Biz Tips: 10 Common Sales Mistakes to Avoid for SaaS Startups

Biz Tips: 10 Common Sales Mistakes to Avoid for SaaS Startups

Biz Tip:

10 Common Sales Mistakes to Avoid for SaaS Startups

Over the past few years, the SaaS space has exploded. Without a doubt, it has become one of the fastest-growing technologies around.

But despite the huge amount of interest in SaaS and its stunning growth, SaaS businesses aren’t going to grow just by virtue of being in a hot niche. Startups still rely on the skill and ingenuity of their sales teams to stay profitable.

If you want to ensure that your SaaS sales are where they should be, the first step is to make sure you avoid these 10 common mistakes.

1. Not Paying Enough Attention to KPIs

If you want to succeed in something, you need to find a way to measure your success. Without metrics to go by, it’s impossible to know whether you’re actually growing.

In SaaS sales, these metrics are referred to as your KPIs — your key performance indicators. You can choose which ones to pay attention to, or even come up with your own, but some of the most important ones are:

  • Revenue growth
  • Average contract value
  • Win rate
  • Percentage of time spent on selling activities
  • Qualified lead velocity rate
  • Customer lifetime value
  • Conversion rate to customer

To make the most of these KPIs, you’ll likely want to set targets and goals, which you can use to more clearly measure your progress.

However, while it’s absolutely important to pay attention to KPIs, it can be problematic to use too many KPIs. While it can be tempting to collect as much data as possible, in most cases it just ends up leading to more noise and distraction. Instead, figure out which KPIs will provide the most actionable insights and focus on those.

There are no hard and fast rules about how many KPIs to use, but common advice is to choose no more than three KPIs per objective. So, make sure you take the time to evaluate which KPIs will serve you best.

2. Storing Inaccurate or Problematic Customer Information

If you want to make sales, you need to ensure that your reps are using accurate and useful customer and lead data. If you’re not periodically making sure that you have active email addresses and phone numbers for your leads, then your sales reps will likely be wasting lots of time reaching out to dead ends.

What’s worse: if you send too many emails to inactive addresses, your email could get blacklisted.

Simply put, you cannot afford to waste time with inaccurate data.

If you don’t think this is relevant to you, think again. In a recent survey conducted by Experian, only 51% of respondents said they believe their CRM data is totally clean and can be completely leveraged, and 28% said they suspect there are inaccuracies in their customer and prospect data. Inaccurate customer info is a more common problem than you might think.

If you’re not sure whether your data is up to snuff, you can use email verification tools to begin checking it. This isn’t a complete solution, but it can get you started.

3. Focusing Entirely on Acquisition and Not on Retention

Business growth has two sides to it: getting new customers and keeping them.

In SaaS, where revenue is based on monthly subscriptions, the importance of customer retention could not be more obvious — without retention, you can’t collect the monthly subscription fees that your business depends on.

In short, that means that your sales strategy has to focus not only on acquiring new customers, but ensuring that they’re happy with your product and stay for the long haul.

focus on acquisition and retention
Source: invesp

Conventional wisdom says that it costs five times as much to acquire a new customer as it does to keep a current one. Although the reality is a bit more complex than this, rendering this popular stat potentially inaccurate, it does speak to how important retention is — and it’s perhaps even more important in SaaS companies.

To combat this pitfall, make sure that your sales team isn’t ignoring current customers in favor of new ones — getting your current subscribers to renew is just as important as having your account executives close deals in the first place.

One quick and effective way to boost retention is to offer discounted annual plans. Longer-term and more foundational ways to boost customer retention are making sure customer service is top-notch, keeping your product fresh with new features, and optimizing pricing.

4. Setting Unrealistic Quotas

When it comes to setting sales quotas, there’s a tough decision to make: is it better to overestimate what’s realistic and risk demoralizing your team when none of your reps can hit those numbers? Or is it better to lowball it and risk having your team members check out once they’ve met their quotas?

The solution is to do your best to research the market and set realistic quotas that you’re confident at least 60-70% of your sales team can meet. Many sales managers believe that if less than that amount of reps can’t meet their quotas, morale will start to drop, which will not help your sales figures.

5. Not Being Selective Enough With Hires

The best way to build a killer sales team is to start off with solid talent. Unfortunately, many SaaS recruiters don’t know what they should be looking for.

Right out of the gates, lots of SaaS companies hire a vice president of sales, but this isn’t always the right move. Typically, SaaS startups only need to hire a few reps to get started.

candidates market
Source: hirebel

While it’s currently a job market that caters more towards candidates than hiring companies, ultimately, the space you’re in will influence the types of reps you hire. If you’re trying to break into an already established market, then you’ll want to focus more on recruiting reps with lots of experience.

However, if you’re in a new market that isn’t fully developed yet, it’s often better to find reps with some entrepreneurial skills that can take a more pioneering attitude and develop a sales funnel that works for the untapped market.

6. Failing to Follow Up With Prospects

There are two prongs to this one: not following up fast enough and not following up often enough.

A study by Velocify (then Leads360) found that following up by phone within 1 minute of lead generation boosted conversions by nearly 400% (391% to be precise). This goes to show that your startup should have a system in place that gives new prospects a response as soon as possible. Automation can help with this.

Beyond that, reps also need to be prepared to persist. Leads usually won’t convert on the first call, and you may need to try as many as six times before you get a conversion.

7. Overusing Discounts

Giving discounts is a great way to provide incentives for new customers. However, when used too frequently, discounts can harm your company. According to ProfitWell, using discounts can lower SaaS customer lifetime value by over 30%.

Obviously, discounts lower your revenue. But beyond that, they also reduce the perceived value of your product.

Discounts can also lead to a less valuable customer base. If lots of your customers signed on just to snag a discount even though they don’t actually need your product, then you will have artificially inflated acquisition numbers that will drop off when it comes to retention.

The real takeaway is this: discounts work great for retail stores because the goal is to lower the barrier to entry for customers so that they can make a bunch of purchases as quickly and as often as possible. For SaaS companies, however, the goal is to retain a customer to profit off their recurring subscription fees. Providing discounts works in the short-term (that’s why it’s great for retail stores), but it doesn’t fare well in the long-term for SaaS.

8. Not Understanding Your Ideal Buyer Persona

buyer persona
Source: slidesgo

Sales is based on providing a solution to buyers. But if you don’t understand what your buyers’ pain points are, you won’t know how to sell them your medicine.

Understanding your target market starts with constructing an ideal buyer persona, an imaginary person that represents the perfect customer. You can base this on a real person or a group of customers.

Once you’ve hammered this out, you can develop a sales strategy that better meets the needs of your target market.

9. Not Implementing Solid Onboarding and Training

A successful sales team works as a cohesive unit. But if there’s no onboarding or training, it will be impossible for your reps to work as a unified whole.

You don’t necessarily need to develop a training program before you hire your first rep — they can learn more naturally through observation. But once you start to build a larger team, you’ll need to start codifying your best practices to keep everyone on the same page.

Standardizing your training across teams is crucial and you can simplify the process by investing in one of the popular online course platforms, or you can create a system internally.

10. Not Evaluating Lost Prospects

Losing leads is par for the course. But a prospect that falls through is more than just a bummer — it’s a learning opportunity.

If you’re not evaluating what went wrong with your lost leads, you’re missing out on some of the most important and actionable data available to you.

Key Takeaways

Building a successful SaaS sales program requires careful evaluation of your data, an understanding of your target market, and solid training programs. If any of these factors aren’t in order, you’ll see the effects in your bottom line.

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