How to Manage Sales in the SaaS Industry

 

I‍ntroduction

Sales management has never been easy. Even in the best of circumstances, it’s a challenging role that requires a lot of micromanagement. In the SaaS industry, however, things get even more complicated. 

As SaaS companies don’t sell physical products but rather software services, sales management takes on an even more important function than usual. After all, SaaS companies need to ensure that their sales reps can sell as many subscriptions as possible with as little investment as necessary on their part—which means figuring out which quotas work and which don’t so that they can adjust accordingly. 

Clearly, this is no easy feat. But by focusing on the right metrics and processes from the beginning, you can make things much simpler for yourself down the road. Here are some essential tips for managing sales in your SaaS company…

Define Your Core Metrics

Whatever metrics you use to track your sales team, they should be important to your business overall. Because SaaS companies sell subscriptions, it makes sense to track number of monthly recurring revenue (MRR) subscriptions sold. 

It’s also a good idea to track average monthly recurring revenue per customer (AMRR per customer). This can help you estimate how much you can spend on advertising and how much you should be charging customers. 

It’s also helpful to track how many new accounts each sales rep brings in each month. This will give you a general idea of how many new customers each rep is bringing in, which can help you judge their effectiveness when it comes time to give out quarterly or annual bonuses.

Establish A Process For New Rep Hires

A sales rep’s first 90 days on the job are incredibly important. You want to see how quickly they ramp up and become effective at selling your product, but you also want to see their long-term potential and fit with the team. 

To do this, you should have a sales rep onboarding process in place to help new hires hit the ground running and get a feel for the sales process from the start. 

A good onboarding process will also help you figure out which of your sales reps are underperforming.

Define A Quota Process

If your sales team is expected to hit a specific quota every month, you should have a clear process in place for determining how much each rep should be selling. 

For example, if your MRR is $2,000 per month, and you want each rep to bring in two new subscriptions per month, each rep should be selling $1,000 worth of subscriptions each month. 

This doesn’t necessarily mean that they should be selling $1,000 worth of product every single month, though. It just means that, over the course of the year, they should bring in $6,000 worth of subscriptions. 

As your company grows, you may find that it makes sense to adjust your quota process, so make sure it’s flexible.

Define A Qualification Process

The qualification process is how you determine whether or not a lead is worth pursuing. It’s also the first step in the sales process once you’ve found a lead. Indeed, you should have a sales process in place for managing your leads from beginning to end. 

This process should determine whether each lead is worth pursuing and how much time and resources each rep should spend on each one. Typically, a qualification process will involve a rep following up with a lead via email. 

In this email, they will attempt to qualify the lead by finding out why they’re interested and also determining how likely they are to buy. This step is important because it helps you figure out how many leads you should be pursuing. 

Ideally, you want to pursue leads that are likely to buy, but you don’t want to pursue leads that are unlikely to buy.

Define An Opportunity Management Process

As you manage leads, some of them will become opportunities. An opportunity is a lead that has expressed interest in your product, is qualified to purchase your product, and has been given the go-ahead to purchase your product. 

As your company grows, you will likely have multiple opportunities at a time. It’s important to have a process in place for managing these opportunities so that your team is able to track the status of each one and know exactly where they stand. 

When managing opportunities, you should have a process for determining which ones are worth pursuing and which ones are not. This process can include information about which leads each opportunity is associated with and how long each lead has been in the sales process. 

For each lead, you should know how long they have been looking at your product, how much time they have spent on your website, and how many pages they have visited.

Carefully craft a sales compensation plan

As you begin to implement some of these processes, you’ll start to see which sales reps are effective and which ones are not. Eventually, you’ll be able to make informed decisions about which reps to promote, demote, or fire. 

This will come in handy when you have to create a sales compensation plan for your team. While base salaries are still common, commission-based pay is also typical in the SaaS industry. The important thing is to make sure that commission-based pay is calculated in a fair and transparent way. 

If you’re promoting reps whose metrics show that they are more effective than others, their commission-based pay should reflect this. If you’re promoting reps whose metrics show that they are not as effective, their commission-based pay should reflect this as well.

Conclusion

As you can see, sales management in the SaaS industry is a complex process. It requires you to keep an eye on several different metrics and processes on a daily basis. That said, it’s an incredibly important role that can make or break your company. 

If you do it well, you can expect to grow your MRR rapidly and see your company’s valuation rise as well.