Growing SaaS Companies – Changing Software ‘Sales’ Models

Neil HartleySalesLeave a Comment

software sales models

Here at Domino Digital Marketing we focus on lead generation for B2B tech companies thinking big and our post on B2B digital marketing covers the soup to nuts of creating demand, as well as generating and nurturing leads.

This post is specific to SaaS companies. I was with one of my SaaS clients this morning and they were bemoaning the fact that, having won a major new client, the implementation was stalled and just about ‘dead in the water’. All of that hard marketing and sales work was going to lead to a one year contract, likely without a renewal.

This had me thinking was it really worth it given: the upfront acquisition cost; lack of renewal; limited lifetime customer value; possible reputation damage from a lost customer etc.? Particularly as SaaS pricing models are designed with renewals and multi-year engagements in mind.

It also made me think about how software ‘sales’ models have changed dramatically over the past 30 years or so.

The chart is purely representative of the shift from the sale of on-premise software through SaaS to PaaS and, most recently, RPA. The y-scale and even time axis are not intended to do anything other than represent the general trend.

And that general trend is very definitely from the on-premise software ‘sales’ model led by Sales with ‘branding’ support from Marketing in the form of brochures, PR, logo design etc.; to a SaaS sales model led by Marketing (demand and lead gen) with Sales closing the leads passed to them; to today that still has a heavy dependence on Marketing (and to a much lesser extent Sales) to win the first customers but where company success will be defined by utilisation.

Let’s spend a moment on each:

Sales-led

This is where I started my career with the sale of on-premise software. Given a territory, the sales person was meant to figure out how to make first contact with a prospect, devise an account plan, and coral the whole company’s resources to ensure the deal closed. Multiple opportunities were to be managed with the aid of a rolodex and some form of [individual] process to ensure deals didn’t fall between the cracks.

Marketing-led

With SaaS came the rise of Marketing and the need to create demand online (as well as offline) and to figure out: the best communication channels; how to scale the process; how to nurture leads until they were ready to engage etc. When those leads were ready to engage, they were handed off to Sales. What was an outbound process (Sales-led) became very much inbound and, in many respects, the creativity (and art) of sales people was replaced by a volume/numbers game. The account plan and rolodex were replaced by personas, CRM, and marketing automation.

Utilisation-led

And so to today where utilisation and a frictionless user experience will define success (and failure). Of course, Marketing is still important in creating demand and driving traffic to the product but Sales?

Today, the design of a successful SaaS product is likely to begin with some form of free trial or freemium model. The buyer can experience the product for themselves with the help of an intuitive design, appropriate help tips, chat support, whatever it takes to demonstrate value.

Utilisation reports are generated which are used to keep the buyer on track and surface in-app guidance or out of app messaging. Towards the end of the trial period, the system reminds the user of the end of trial, encourages greater utilisation and ultimately presents the purchase options.

Post-purchase, users have in-app marketing (upgrades, new modules, more users etc.) and the system continues to monitor utilisation which guides communication with users, all with the ultimate aim of maximising lifetime customer value.

Sales? Doesn’t have much of a role. Indeed you could argue that, if you need Sales, the experience isn’t frictionless and that’s where effort needs to be applied.

Marketing? Yes in driving awareness and demand, yes in supporting the utilisation of the product. We’re perhaps at an inflection point that determines whether utilisation is the domain of Marketing or whether the role of Chief Utilisation Officer will be needed to provide the focus and discipline required?

What do you think? Leave us a comment below or send us a private note via our Contact page.

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