April 5, 2017 In our previous post, we offered ‘4 Best Practices’ for how to sell SaaS technology products to enterprises throughout Europe—from choosing the right country as your entry point, to how to act like a local in each territory. In this post, we’ll talk about how to hire and manage the sales teams to deliver stellar results. Sales teams that are accustomed to typical software license deals often take an expenses-be-damned approach to making the sale. However, a SaaS license does not generate the same kind of up-front fees, so a more measured approach is needed to keep customer acquisition costs in line with revenue ramp-up.
Below we talk about how to build the right sales team to go after SaaS sales, and how to keep them motivated.
Identifying the Right Talent
Sales teams are usually built either from the bottom-up or from the top-down. Bottoms-up teams hire young account managers and promote from within; top-down teams find a VP of Sales who then attracts a senior team around them.Hiring large teams of entry-level reps tends to be expensive-per-dollar-booked, because each rep books a smaller quota. Less senior teams also require more training. On the other hand, you can recruit a top VP of Sales who will bring with them a team of senior account exec’s and a spreadsheet of enterprise buyer relationships—but they will be more expensive.The SaaS business model is a relatively new invention (from the late 90s), so if you can find an experienced VP of Sales who knows SaaS, hire them! That said, it’s rare for a startup to have the resources to attract such an experienced sales executive, in particular when launching in foreign markets.
Setting Commission Expectations
Because SaaS products are sold on a subscription model, the value of a deal is difficult to measure up front and therefore your justified cost-per lead and cost-per-acquisition is hard to nail down as well. You need to factor in sales, the sales cycle time, renewal rates, and other factors that are beyond the control of the initial salesperson. Due to the opacity in the up-front value of the SaaS sale, it’s equally imprecise to put an exact value of a sales person’s contribution. A fair and objective formula for compensation is to value the deal based on a formula based on recurring revenue. You might also want to factor in the total acquisition costs and expected lifetime customer value when setting goals.In addition to gross sales goals, keep in mind that improving the sales conversion rates at any stage of the cycle goes straight to top line revenue. In a high volume sales operation like SaaS sales, you can’t afford to waste time on window shoppers, or custom deployment requirements, or highly competitive bake-offs. Increasing conversion ratios requires sales reps to properly quality opportunities, then provide timely feedback about a prospect’s true level of commitment.
Accelerating Revenue (Leverage Through Marketing)
Successful SaaS sales executives can’t do this alone. Outbound calling and in-the-field meetings can quickly mushroom acquisition costs by sucking up too much sales investment in relation to too little commitment from prospects. Instead, SaaS price points demand that sales teams have a tight working relationship with marketing.Marketing provides leverage for your sales investments.By providing leads in bulk (vs. sales reps creating leads one-at-a-time), and automatically (digitally) qualifying and nurturing leads until precisely the point that they are ready to make a decision, sales teams can leverage marketing to scale their own efforts and accelerate their revenues. Clients often implement these marketing strategies in their home markets, but then forget or delay marketing when expanding to new countries, and this creates a huge impediment to success.For our clients at SFE, we offer an ‘Accelerated Lead-Gen’ module where we take responsibility for finding and qualifying leads for sales, using the latest digital marketing technologies and inbound-marketing techniques.
The skills needed to deliver on a $1 million quota when the average SaaS deal value is just $10K are different from the skills required to land a single $1M deal: your sales reps need the stamina (and support) to deliver 100 deals vs 1.Public acknowledgement of sales wins, creative perks, and team-building activities can make a big difference in performance—as can ongoing mentoring and coaching. Especially for international sales, sending a team off to figure it out for themselves (even an experienced team) will lead to frustration. Sales staff members need to be backed by quality leads, efficient internal processes, and time and attention from senior management.
Sales as ‘Service Delivery System’
The SaaS software model presumes large scale economies—volume and speed—to make low subscription-based pricing work. Likewise a SaaS sales operation needs to function with an efficiency that can deliver sales within optimal cost parameters. It requires a capable front-line sales team, supported by an efficient marketing process and lead hand-off, and a management infrastructure that can monitor, guide, and mentor.SFE has honed its SaaS sales experience across 200 companies in 28 different countries, and has developed its ‘Accelerated Sales Delivery’ system to bring those efficiencies to you.If your SaaS company is considering the daunting challenge of building up sales teams to crack open international markets, please consider the services of SFE.
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