Following the success of Salesforce over 20 years ago, numerous companies have been offering SaaS solutions for various business functions. The market also readily responded to these new initiatives as software deployment time was reduced from several weeks to just a few minutes in the SaaS model. Apart from the reduced installation hassles, SaaS vendors can make feature updates, bug fixes and security updates on the fly.
With the entry of many new start-ups and established companies looking for newer ways to capitalize on the growth of SaaS products, the application services market is now expected to reach $113.1 billion in 2021, up by almost twice from the 2017 revenues of $58.8 billion, according to a Gartner study.
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The number of SaaS products increased from 500 to 8500 between 2007 and 2017 and during the same period, every SaaS startup faced competition from nine other firms competing in the same segment. Given this competitive scenario, let’s see how, as a SaaS vendor, you can capitalize on the potential growth that the cloud industry is set to offer. The SaaS market is a tough nut to crack and it requires a different selling approach when compared with on-premises software solutions. You should be prepared for longer sales cycles and provide various buying options for your buyers.
When we talk about sales, we have to look at the conversion rates. Research shows that the average conversion rate for the SaaS industry is around 7% and only 25% of free trial signups convert as paid customers. If your conversion rate is below these benchmark figures, don’t worry, you can follow these steps to improve your conversions significantly.
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For any SaaS product, the user would be interested to gain firsthand experience on how the software works before committing long-term. Research shows that a 14-day trial period is ideal for the user to reach a decision. You should immediately follow up with your customer after the initial sign up with a phone call to find out more about their needs and share information on product features to suit their requirements.
Low cost SaaS products see a huge volume of sign-ups and it may be cost prohibitive for the sales team to follow up with each customer over the phone. If your annual revenue per user is less than $5000, then your business needs to operate on a self-service model without touch points from your sales team. Seamless activity-based email drip automation holds the key to nurture your prospect till they decide to stick with the software.
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Make sure that you understand your customer needs before you organize the demo. The demo should be customized to show how the software meets their needs within the first 15 minutes. These days everybody has a short attention span. Focus your entire demo on how your product can save them money, improve their business operations and boost their revenues.
Your sales team must be fully aware of your competitors’ products and their pricing strategies. To survive in a SaaS market, the prices have to be very competitive. Also your sales team needs proper training to impress upon your customer the value of your solution by comparing your features with that of your competitors and highlighting the USP of your product. If needed offer discounts to close the deal.
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Ideally, you should be calling your customer only if the annual order value is more than $5,000. The margins should be high enough to justify in person follow ups. For these high-value products, the sales cycles are a bit longer and regular emails and follow-ups are required until the customer signs up. Whether you choose to send an email or call them, it should not exceed 2 or 3 in a month.
In a customer journey, as a salesperson, you will have multiple interactions with each prospective customer over a period of time. You may send mails; share information through links and attachments; answer their queries in chat etc. It is this ‘context’ that equips you to act and engage with your prospect holistically till he becomes your customer.
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In the above example, as a salesperson, you can organize the threads (context) ‘customer-wise’ or ‘territory-wise’ based on your preference. The end result is that you are never lost! So whatever be the mode of interaction with your customer, missed sales opportunities will become a thing of the past. It doesn’t just stop with that. Threads give you a single view of your customer journey, creating more opportunities for ‘up-selling’ and ‘cross-selling’ later.
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While these tips will help you close more deals and achieve your revenue targets, never forget that sales is all about relationship building. Ensure that each and every customer of yours is assigned a success manager who can handhold them till they derive all the benefits that your product offers.