• Mike Poledna

How to Avoid SaaS Failure: The Six Critical Components of an Effective Sales Strategy

Updated: Jan 13

The SaaS industry has seen exponential growth in recent years. The SaaS market is predicted to grow by 21.2% over the next 4 years, but all is not well in SaaS-land. SaaS startups have a high failure rate; according to one study, the average lifespan of a SaaS company that grows at just 20% annually is likely less than 3 years! One of the biggest reasons for this is that many SaaS CEOs wait too long before developing their sales strategies - and when they do, they often lack experience or know where to start. This post will provide you with a step-by-step guide on how to build an effective SaaS sales strategy so your company can avoid the dreaded SaaS company graveyard.

If you are like many CEOs of SaaS companies you know that growing sales is the lifeblood of your company yet it's an area you have little experience in. As a result, it can be difficult to know where to start or what should start. After all, the LinkedIn feed is littered with posts from so-called sales experts. With all this information creating a tremendous amount of noise oh, it can make growing sales seem impossible. My goal here is to help simplify the way you think about growing sales so that you can begin to chart your course take action.

Successfully growing sales is like building a house, you need to start with the foundation. In this case, your sales growth foundation is your sales strategy. Now at this point, I don't want you to become overly concerned or worried that building a strategy is going to take too long and that you don't have time for it. That's where the simplifying sales growth comes in. I'm going to share with you the six key components required to build your sales strategy foundation. And rest assured the six key components I'm sharing with you will allow you to build your strategy in hours to just a few days rather than a few weeks or even months.

So what are the six key components that comprise a successful sales growth strategy? They are:

  1. Defining your ideal customer profile

  2. Developing Buyer Personas

  3. Creating Strategic Messaging

  4. Build Your Sales Process

  5. Define Your Sales Growth KPIs and Metrics

  6. Identify and Hire Top Sales Talent

Defining Your Ideal Customer Profile

As a CEO, time is your most valuable asset, so you must ensure that you and your team spend it effectively. This entails concentrating on selling your products and solutions to the customers and buyers who are most likely to purchase them. To do this, you must create your Ideal Customer Profile to determine which ones are most appropriate for you.

What Is An Ideal Customer Profile?

An ideal customer profile (ICP) is a picture of the kind of company that is most likely to want to do business with you and one that is most likely to be loyal and recommends you to others. It should include information such as, how big the company is (revenue and employee headcount), what industry they operate in, what activities they carry out, and why they're interested in purchasing your products and solutions.

An ICP may also contain information about the buyer personas you need to target. In most situations, however, you will want to document personas in a wholly different exercise.

Developing Buyer Personas

I've seen it happen time and time again: a company's marketing team will spend valuable time and resources to create lengthy and accurate buyer personas only for them to go unused. It's unfortunate because the team that would have benefited most from using them is sales.

It's unfortunate too because right now with all the noise in the marketplace, personalized messaging is what's required to get prospects to engage. In chapter 3 we took the time to create ideal customer profiles and now it's time to go a little deeper and create your buyer personas. In this chapter, we're going to cover what a buyer persona is and how you can use them to grow sales.

What Is a Buyer Persona?

A buyer persona is a somewhat fictional character who may purchase your products, services, and solutions. Information about the potential buyer's business goals, as well as demographic data, is included in the persona. It's often based on market research and data from your previous customers when available. Depending on your ideal customer profiles, and the number of products and solutions you provide, you might have one or several personas.

When creating buyer personas, you determine which individuals within your ideal customer would be responsible for making purchasing decisions or even acting as a heavy influencer in the decision-making process.

Knowing who they are, what they're like, and what matters to them allows you to tailor your sales pitch directly to them - and improve the chances of being able to engage and convert them to paying customers. To do so, you'll need to conduct some research of which we detail in the resources accompanying the book, Sales Growth Simplified.

Creating Strategic Messaging

It's important to realize that a variety of communication templates may be utilized to generate sales messaging. My objective in this chapter is to provide you with a simple, straightforward template that has stood the test of time.

Keep in mind that while the final product you produce from completing the activities in this chapter will be sales-oriented messages, you may also use the same template to assist in creating your marketing copy and messages as well.

In order to get started in developing your messaging, you must first determine your:

• Positioning Statement

• Unique Value Proposition (UVP)

• Unique Selling Proposition (USP)

Everyone in the company should know these things. For example, can you and everyone else recite your UVP? Would everyone say the same thing? Does everyone know how to effectively use each in prospect and customer conversations?

Sad to say, I usually find the answers to these questions are “no” because they often have yet to be determined and that’s okay. Every company has to start somewhere.

Build Your Sales Process

There’s one thing that is true about growing sales – it’s never boring.

Working in sales entails some degree of freedom in how you execute your daily responsibilities. When it comes to selling, you must be adaptable and open to change in order to successfully close a deal.

Another fun aspect of sales is that buyers may be fussy, overcautious, impulsive, and even paranoid! That's why salespeople must be creative and adjust their selling approaches to a potential client's demands as well as their whims from time to time.

So, how can something as unstable as this work under a structured plan, you ask?

Well, that’s exactly what I am going to cover here - using research and data (yes, the science of growing sales) to show you how a formal sales process works and how despite all the challenges that come with selling, how it will make you more efficient, effective, and even help you sell faster.

What is a Sales Process?

A sales process is a set of repeatable steps that a salesperson takes to guide a prospective buyer from the early stage of awareness to a closed sale. Typically, a sales process consists of 5-7 steps: Research, Prospecting, Initial Discovery, Demonstration, Negotiation, Closing, and Follow-up.

Why You Need a Sales Process

Higher Conversion Rates

The conversion rate of your business is influenced by how you have structured and managed your sales process. You can make your sales process more efficient and add additional resources to help your team close more deals from their prospects and leads by fully comprehending it. A well-engineered selling approach will eliminate client objections before they become an issue, establishing trust in the buyer so that he or she feels safe enough to buy from you.

Bigger Deals

Your sales team must have a thorough knowledge of your company's sales process since this will allow them to determine which leads to nurture and which to ignore. This will assist them in working on prospects and possibilities that may result in greater value and revenue for the company. In addition, a well-designed sales process can attract bigger and more lucrative transactions because it provides everyone with the tools they need to manage these high-value purchases.

Less Time

Salespeople put in a tremendous amount of time attempting to close deals that will never materialize. A proper sales process will help salespeople and sales leaders identify bad-fit customers and deals early on. One of the most critical activities your sales staff can do is qualify prospects to determine whether they are a good fit as customers and, therefore, worth your time and energy.

Tips: Make sure that your salespeople are aware of the decision-making process of your ideal customers and personas to make sure you don’t waste time.

Before You Start

The creation of a sales process is not a straight line. You may find that it will take you a couple of attempts to get it right. It's highly likely that you will build your initial sales process, test it for a quarter as you build a sales pipeline, and close a few deals before you are able to truly validate or invalidate the work you've done. Think of building your sales process just as you have your software - build, test, iterate.

Define Your Sales Growth KPIs and Metrics

“If you can't measure it, you can't manage it.” Peter Drucker

If you want to grow sales, you must be able to measure sales performance indicators that will help your company achieve its goals. By doing so, you'll provide instant alignment to the sales floor if you empower your staff with data because everyone will know exactly where they stand and what is required.

Plus, you'll have the opportunity to set the appropriate performance expectations, hold individuals accountable for their numbers, and know when to make course corrections in the times when your team is off track. That level of openness is an incredibly motivating factor. According to Sales Hacker's State of Sales Performance Report, 32% of salespeople said that seeing data is more energizing than anything else including incentive programs.

What Are Sales Metrics and Sales KPIs?

Metrics are data used for tracking a company's sales performance. They can also be used to measure your reps' activity, the number and quality of deals closed, or the amount of money you're making. They may be used to set strategy, identify present performance, or keep track of pipeline issues. Think of metrics as micro performance indicators.

The words "metric" and "KPI" are frequently confused with each other. KPIs are metrics designated as critical to evaluating business success and can be utilized to assess overall performance. Think of KPIs as the macro performance indicators of your sales team and even your company overall.

Sales performance metrics are crucial, but it's up to you to choose which ones truly reflect performance — i.e., which numbers, as they change, are tied to more deals closed and more significant revenue earned? Those are the sales KPIs that will move the needle for you. If you want to be a metrics-driven organization, those are the metrics you must focus on across your entire sales process.

Each company must establish its own KPIs. No one can tell you, the CEO, exactly which ones to use. This is because every company is different. Only you know what numbers are the most accurate indicators of your success or failure. A good KPI dashboard, for example, will include a combination of "leading" and "lagging" indicators, which tell you whether you're on track to meet your goals and whether you did or not.

Identify and Hire Top Sales Talent

Have you ever made a bad hiring decision? What went wrong, and why?

At the time of this writing, our country is experiencing what is being called the Great Resignation. Employees of all types are re-evaluating their lives personally and professionally to determine how they want to live going forward. Perhaps nowhere else is this felt more than with sales teams. The number of available sales jobs on at any given moment is 50% higher than it was two years ago. What does this mean? It means it’s a seller's market. I'm not referring to the seller’s market as we think of it in real estate terms. Instead, I'm talking about a seller's market since salespeople now have the upper hand.

CEOs be warned. Just because there is a flood of candidates in the market doesn't mean they're all qualified to become part of your company. It's important to remember that during the interview process, salespeople are frequently at their best. This creates a big problem because salespeople who look good on paper and say all the right things during the interview can fail when they're called upon to perform on the big stage.

What is the Impact of Making a Bad Hiring Decision?

Here’s something to keep in mind the next time you hire a sales rep. As a rule of thumb, a bad hiring decision costs you three times the employee's annual salary. Now you may scoff at this number, but here's what you need to realize. You're not only losing money spent on the salary, but you're also losing out on potential sales. There are the sales you lose while you’re busy hiring or replacing a sales rep. Then there are the sales you miss out on while your new hire is onboarding and ramping up. And don’t forget, you will lose out on potential sales they will inevitably strike out on while they are in training and still ramping up. This does not even consider what happens after their 90-day probationary period is over, which usually results in termination if they do indeed turn out to be a bad hire. It can be hard to pull the trigger on releasing a bad hire and often results in an exit process taking far longer than it should.

The bad news is the competition for rockstar sales reps has never been greater. The good news is you can be confident in your ability to build a high-performing sales team with the right recruiting and selection process in place.

Building a successful SaaS company is hard. The odds of failing are high and it creates a lot of pressure on CEOs who know they need to grow sales quickly. But how? To address this question I've written, Sales Growth Simplified, a step-by-step guide for how to build and implement a SaaS sales growth strategy in days, not months. You can check it out here.

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