Software sales commission at startup

SaaS Sales - The most important facts compact (2020)

What is SaaS

Do you remember when you used CD-ROMs to load software onto your computer, which you then only had access to from a single device? Thanks to SaaS, those days are over. Nowadays, the software is hosted in the cloud by the developer, who also creates backups and updates them regularly.

That also means that SaaS is often with low Acquisition costs, regular upgrades and many interfaces brings with it. For the customer, this means that he receives software that he no longer has to worry about running and at the same time benefits from frequent updates.

What is SaaS Sales?

But how can you best sell that? SaaS requires a special kind of sales. In general, SaaS Sales is the process of selling web-based software to customers. The sales people focus on acquisition of new customers and theUp-selling or the Retaining existing customers (Key accounts).

Marketing maintains a lead until it is “Sales Qualified”. Then a seller takes over the contact with the interested party to discuss the next steps. Just because a lead is Sales Qualified doesn't mean they're ready to buy - or want a product demo.

SaaS salespeople need the Be able to clearly communicate the advantages and functions of your software. It is also important to tailor each presentation to the individual needs of those interested. Service and attention are key to getting the prospect to complete the purchase.

In order to present the product optimally and to be able to fix errors, the salespeople must be very good be familiar with how the software works.

In order to be able to give the customer the best advice, we often take Sales engineers, sales managers or those responsible for product marketing take part in meetings with customers. So a relevant quality of a qualified SaaS salesperson is knowing when to ask for help.

SaaS sales salary

The average base salary of a SaaS salesperson starts at around € 50,000 and goes up to € 150,000 (B2B sales salary study SalesPotentials). There is also one commissionthat the salesperson receives when they reach or exceed their sales target.

SaaS sales staff usually have one higher basic remuneration than other employees in sales. That's because it's particularly high technical requirements to be put to you and in the market only few experienced specialists available are.

SaaS sales commission

SaaS commissions are paid when a sales representative starts a new one Concludes business dealings or renews contracts with existing customers. You will be based on MRRs(monthly recurring revenue) or ARRs (annual recurring revenue).

Some companies wait to give the commission until the customer has paid. This is to prevent commissions from being paid to a customer who may still withdraw from the purchase. With regard to the commission, there are very different models:

in the linear model the salesperson always receives the same commission rate (e.g. 10%), regardless of whether their target achievement is 90%, 100% or 120%.

The so-called "Kicker model" means that the commission changes when the target is achieved (example: with 100% target attainment, the sales employee receives 10% commission, with 110% target attainment he receives 11% commission).

Other companies use a model that the Commission in stages Are defined. In this model, the first stage the achievement of 100-110%, the second step the achievement of 110-125% and Level three the achievement of 125% and more. Salespeople who reach the third tier are often rewarded with the President's Club.

On some models, the commission is not paid until the salesperson brings in enough income to cover their base salary and social security costs. However, when the salespeople have closed enough deals to cover those costs, the Commission can also be significantly higher (up to twice as high)as in a normal commission model.

SaaS sales cycle

SaaS sales cycles vary depending on Price, customers and product complexity. A product that costs $ 100 a month is likely to have a faster sales cycle than a product that costs $ 5,000 a month.

The more expensive the product is the more stakeholders are included. That can Sales process by weeks or months extend. Four other factors that slow down the SaaS sales cycle are:

1. New markets:

When you're selling to new markets, your sales cycle can be longer because you Spend more time getting your product and value across to potential customers. It is very important to enter new markets before selling to them. tip: Work with the marketing teamto open up new markets before the start of public relations.

2. Enterprise deals:

Selling to enterprise companies increases the number of stakeholders required and the Amount of legal and technical bureaucracythat comes with it. tip: Build the additional time you need into your budget. You cannot perform well under unrealistic goals.

3. Complexity of the software:

The more complex the software, the longer the sales cycle. It is therefore important that the right prospects present are. These should be able to prevail against less knowledgeable colleagues. tip: Get a professional writerwhich helps to communicate the software offer in a more understandable way

4. Free Trials:

A month-long, for example Trial version can significantly extend the sales cycle. Tip: Shorten the trial version for example from four to two weeks.

Sales expert Matt Bertuzzi has compiled a list of the average length of sales cycles in B2B SaaS companies.

1. Deals <€ 5,000 ARR: 40.1 days

2. Deals € 5,000-10,000 ARR: 62.2 days

3. Deals € 10,000- € 50,000 ARR: 84.1 days

4. Deals € 50,000-€ 100,000 ARR: 116.6 days

5. Deals € 100,000 + ARR: 169.6 days

6. Average: 84.3 days

SaaS sales models

Sales models show how many salespeople to hire, how to interact with customers, who the customers are, and how to get a deal with them.

It is crucial to use the right model and know when to move the company forward. The following are the three most popular models shown:

1. Self-service:

This model works best when you can cheaper, high-volume SaaS sold (e.g. Spotify subscriptions or memberships). The average The selling price is low here and it can still substantial income be achieved.

"Freemium" models (from “Free” and “Premium”: software that can be used free of charge, but for which you have to pay for additional services) and free tests are common methods of attracting customers to this model. The Customer service is not comprehensive and the model cannot be supported by entire sales teams. Instead, the websites encourage customers - mostly individuals or small teams - to register online.

2. Transactional sales:

Transactional sales are on commonly used sales model and scales very well. Transactional sales are usually carried out by telephone small and medium-sized companies and occasionally personally.

Software that is sold in transactional distribution should customizable to meet the needs of a wide variety of use cases. The pricing is usually very different and the salespeople are allowed to Grant discounts and Price scales apply.

Typically, salespeople receive warm leads from marketing that need intensive marketing Complete product training, comprehensive product knowledge present and monthly or quarterly Meet goals.

3. Enterprise sales:

This model refers to software that is too high price and low volume on sale is. The solutions often have all available functions integrated and can be adapted to any conceivable application. Enterprise Sales Representative work closely with potential customers for monthsto answer your questions, introduce the software and talk to executives.

Enterprise sales is the ideal sales model for complex or niche SaaS of which large corporations or corporations who have the budget to support the high cost of these solutions. Sales teams in the enterprise sector are common organized according to sales areas and responsible for one defined list of target customers.

Since so many people are involved in the process in this model, the employees work closely with product marketing and engineersso that they can get the information they need to close these quality deals.

tip: A higher Average Selling Price (ASP) means that your potential customer expects comprehensive customer service, regular support, a signed contract and an invoice. A low ASP indicates that you probably can't or don't need a sales team. So know your ASP Before you hire salespeople or expand your team, make an informed decision about when and who to hire.

SaaS Sales KPIs

SaaS salespeople are often tied to KPIs. Some important KPIs that SaaS salespeople should be aware of, are:

1. Churn:

The churn rate is that Percentage at which you lose customers annually. To work this out, divide the number of customers you lost by the number of customers you started with. A negative churn is a good thingas it means that you have gained more customers than you have lost.

2. Net Promoter Score:

The Net Promoter Score (NPS) measures customer satisfactionand forecast business growth. Users answer for this relevant questions using a rating scale from 1-10. For example, a question could be: "How satisfied are you with [SaaS company name]?"

A Score between 0-6 would mean that the Unsatisfied customer and growth could be hampered by this rating and turn out negative. He is referred to as "critic„.

When reaching 7-8 points indicates a passive attitude of the customer down. He is satisfied with the product, but also prone to switching to the competition.

If the customer's rating is between 9-10 points you can call it loyal "promoter" describe. He's probably one Regular customer and will mediate further business.

To calculate the NPS, which goes from -100 to 100, form the Difference between the percentage of your promoters and your critics. If you have a low NPS, how many deals you do doesn't matter as your customers are likely to churn. However, a high NPS indicates satisfied customers and the potential for sustainable growth.

3. Monthly Recurring Revenue (MRR):

The MRR is that Revenue that your company earns monthly from subscription contracts. There is a contractual agreement between the customer and the SaaS provider monthly fee agreed, which must be paid by a certain day.

4. Annual Recurring Revenue (ARR):

ARRs is the MRR extrapolated to the year. Annual Recurring Income (ARR) represents the Represents the value of the recurring sales your customer is willing to pay annually.

5. Sales Qualified Leads:

A Sales Qualified Lead (SQL) is a potential buyer ready to speak to a seller. That doesn't mean he'll buy yet. But he has shown that he would like to learn more.

6. Lead Velocity Rate:

The lead velocity rate says how fast your leads are growing month to month. Even constant MRR growth may only indicate where you are at the moment, but not predict future growth.

The Lead Velocity Rate shows whether the leads arrive faster than the sales. So you can Calculate growth, goals and milestones.

7. Revenue Per Lead:

By measuring the sales each sales rep brings in per lead, you can do that Determine the exact number of leads a salesperson can take care ofbefore its productivity suffers.

8. Customer Acquisition Cost (CAC):

To determine this, you need to use the Divide total sales and marketing costs by the number of deals closed.

Companies with a transactional sales model will have a lower CAC than companies that do enterprise sales.

If your CAC is too high, you may be scaling too fast. If they're too low, look at areas where you can invest in growth or increase sales.

9. Closed-Won / Closed-Lost Deals:

A deal is called completed marked if a Contract signed or a payment was made ("closed-won").

It's also complete when a potential customer turns up opts for a different solution. In this case, the deal is called a "Closed-lost".

It is important to examine the number of closed-won and closed-lost deals. These numbers are closely related to total sales. The relationship between "closed-won" and "closed-lost" deals makes a statement about your personal productivity, your success and your suitability for the job.

10. Demo-to-Trial Ratio:

If your product needs a demo, analyze carefully, how many customers become test customers from such a demo, and how many of these test customers conclude a contract ("closed-won"). At a low conversion rate must examine and optimize each step (demo, product test and closing discussion) in detail.