesperson can help you navigate the ins and outs of selling SaaS. This way, you can focus on other important business development activities.

Don’t hire the first salesperson you come across. And don’t be cheap either. The cost of a quality salesperson will cover itself, and you’ll be able to generate more profits in the long run.

Don’t risk outsourcing part of your sales to unqualified individuals. You may end up doing more harm than good to your business.

Understand the Sales Process

Even if you hire a specific team to handle the sales process, you should still be aware of how it works.

A fundamental aspect of the sales process is the sales funnel. This is how clients go from being passive viewers of your marketing campaign to paying customers. The parts of the sales funnel are:

  • The top (awareness): Here, clients are exposed to your ads, whether they be on Google, Facebook, Instagram, or other online spots.
  • The middle (interest): At this point, clients land on your website. They’ve clicked through an advertisement to get to your website because they need your product.
  • The bottom (purchase): After researching for themselves, your client has either signed up for a trial or made a final purchase.

Understanding the sales process is crucial. It allows you to:

  • Understand your demographics and build buyer personas
  • Generate leads
  • Collaborate with your company’s marketing department
  • Highlight areas of improvement in your company

Provide a Well-Crafted Product Demo

Your customers want to know what they’re investing in. Take the time to create a concise yet informative product demo. Keep it under 20 minutes and make sure that it explains the value your product has to offer.

If you find it difficult to craft a short demo, it’s time to rethink your target audience and product value. Make sure you know why your product is unique and convey this to your audience.

Focus on Your Existing Customer Base

It’s much more cost-efficient to keep a customer than it is to gain a new one. We recommend focusing your efforts on increasing your current customers’ LTV.

You can evaluate your customers’ needs by:

  • Sending out automated surveys
  • Sending emails
  • Making personal phone calls

With these outreach methods, you can get an idea of what they need. Help them change the plan they’re spending money on every month to one that better suits their preferences. Or, hook them up with a much-needed add-on feature.

Master the Onboarding Process

While you should focus a lot of your resources on upgrading current customers’ plans, you need to know how to handle new clients.

Don’t leave them to fend for themselves. Some businesses have relatively simple software to figure out, while others are more complicated. Determine how much intervention your team should have during a new client’s first few weeks or months.

Failing to have an effective onboarding process can cause higher cancellation rates. Make sure your client wants to stick around. Show them the ins and outs of your software and be ready to step in if your assistance is needed.

Recruit a Reliable Customer Support Team

The frustration that results from software that has gone down is understandable. Businesses may have come to rely on your software to conduct their everyday operations.

As a startup, you may run into functional problems like these early on. You must handle them smoothly. How you deal with issues says a lot about your business’s professionalism.

Be as transparent with your clients as possible. Don’t delay the repair of technical issues, and don’t let them become buried problems that your company will never revisit.

We recommend enlisting a compassionate customer support team. Have these members be on-call at all times and ready to address your clients’ issues.

An attentive and understanding support team will make your clients stick around, even if occasional issues arise in the early stages of your company.

Pay Customers an In-Person Visit

While it’s unrealistic to visit all of your customers in person, you should make the effort to visit the ones in your area. Or, make a detour to visit an important client on your next business trip out of town. During an in-person visit, you can:

  • See your product being implemented in a real-life company, which can quell doubts you have about your product’s design.
  • Learn exactly how your customers are using your software, which can reveal new ways you can market it.
  • Gather both positive and negative feedback. Even if they have a complaint, some clients forget to report bugs or areas of improvement. Conducting an in-person visit will allow them to feel heard and voice their concerns to a listening ear.

Clients will appreciate the thoughtfulness of a personal visit and their view of your company will be heightened.

Reach Out to Recently “Churned” Clients

There’s a big emphasis on “churned” clients in the SaaS industry. Churned clients are those who cancel their subscription.

If a client terminates their subscription, whether it be after a month or a year, don’t let them fade into the background.

It can be difficult to take criticism, but don’t let this stop you from reaching out to churned clients. Ask why they left and what you can do to win them back. Maybe a competitor is offering more features or they found your software to have too many defects. Whatever the reason they left is, you won’t know unless you ask! While they may not answer your phone call or email, it’s worth making the effort to reach out. Feedback from customers, especially those who have left, is invaluable in improving your product and company’s operations as a whole.

Know When to Let a Client Go

Shouldn’t I take on and keep any client that wants my software?

This tip may seem counterproductive to the main goals of growing your business and increasing your ROI.

However, you should know when to let a client go. Not every client is right for your business. If a client is is consistently rude and hard to deal with, you should fire them. The welfare of you and your staff is more important than the business of one ill-mannered client.

A client with an endless amount of complaints uses up a lot of your company’s resources. Because of their complaints, they are likely not getting good use out of your software. Don’t allow them to waste their time and that of the company’s.

They are also more likely to abruptly cancel their subscription and speak poorly of your company. Don’t feel bad about letting an abrasive client go.

There is the argument of “just deal with it, they’re bringing in revenue.” It’s up to you to determine if the client is worth working with. Use your judgment and seek the counsel of your team members if necessary.

You Can Run a Successful SaaS Business, Even as a Startup!

As a new company, it can be easy to get caught up with the internal operations of your industry. While perfecting your software will improve sales, it’s often not enough on its own. Use this guide to improve your SaaS sales process. Elevate your business to the next level by adding a personalized touch to each sale you make.

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