What do you hire a software as a service (SaaS) sales team for? To get sales, obviously.
But if your sales team isn’t performing up to snuff, it’s a sign you need to take action pronto. After all, you’re probably paying your sales team a healthy SaaS sales salary—especially when you factor in commissions—so you’ll want to get your money’s worth.
Some symptoms of a struggling SaaS sales team are easy to spot. For example, you may have set an enterprise sales quota—you’ll know you have a problem if your team’s deal numbers are nowhere near hitting it.
However, some other symptoms can be more insidious. Don’t let them sneak up on you and cause irreparable harm to your business while you remain blissfully unaware.
Regardless of whether you’re monitoring the performance of a new SaaS sales rep hire or of your sales team as a whole, alarm bells should immediately start going off if you see questionable SaaS sales conduct such as these:
1. Chasing every lead with the same amount of effort
Not all leads are created equally.
- Some leads may have already done their homework and convinced themselves your product is right for them, and will hence be easy to close.
- Other leads may be higher up in the sales funnel and need more nurturing before they see the value in your SaaS products.
- Meanwhile, some leads may have fallen into the sales funnel by accident and have no intent to purchase anything from anyone at all.
If your sales team is pursuing every single one of these potential customers as part of the SaaS sales cycle, and with the same degree of effort, then this is a sure-fire recipe for inefficient resource usage when selling SaaS.
“Inexperienced sales teams feel the pressure to contact every lead to maximize conversions, no matter how qualified they are,” shares Samuel Devyver, CEO of sexual harassment compliance training platform EasyLlama.
“Unfortunately, contacting every lead causes sales burnout and doesn’t make the best use of your time.”
Instead, Devyver recommends adopting a lead scoring formula that’s been modeled to fit your business priorities. This helps sales teams establish which leads have higher conversion potential—and filter out leads that don’t—so they can optimize their efforts for maximum close rates.
“Sales teams need to work smarter, not harder.”
2. Being unable to get your product’s value proposition across
Ever played the Telephone game? It can be funny hearing the message get garbled up across players. However, it is no laughing matter if you find your sales team playing out a real-life version of Telephone when talking to leads.
This could happen where your sales team:
- doesn’t know the value of your product that it should be communicating to leads, and/or
- can’t communicate such value proposition accurately during the SaaS sales process.
Can your leads make an informed purchase decision after that? Probably not.
While security platform Sysdig’s leads loved the platform’s technology, Sysdig’s sales team had difficulty converting such love into actual sales.
These leads couldn’t see how the platform’s tools would benefit their business, and therefore couldn’t justify signing up. Over time, deals withered and died. It was a blow to Sysdig, which had spent time and effort to nurture leads only to fail to capture the desired business.
To fix its “broken telephone lines,” Sysdig took steps to:
- identify the value in its product,
- align such value with its customers’ pain points, and
- train its sales team on communicating this value to leads.
The efforts to improve its sales techniques paid off immensely, with the business more than doubling its conversion rates. Sysdig’s gross and net retention revenue also “skyrocketed” as its customer success team used the same value framework to help customers succeed with the platform after signing up. (While not a sales role, your customer success team at your SAAS business is often the key to upselling current customers – especially if your web-based software operates on a self-service model.)
3. Signing bad-fit SaaS customers just for the sake of closing
After speaking with a lead for some time, your SaaS sales reps might realize the lead isn’t the best fit for your product. But they’re inches away from a deal (and a commission), so what might they do?
They heed the siren’s call and sign the customer anyway.
As a result, their performance looks good—at least until the customer leaves due to dissatisfaction with your product before you’ve recouped your customer acquisition costs (CAC), causing you to have lost money by signing them.
Over at customer success platform Heyook, the co-founders had managed to bootstrap the business to $1 million in revenue in just two years. However, they subsequently announced that they were “starting all over again.”
While the business looked successful on the outside, it had churned and burned customers “just to grab money.” Of Heyook’s 400 paid existing customers, 70% of them were inactive.
Heyook co-founder Qi He acknowledged that such signing on of bad-fit customers had only hurt the business’s reputation and “cost us much more than we gain[ed].” Heyook has since been revamped into Intercom customer health score platform Alvis.
Preventing bad-fit customers from taking a toll on your business calls for training your sales reps to spot and avoid signing such customers. As a greater incentive for your sales team to close only customers in your business’s target audience, you can also tie sales bonuses to revenue and Net Promoter Score, as SaaStr’s Jason Lemkin suggests.
4. High customer churn rate
While churn can certainly indicate issues in other parts of your service (like customer support, platform functionality or pricing model), it can also be a huge indicator that your sales team is closing deals with the wrong clients – or not setting the client up for success during the sales process. (IE Your sales representative told the client that your software had a certain functionality that it definitely doesn’t have.)
If it’s the wrong clients, see point 3 to fix. However, if it’s that your sales team is not setting the client up for success? The quickest way to fix this is to provide training to the team on what your product actually does and being careful of how you incentive upsells to prevent straight up lying.
5. Not tracking (the right) metrics
What gets measured gets improved. If your sales team simply focuses on closing new customers and doesn’t track its performance, then it has no way of knowing how it’s doing and whether anything needs to be done differently.
However, tracking the right SaaS sales metrics goes beyond simply counting the number of deals closed. As part of the SaaS sales strategy, your sales team should be keeping an eye on key metrics such as:
- monthly recurring revenue,
- customer lifetime value, and
- customer acquisition cost.
These figures will help your sales team understand whether it’s bringing in valuable business, as opposed to pursuing and signing bad-fit customers (see points #1 and #3).
It might also be worthwhile to track joint key performance indicators (KPIs) with your marketing team.
After all, marketing is in charge of generating the leads that sales goes on to qualify and convert. By setting joint KPIs for your marketing and sales teams, you can evaluate—and then enhance—the effectiveness of your customer acquisition efforts across the entire buyer funnel.
Through establishing joint KPIs for marketing and sales and taking other measures to align both teams, customer relationship management platform SuperOffice was able to increase its revenue by 34%.
6. Low conversion rates
Your marketing team pushing plenty of leads to your team but they aren’t closing them? That’s a sign of struggle. There are a variety of reasons this could be happening:
- Your marketing team is drumming up inbound leads that are a bad fit for your software.
- Your sales team doesn’t have enough time to give each lead the attention it needs.
- Your sales team is simply dropping the ball.
If the leads themselves are the problem, it’s going to take cross-departmental effort to fix. You’ll need to sit down with your marketing team to determine what sorts of qualified leads they SHOULD be drumming up. You can share research with them of the common characteristics of happy clients. For instance, business size, location, or industry. It’s especially crucial to nail down who the decision-makers and key stakeholders are at your ideal lead, so account executives can direct their outreach and follow-ups appropriately. When you work out who you want to be selling to, the marketing team can figure out how to do the lead generation required to fill the sales pipeline.
If your sales team doesn’t have enough time for all the leads you have – it’s time to hire!
And if your sales team is dropping the ball, you need to determine the cause. Common causes include lack of training (or low quality training) and lack of incentives. In this case, you’ll need to invest in education for your team or change your commission structure. It’s important not just to invest in onboarding training, but also in sales development over your reps’ whole tenure so that they can keep up with sales best practices in the SAAS industry.
7. Inadequate pipeline management
Another reason your team may be dropping the ball is that the pipeline is completely mismanaged, resulting in forgotten leads.
Audit your current contact management system. If you’re still using a spreadsheet or a decentralized system, it’s time to invest in a CRM. If you’re already using a CRM, you should audit how your team is using it. Chances are, they’re using it incorrectly (or in some circumstances not at all). If that’s the issue, you can provide training and incentive structures to use the software correctly. If you do find the team is using it as intended, it may simply not be the right CRM for your company – in which case, it’s time to start researching new systems.
Effective SaaS sales starts from knowing and (only) going after your ideal customer
To avoid throwing up the SaaS sales red flags discussed above, your sales professionals need to:
- know the ideal customer for your SaaS product, and
- prioritize its efforts to identify, nurture, and finally close leads that fit the bill (and only such leads).
Because if your sales team doesn’t know your product’s value, then it won’t know which customers will benefit from it. Accordingly, it may woo every single lead in the hopes that the lead will convert.
And if the lead indicates interest to sign up, then your sales team may go for the close just to add to its deal numbers—regardless of whether it’s in the customer’s best interest. Turning a blind eye to key sales metrics only allows such issues to perpetuate unchecked in subsequent SaaS sales cycles.
Nipping bad SaaS sales tactics in the bud will involve refocusing on your business’s ideal customer profile, and training your sales team to target only leads that are a match. You may also need to tweak performance incentives to keep your team on the right track.
Changing sales culture and your SaaS sales model can take time, especially if it requires a teamwide overhaul. However, making such adjustments will be vital for helping your SaaS company enjoy a healthy stream of best-fit customers in the long term.
Frequently asked questions
What are some signs of a struggling SaaS sales team?
Symptoms may include treating every lead with the same amount of effort, inability to communicate the product’s value proposition, signing bad-fit customers, and inadequate pipeline management. These symptoms indicate that the sales team may be struggling to effectively identify and prioritize high-value leads.
Meanwhile issues like low conversion rates and high churn rates are a sign that the sales team may be targeting the wrong customers, lacking in effective sales techniques, or failing to accurately set expectations during the sales process.
What strategies can be adopted to optimize lead conversion efforts?
Adopting a lead scoring formula that aligns with your business priorities can help. This approach can help your sales team identify leads with higher conversion potential and focus their efforts on these instead of wasting time on leads that are less likely to convert.
How can teams manage the sales pipeline more effectively?
Using a centralized CRM and ensuring the team is trained to use it correctly can improve pipeline management. If the current CRM isn’t suitable for the company’s needs, it may be necessary to research and adopt a new one.
How can a SaaS sales team improve its performance?
It starts with knowing and targeting the ideal customer, prioritizing efforts to nurture and close leads that fit this profile. The team should also be trained to understand the product’s value, track relevant metrics, and avoid signing bad-fit customers. Performance incentives might need adjustment to align with these goals.
