5 different SaaS sales models
Choosing the right model for your SaaS sales is the key to deciding how many sales reps you need and how best for them to work with your customers, including the all-important close. Getting the right model depends on the nature of your SaaS product.
1. Customer self-service model
This product-led model is a good fit for selling lower-priced, high-volume SaaS (for example, a Spotify subscription or WordPress theme). The self-service model works best with software that’s easy to use and doesn’t involve complex business processes.
To attract customers, the self-service model often leverages free trials or a freemium model (such as with Asana or MailChimp). Users tend to be individuals who sign up online themselves. Most of the time, having a full sales team is unnecessary for the self-service model.
2. Transactional sales model
Most B2B SaaS sales happen via a sales-led model. The most common sales-led model is transactional sales, which involves selling software to SMEs, usually over the phone. Software at this level costs more, so buyers will need more personalized service – meaning you’ll need a sales team. Sales reps normally have a certain level of autonomy, such as the ability to offer discounts and guide customers toward tiered pricing models. Challenges include the need to focus on the highest quality leads, to maximize salesperson efficiency.
3. Enterprise sales model
Enterprise sales is the second sales-led model, dealing with software sold at a high price and low volumes, such as social listening platforms or data analytics tools. Because these SaaS products are highly specialized and large-scale, enterprise sales reps usually need to spend substantial time with their prospects. During this long sales cycle, reps will provide product demos, meet with key stakeholders, and answer a wide variety of questions, many of them technical in nature.
Enterprise SaaS sales reps need to acquire extensive technical knowledge of the product. Typically, they work closely with engineers and product marketers to gather the information needed to close such high-value deals.
Target audiences for enterprise sales usually consist of large companies with sufficient budgets to afford the high price of niche SaaS solutions. One major challenge is the long sales cycle, which can lead to significant opportunity costs if the sale ends up lost.
4. Trials and demos
Many SaaS businesses (both B2B and B2C) offer a free trial at the beginning of the sales process. A free trial is a fantastic way to attract new customers, as it allows them to understand all the benefits of your product. But you'll need a strategic approach to make the free trial model worthwhile.
For starters, the length of the trial should vary according to the complexity of your product. A seven-day trial is fine for a simple or lower-cost product (e.g., a streaming service or fitness subscription), but enterprise business software normally requires a more substantial 30-day trial period.
During a longer trial, it’s also a great idea to check in with your prospects regularly. This helps to gather their feedback while also keeping them engaged with the product.
SaaS products often have an extensive feature set, so it's important not to overwhelm the buyer when conducting a demo. Your sales rep should start by researching the buyer so they can tailor the demo to solve specific problems. When scenarios feel directly relevant, prospects will more easily understand how the software can help them.
5. Monthly vs. annual contracts
Most SaaS subscriptions offer monthly and annual contracts. But how do they differ when it comes to sales?
According to Jason Lemkin of Saastr, SaaS businesses should always let the customer choose whether they prefer to pay monthly or annually. For small businesses and individuals, that often means taking the monthly option. But annual contracts are better for SaaS businesses, as they reduce the chance of churn while also being great for cash flow.
If small businesses make up most of your customer base, then you should offer a monthly contract option. On the other hand, enterprise clients usually prefer to pay annually, because they already have the budget, and it's a headache to reconcile monthly invoices.
The key takeaway: tailor your plan types to your target audience. If in doubt, offer both options.