If you run a SaaS business, you have the potential to scale quickly and efficiently, with margins that most business models can only dream of.
But mistakes in your sales process could sabotage your growth.
When you make SaaS sales mistakes, what’s the actual effect on your business?
The first, and obvious, result is fewer sales. If your processes are ineffective, you’re going to sell your product less effectively.
- target people outside of your audience
- don’t effectively use information about competitors in your pitch
- try to sell the wrong features
—you’re going to have lower revenue.
The second result? High churn.
How do you define churn? Churn is the rate or percentage of customers who stop using your product or service within a given time frame. You might define churn differently depending on the period of time in question.
SaaS sales mistakes decrease sales numbers, but even those decreased numbers seem higher than they really are—because many of them will churn.
If you’re selling to the wrong people or overpromising, you’ll wind up closing deals that quickly churn out—because they weren’t the right fit for your product in the first place.
Improving your sales strategy can result in lower churn rates, higher conversion rates, and more recurring revenue.
Here are eight SaaS sales mistakes you should stop making.
1. Products don’t sell themselves
The idea that a good product sells itself is an enduring myth in the SaaS industry.
Yes, having a strong SaaS product can make sales easier. It makes it easier to demonstrate the benefits of a product, creates more satisfied customers (who don’t churn, and even expand their relationship with you), and generates leads through word of mouth.
All of those are strong benefits—but they can’t replace your sales team.
If you have a great product, but your target customer
- doesn’t know how to use it
- can’t see how it’s better than what they have
- doesn’t believe that it’s great
—you don’t have sales.
A great product is a huge asset that can make SaaS sales easier (and is good for growth). But it isn’t enough on its own.
2. Thinking you’re too small to care about metrics
Early-stage startups sometimes fall into the trap of not measuring because it’s “too early for that.” They want to focus on growth.
Rapid growth and scalability are big SaaS benefits. But blind growth is a dangerous game.
If you fail to pay attention to the metrics, you’ll make some common sales and marketing mistakes.
Without understanding your key marketing and sales metrics, you can’t be sure whether your growth will be sustainable.
You won’t know which prospects wind up being your highest-value customers—which in-turn means you waste a lot of your sales energy on the wrong leads.
Startup metrics are difficult to figure out, but you do need to figure them out eventually. Measuring them early helps to return better results—and saves you a lot of headache down the line.
3. Measuring everything—but not knowing which metrics matter
The other side of the measurement coin is measuring too much—but not extracting any actionable insights from your measurement.
Your website’s time on page has increased by 30 percent in the last 2 months—does that matter?
I couldn’t say. What is that metric really telling you?
- time on page
- social media followers
- total traffic
- email click through rate
- number of installed users
–all have their place. They all measure something that leads to actionable insights.
The problem is when you use metrics that don’t match up well to your goals.
If you’re in SaaS sales, is it more important to know your website’s time on page, or is it more important to know the characteristics of users that become outstanding accounts?
As a salesperson, would you care more that your total traffic numbers are increasing—or which specific pages a prospect was viewing when they requested a demo?
Which metrics you choose depends on your business and product. But you want to make sure that you’re measuring things that ultimately relate back to your goals.
Check out our podcast with Scott Desgrosseilliers of Wicked Reports to learn the three most important metrics businesses should measure.
4. Guessing at customer information
You need to know who your customers are. You also need to know who your best customers are.
- What problems are your customers trying to solve with your platform?
- What features are they most interested in?
- How tech-savvy are they—will they need help getting started or be intimidated by initial setup?
- And of course—how much are they willing to pay?
This type of customer information—and other similar info—is extremely valuable to you as a salesperson. Segmenting your prospects by this information leads to all sorts of actionable insights, such as:
- Telling you which prospects would benefit from proactive outreach
- Showing you where to focus your efforts to land the biggest accounts
- Teaching you which features to emphasize in your demos
The impact of segmentation can’t be overestimated. If you aren’t collecting and using this kind of information already—you should be.
5. Not asking about prospects’ current platform
In a perfect world, everyone coming to your sales team would be choosing from only one option.
Of course, in most markets there are multiple companies that provide solutions to your customers’ problems. Although you might get some leads that are looking into your type of product for the first time, a lot of them will already be using a competitor.
That’s valuable information for your sales team.
If a prospect is already using a competitor, you have an opportunity to steal some market share. You can also tailor your demo to appeal to the problems your platform solves better than your competition.
6. Overpromising (and mismatched sales compensation)
Overpromising leads to:
- dissatisfied customers
- poor reputation
- high churn rate
Misrepresenting what your platform is capable of, or using edge cases of success as examples for your entire user base causes problems down the line.
If that seems obvious on its own, consider this—what are the causes of exaggerated promises?
One often overlooked cause is the compensation structure of your sales team. If your sales team is compensated for closing deals—whether or not those deals churn quickly—you’ll wind up with a sales team making intense claims about your product as part of their personal selling process.
Adjust your compensation structure and make sure your sales team gets strong training in your platform. It helps to reduce overpromising.
7. Ignoring expansion revenue and retention
As legendary copywriter Gary Halbert wrote in The Boron Letters, “the best list of all is your own customer list!”
In many cases, your existing customers are your most valuable source of new revenue. After all, they’ve proven that they are in your market and interested in what you have to offer.
Whether the responsibility for generating expansion revenue lies with sales teams or dedicated “customer success” teams—neglecting your current customers is a major SaaS sales mistake than severely limits your growth.
8. Not studying lost customers
What happens when you don’t close a sale?
If you let cold leads lie, you’re leaving valuable insights behind.
Your lost deals are valuable sources of information for your sales team.
Are you emphasizing the wrong features? Targeting the wrong audience? Was the prospect not convinced that you could solve their problem?
Whatever the case may be, knowing why prospects choose a different option gives you information that you can use to refine your sales processes.
Conclusion: Overcoming SaaS sales mistakes
There are a variety of approaches that reasonably work for a SaaS business. Whether you go for harder sales or a softer strategy, all effective approaches have a few things in common.
- You know who your customers are—and where your highest value customers come from
- You know the most important pain points—and how your platform solves them
- You have systems in place to measure success and make adjustments
Nailing down your sales strategy helps you decrease churn and convert more users.