No matter what verticals you sell into, selling software is rapidly changing from a major up-front cost to a subscription-based software-as-a-service (SaaS) model. Suddenly, investing in bottom line-boosting technology is more affordable.
Matching software performance to business needs becomes more of a factor than cost, which is a great customer benefit. But how does recurring revenue change the way software is sold?
A new breed of sales rep
Successful subscription sales businesses are shining examples of what the Harvard Business Review calls “the best business model in the world”: recurring revenue, low churn, often with cash due before services are rendered. For software companies, the potential is huge. It’s a model that can expand your universe of potential customers—and with some kinds of software sales, the cost to add an additional customer approaches zero at scale.
The model does, however, demand a change in how sales reps work. No longer are they selling a customer, walking away and selling another one. When your revenue and commissions involve smaller amounts up front—typically one year annual contract value (ACV)—keeping customers sold becomes an absolutely critical, integral part of modern software sales.
Subscription selling changes sales team compensation, typically from base plus a massive bonus to base, a small bonus and a residual commission that’s predicated on keeping customers sold. To be successful in a SaaS scenario, sales reps need to change not only their compensation expectations but also the way they sell, which can be difficult for reps used to the traditional sales model. The implication for sales operations leaders is a shift in sales training and enablement.
Here are 4 standout qualities of great SaaS salespeople:
- Understanding technology
While a traditional sales rep can get away with knowing not much more than his or her own product’s tech specs, SaaS reps need to understand how the product complements other technology in customers’ software stacks. Tech may not be a rep’s passion, but some fluency is required.
2. Ensuring a good customer fit
With traditional sales, so much of the compensation is front-loaded that sales reps can get away with selling a solution to a customer who is not quite the right fit, or over-promising on deliverables. Great SaaS reps know that an imperfect fit can hurt the business, since customers churning before the end of the payback period results in a net financial loss.
3. Holding the line on price
In traditional sales, discounting is a useful tool, especially if ensuing integration or consulting services will realize a big profit, or there is a reasonable expectation of selling more. With SaaS, discounts haunt you month after month, for the life of the contract. Great SaaS reps will hold the line on price, steering prospects from numbers-based to value-based negotiation. If the price is right and the value can be explained in a compelling fashion, the product will sell.
4. Mastering the inside sales experience
Modern software sales reps may never meet their customers. The smaller the upfront cost and the simpler the integration, the less need there tends to be for in-person meetings. Great SaaS reps are not only compelling in person, but also compelling via email, telephone and video chat.
To find out how Obero can help you to better manage the transition to SaaS sales and win big for your company, register for a demo of Obero SPM.