What Sales Model is Right for SaaS?
At Pilvi we have met dozens of founders and those responsible for sales in SaaS. These discussions have given us a clear picture of the issues that are important to online sales. The questions have raised concern with management at SaaS companies, and for good reason, as online sales are the best (and only) way to create hyper fast, super-growth.
The sales models that best suit SaaS can be summarized by the following three types: online sales, inside sales and solution sales. Choosing the best sales model for your SaaS depends on the target group, the product, and to some extent about your organization and its capabilities. The company’s developmental phase also affects the choice of a suitable sales model.
Next, we present a brief description of the three most common sales models. There are also a number of variations and combinations of these sales models:
1) Online sales – sales are mainly through a highly automated subscription channel via web pages. The customer chooses the product, makes the order, chooses the payment method and receives the information for use of the service. They are then directed to the SaaS-onboarding process. Online sales are buyer heavy, i.e. the buyer independently makes purchasing decisions and the sales interface is a largely well-functioning passive implementer.
2) Inside Sales – Sales are triggered via contact through the web or by contacting sales. In remote sales, the customer is sold to over the phone or through a virtual meeting. Inside sales are suitable for products that are somewhat more complex or require more than one person’s decision-making within the organization. In inside sales, marketing and productization must be fairly strong and well-designed.
3) Solution Sales – a traditional way to sell applications especially to large companies. The company may only have dozens of customers, all of whom are you are heavily investing sales hours in to – including after the first sale. Behind the sales of a vendor-driven company you’ll often find a key account manager (Key Account Management).
Unfortunately, many SaaS companies are using solution sales models even for small businesses, and for products with an annual contract value (ACV) of less than 10K €. In the early stages of your company, this is also permissible and mandatory, in order to gain reference cases and Proof of Concept (PoC) validation from the customers.
The combination of two sales models (a hybrid sales model) is often the most effective solution for SaaS. In this case, small customers are directed to a self-service/inside sales channel, and larger customers are handled via solution sales as necessary.
The boundaries of sales model are somewhat blurred. In many cases, a company has different products (or product versions of different levels) that are sold using different sales models. This is the correct approach as to establish how customers wish to deal with you as the seller.
Online sales are the most scalable. Solution sales are the easiest to start with and provide the deepest customer contact, that is, it provides you with information about customers and the market. The growth of a SaaS should be based on online and/or inside sales and you should start selling solutions at the prototyping stage. Developing online sales will take from a year to two years and often involves much testing and experimenting as well as a large investment in marketing.
- The way you sell now or succeed in selling now is not necessarily the right sales model for growth.
- Choose a sales model which suits your customers, product, and your own level of business maturity.
- Online sales are the most effective way to sell. However, its role can be also supportive of other models. Enterprise (KAM) sales benefits are lower.