If you want to beat the competition, you don’t necessarily have to be bigger or stronger. But you do have to be faster. Optimization is every SaaS company’s secret weapon. But where do you start?
Fine-tuning your SaaS sales machine is all about getting the most out of the resources you have today. By following these 5 steps, you’ll be able to outperform and out-sell the competition, even if they have 10X the staff and millions more in funding.
Step 1: Design a simple sales funnel
Your sales funnel is the backbone of your entire sales process. It’s the path your prospects take from having no idea who you are to becoming happy, paying customers. Yet so many SaaS startups don’t take the time to really understand and optimize their funnel.
Let’s start with the basics. Regardless of what you’re selling, every sales funnel follows the same steps:
- Understand who your ideal customer profile is: Who exactly are you selling to? (Everything else in your sales funnel doesn’t matter if you get this wrong, which is why we spend so much time talking about the importance of customer intimacy)
- Discover where those ideal customers spend their time: Where are they and how can you get in touch with them?
- Qualify them as good leads: Are these actually the right people who will get value from your product or service?
- Convert your qualified leads into customers: Can you successfully sell them on your value?
That’s the flow you want your customers to go through. But to make it even more clear, we use a simple framework called the ACQ funnel: Activity, Quality, Conversion.
Here’s an example: Let’s say you’re running a sales calling campaign and you dial 100 prospects, reach 15 of them, qualify only 10, and close 5. In this case, your sales funnel will look like this:
- Activity: 100 dials
- Quality: 15 reaches and 10 qualifiers
- Conversion: 5 closed sales
The reason it’s so important to break down your sales activity into a funnel like this is that it allows you to see where you need help.
Let’s look at our example campaign again, only this time, let’s say we’re only closing 1 customer from every 100 calls. The problem might seem obvious (you’re not closing enough deals). But without a sales funnel, you don’t have enough information to pinpoint exactly where to experiment and optimize.
Maybe you called 100 people, reached and qualified 1, and closed that 1 person.
Or, you called 100 people, reached 30, qualified 20, and only closed 1.
In the first case, your reach rate at the top of the funnel is broken. While in the second, there’s something wrong further along when it comes time to close.
Your goal in both scenarios is to improve your close rate, but only by having a funnel and understanding where the issue truly is can you fix it.
2. Start at the top of the funnel
Your sales funnel will tell you where your sales process is breaking. But there’s one part of it that will always benefit from being optimized: the top.
I touched on it before, but none of your funnel matters if you don’t know your ideal customer profile.
When you know your ideal customer the downstream impact on your sales funnel is massive. It will be easier to reach them, qualify them, and close them, because you already know they’re a good fit for what you’re selling. Otherwise, you’re just wasting all that activity on low-quality prospects.
Look at your top customers and see what they have in common. What are their shared attributes or qualities? What size is their company? What’s their annual revenue? What’s their job title? Find out as much as you can about them and target them aggressively.
The better the quality at the top of your funnel, the better the results will be at the bottom.
3. Create never-ending learning loops
The more you know about your sales process, the faster you can optimize it. And there’s one incredible source of insight you’re probably not using enough: Your customers.
Your customers will tell you everything you need to know, from what you’re doing right or wrong to how to change your pitch or timing of your cold calls.
For example, let’s say a prospect booked a product demo. Before jumping into the sales conversation, ask them a simple question:
“Hey. I know you’re super busy and get tons of emails every day. Before we start the demo, I’m curious what made my email stand out to you?”
Let them tell you what made them curious and interested (and what might make other prospects interested). Let them educate you about what worked with your approach.
On the flip side, you can also find out what didn’t work. If a prospect opened an email but never responded, call them up and ask what happened:
“Hey. I sent you an email yesterday about our business. I assume you’re not interested and I’m not trying to pitch you. It’s just that as the founder of a small startup, I was hoping to get a bit of advice from someone as experienced as you about how I can make my pitch better. What was it about the email or my pitch that made you not interested in responding?”
All of a sudden, you’ve created empathy and a connection with a non-customer to find out what went wrong. Instead of just writing them off, you’re able to learn from them.
There are so many opportunities to bake this kind of customer learning into your sales process. When you close a deal, ask them why they chose you over the competition. If you’re getting pushback at a certain part of your funnel, ask prospects what their concerns were and why they said yes or no.
Don’t just sell to prospects. Make them the R&D department for your SaaS sales process.
Step 4: Eliminate all complexity
Complexity is toxic when it comes to the predictability and scalability of your SaaS sales funnel. It makes it harder to sell, lengthens your selling cycle, and confuses and wastes your sales reps’ time.
In my experience, there are three main places where SaaS companies usually introduce unnecessary complexity into their sales process:
- Building sales processes that are too reactive: Your reps have a number of tasks they need to do to be successful—lead gen, demo calls, answering emails, negotiations. However, if they’re spending all day zigzagging from one task to the other, they’ll end up working harder for worse results. Instead, bracket tasks by day of week or time of day (i.e. lead gen on Mondays and follow ups on Wednesday). Focus, flow, and excellence only happen when we’re able to repeatedly do a task and learn from it.
- Supporting a discount culture: Every time you give a customer a discount, you’re essentially adding complexity into your sales system. Yet discounts are still the most abused tool in SaaS sales. Not only do you have to track and deal with all these unique deals, but you’re also essentially telling your prospects you’re not confident enough in your product, company, and brand to charge them full price. You need to kill your company’s discount culture before it kills you.
- Closing bad deals: If somebody wants to buy your product, your reps are going to find a way to justify selling to them. But closing a bad deal is worse than closing no deal at all. Bad deals are going to ruin your business, by adding tons of noise, extra work, and negativity when they eventually churn (and they will). Your investors might be happy that you hit your monthly revenue number, but you’re setting yourself up for long-term failure.
Step 5: Shorten your sales cycle
It’s an old cliche, but time really is money. And one of the best ways to optimize your sales funnel is simply to close deals faster. The shorter the sales cycle, the less it costs you to close a deal, the faster you can learn, react, and improve, and the more profitable you become.
To shorten your sales cycle, there’s really just three steps you need to follow.
First, waste less of your reps’ time and attention. SaaS sales teams give away their time too freely. You don’t need 60-minute calls to do a demo. Thirty is more than enough. Plus, the longer you schedule for tasks, the more your day gets disrupted when something comes up. Rather than lose 20 minutes because a prospect didn’t show up for your demo, a whole hour is wasted. And that adds up quickly.
Next, use the power of now. When you’re talking to a prospect, make decisions right away instead of ending the call with a big to-do list for everyone. Is there a next step your prospect needs to take? Help them do it right then and there. Do they have questions or concerns? Answer them now. As much as possible you want to make prospects take action now. Not later when they can be easily distracted.
Finally, map out the buying process for them. If you want to get to the close faster you need to know what’s in your way. It might feel awkward asking what it’s going to take to get the deal, but if you’ve properly qualified your prospect this should be a no-brainer. Ask them to outline the process from now to the close. Then, map out every stage of the buying journey. Every stakeholder you need to talk to. Every hoop you have to jump through to go from where you are right now to them becoming a customer.
Once you know these steps, not only can you point out any red flags, but you can start to run steps in parallel. For example, instead of waiting until after a 3–6 month pilot to talk to legal, why not ask to send them your contracts now? That way, if the pilot is a success, you’re not delayed an additional 3–6 months while legal finds time to look them over.
To optimize your SaaS sales machine, you need to dig into the details, root out unnecessary complexities, and find where you can get the most return on the least effort.
Start by designing a simple funnel. Focus on improving the top of it. Create continuous customer learning loops. Eliminate complexity. And shorten your sales cycle as much as possible.
If you do all of these things, you’re guaranteed to have an incredible SaaS sales machine. But even if you do just one or two, you’ll still be doing more than the competition. The key is to just start. Every small step you take puts you that much closer to leaving your competitors in the dust.
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