Should you move from self-serve to sales-supported SaaS?
You’ve got a great self-serve SaaS product. You have leads coming through your funnel, signing up for a trial and upgrading—without you having to lift a finger.
You’ve had a taste of success and you’re wondering whether now is the right time to hire salespeople, ramp up growth even more and make more sales through all of these inbound leads you are generating.
This is an extremely important decision in the life of a SaaS business. Hire too soon and it could be a massive momentum killer for your self-serve business.
But hire too late and you’ll miss out on the potentially massive revenue growth that comes from going upmarket into the enterprise. If your competitors have a sales team in place to take advantage of these large leads, then they are going to be the market leaders.
To make this decision, you need to think systematically about your business, not just go with your gut. Here’s the thorough decision framework you need to determine whether now’s the right time for your company to build a sales team.
The decision framework for hiring a sales team
You need to do just 3 things to see whether you need to transition from a self-serve to a sales-supported SaaS:
- Decide whether you have a high CLTV business that can support a sales team
- Segment your large trial accounts and see if they are converting
- Reach out and identify their friction and challenges.
All along the way, you’re looking for places where a sales team can add value to trial accounts by making the buying process much easier.
1. Is your CLTV high enough?
The first question you need to ask yourself is whether the economics of your business can support a sales team.
Take a look at your customer base. Are the vast majority of them individuals or prosumers? If so, it’s likely that your customer lifetime value (CLTV) will be too low to acquire customers efficiently through sales. That’s because each additional sale won’t be worth the sales rep’s time it took to close the deal.
Use this as a rule of thumb: if your customers have a lifetime value of less than $1,000, then it’s most likely that a sales team isn’t a good fit for your business. You’ll need a frictionless way to acquire customers at scale, not a high-touch sales process.
If your CLTV is too low right now, you’re left with two options:
- Go upmarket, build a self-serve premium version of your product at 2x–5x the price, and then revisit this question after you’ve gotten some customers, or
- Focus 100% on scalable, frictionless customer acquisition.
If your CLTV is over $1,000, then it’s possible that you have a segment of high value customers for which a sales process makes sense.
2. Are your bigger customers struggling to convert?
The next step is to take a deeper dive into your high CLTV customer-base. If bigger trial accounts convert from trial to paid at a lower rate than smaller ones, that’s an indication that bigger customers are encountering difficulties with your self-serve process that a sales rep could help fix.
Start by segmenting your trial accounts by size—small, medium, and large—then, evaluate their conversion rates. Here's how.
Lead score your inventory
When a trial account signs up, they give you information about themselves and their company. At a minimum, you have their email address—and you can use that alone to generate a lead score for your customer.
For example, a regular Gmail or Yahoo email address is likely just from an individual customer, but a company email means that you potentially have enterprise interest. Pull up the name of person who signed up on LinkedIn to learn more about their role and the company they work for. If you're automatically adding your trial account signups as leads to Close, you can also use our Clearbit integration to enrich your lead data with their LinkedIn data and other social profiles.
Add this one simple question to your current onboarding funnel that'll separate the business accounts from the individual sign ups: How big is your team?
This number feeds into your lead score to determine which segment the trial account will fall into. Also consider asking for the customer's role, company information, company size, budget and more.
You can do this quantitatively, or with a SaaS tool that helps you create lead scores—or you can just go through your trial list and do this by making rough, qualitative judgments on each account.
The final way to segment your customers is to get them to self-select.
Have your regular 2 or 3 priced tiers, then start a 4th tier with all the regular enterprise offerings—multiple accounts, enterprise single sign on, awesome support—and write “Contact Us” instead of the price.
Large companies are used to buying a certain way, and will actively be looking for this type of sales channel. If you don’t have it, your big customers will try a regular account, but they'll turn around and leave when they hit an issue that would be easily solved by an account manager.
When you add a “Contact Us” plan, you’re giving the large accounts that have difficult buying requirements a way to head straight to you. If you have enough companies coming through this channel, you’ll know you need a dedicated sales team.
Finally, look at your conversion rates
You’ve segmented the large trial accounts from the rest. Now take a look at their conversion rates from trial to paid.
If your large accounts are converting at the same rates as the rest of your accounts, then there’s not much that a sales team could do to raise those conversion rates.
However, if large accounts are converting at a lower rate than small accounts, you need to transition to sales support. Low conversion rates mean these accounts need more support to reach a buying decision, since self-serve isn't working for them.
3. Is there complexity in the sales process for your bigger accounts?
The last step in deciding whether to build your sales team is for you, the founder of your company, to run an experiment. You need to call your large accounts and walk through the buying process with them.
This isn’t a sales call. You’re not in sales mode yet.
All you want to do right now is learn. Gain insights into the buying processes your customers are going through, find their friction and identify challenges. You need to figure out whether a salesperson could make a difference to their lives and their businesses. You need to identify any complexities in their buying process where human help could significantly increase conversions. These are your opportunities.
And you need to do that yourself, now, before you hire a single salesperson.
Find the friction
When you get on these calls you want to find out one thing: Are they the decision maker?
If you’re talking to these larger trials and they are the decision maker, they have a credit card in hand and they have the budgetary responsibility to make the call, then a salesperson isn’t going to be much use in these scenarios.
But if you are talking to people who don’t have the decision making authority to pull the trigger on your product today and have complex buying cycles, then you have a great case for a dedicated salesperson who can make a substantial difference.
Buying cycles that have friction will include:
- customers evaluating not only your solution, but also your competitors
- multi-stage buying processes
- multiple stakeholders involved in decision-making
If the potential customer is evaluating you alongside your competitors and comparing your offerings, then getting a dedicated account manager or salesperson will put you at least on par, if not at a massive advantage.
You’ll be able to listen to their concerns and address them, rather than leaving your customer with no one to turn to for help and guidance. Having salespeople will also move the needle in terms of converting these leads into customers.
Identify challenges to buying
Additionally, there are business customers who have difficulty onboarding onto any new product due to significant business challenges that are nearly impossible to self-manage.
These might be specific to their business. Concerns about security, scalability, privacy, integration and data management are likely to come up when dealing with enterprise-sized customers.
Even a great FAQ won’t be able to answer these thorny issues. The customer is going to want to get on the phone to talk things through with you and your team.
Another sticking point might be budget. In a self-serve scenario, with no opportunity to negotiate, they might decide that they can’t afford your product. But if a salesperson can get on the phone with these customers and negotiate, this can be a win for both sides.
Concerns like these, which are difficult to address, are a good indicator that a salesperson could to make a great difference for that type of buyer during the trial.
If they’ve got friction or challenges that you can identify and resolve, then it’s time for a sales team!
Now get started!
If you’ve gotten to a yes, it’s time to get started building your sales team.
Note that this isn’t a pass-fail test that will define your business forever. You need to re-run this experiment constantly.
As your business grows and your product changes, you might find that you start to have these enterprise clients hidden within your typical customers. By running through this decision framework you drill down into your data and find the accounts that need sales support.
Want to learn more about selling SaaS products? Download our free book today, SaaS Sales for Startup Founders.