There is a certain analogy between hunting animals and using a specific SaaS sales model. There are primarily three kinds of strategies you can use for choosing the perfect SaaS sales model. Hesitation in either of the two activities can land one in a dangerous spot. We don’t want that and you definitely don’t want that. So here’s a checklist that might help you decide your SaaS sales model.
Self-serve model: Hunting flies and mice
This kind of model requires one to use a smooth running product combined with the high volume, velocity and a low-cost lead generation tool. It is important to note that the Annual Contract Value in this model can be somewhere between $1 and $1000. This model of SaaS sales prioritizes on optimization of every level of customer experience. Automation is implemented as much as possible whether it is the customer’s visit from signup to trial and even trial to conversion. Here are the questions you can ask yourself to see if this is the right model for you.
- Market: Does your marketing have enough targeted customers to actually pay between $1 and $1000 every year? Use this keeping in mind your targeted ARR
- Team: Ask yourself if your foundation of the team is strongly based on the product or/and is design oriented?
- Product: Is your product having a strong viral loop? Is your user onboarding frictionless? Also, if your product is ready to be used or if it requires setting up first?
- Lead generation: Is your lead generation tool/service low cost and having a high volume?
- Sales: Is it possible for the customer to easily understand the value of the proposed amount or value? Also, is your process from trial to conversion?
- Customer support: Is your customer support highly automated?
Transactional: Hunting rabbits and deer
This is a hybrid model of SaaS sales. As the requirements for a transactional model are pretty high, it is okay to invest more in acquisition because of the higher number of ACV which is usually more than $3000 in this case. Use an inside sales team for product demonstrations and closing up deals. Products that have a high expansion potential are perfect for this kind of model. This is because the expansion of account requires proactive management that can be financed in this model.
- Market: Does the market being targeted even have enough number of customers to pay north of $3000 per year?
- Team: Is the founding team oriented towards product and marketing oriented?
- Product: Is your product quantity and quality high enough to justify its price of over $3000 per year? Will it be requiring integration with the customer’s existing stack?
- Lead Generation: Is there a high volume lead generation tool or services that you have?
- Sales: Check if your customers are even ready to fix to a yearly plan and if the product even has a high expansion potential to justify the costs?
- Customer Support: Will your product be needing a dedicated customer support team or professionals?
Enterprise: Hunting Elephants and Whales
This model is targeted towards the big number and for the big leagues. The enterprise SaaS model is oriented towards much longer sales cycles, and even requiring an enterprise-grade product. Features like SLAs, security guarantees, and an exceptional and costly customer support service are required for an enterprise-grade product. It is impractical and not a good choice to start with this model for a lot many SaaS users and founders. Use this model when you have the capacity to do so.
- Market: Is there enough customer following and number for your product to justify and afford the $100k per year?
- Team: Is your founding team ready to take on an enterprise model and experienced enough for the same?
- Product: Is your product even enterprise ready?
- Sales: Would it be possible to get enterprise sales talents?
- Support: Will it be feasible to build and support enterprise-grade customer support and account management teams?
These SaaS sales models depend entirely on your budget, the company ability and requirements to handle such large or small requirements. Each model has its own variations and limits and you can decide the one to go about using the given questions. Ask yourself these questions if you think they help you in clarifying the doubts regarding the sales SaaS model that you need for your company or organization. It is much like the animals or the size of animals you want to hunt before you actually head out into the jungle to do so. The same is applicable for a SaaS business sales model. To be sure of what kind of issues or requirements you would need and what the target audience (metaphorically similar to the hunted animal) is like, you need to anticipate and analyze and self-analyze anything that could be required at a later stage. Sure, with the business expansion and the expansion potential of the product, you got to be sure about how much to invest and what tools you would be needing. At later stages, one can always progress and level up the strategies. There are so many people who end up choosing the wrong SaaS model because of trying to lay a wider net than required or a smaller net than required. The customer will definitely feel the difference between the services available between the different SaaS models and the same applies to your vendors and possible partners and clients.
Being practical and not trying to over or underachieve in this field is the way to having a successful SaaS sales model in place. The same applies to generally any business model you might choose for other services. Automation and seamless execution of service without errors ensure the audience is going to return and stay customers (in the net, analogically) and not go away to other places looking for a better service.