SaaS: Three Checklists to Choose Your Sales Model
We previously wrote about hunting animals and the three SaaS sales models. If you are hesitating on the animal you should hunt or on the sales model you should adopt here are three checklists that will help you. If for a given checklist you answer a majority of “yes” to the questions it means that your SaaS is compatible with this sales model.
As usual don’t hesitate to let your comment / questions in the comment section.
Self-Serve: hunting flies and mice
The self-serve sales model requires a frictionless product coupled with a high volume, high velocity and low cost lead generation engine (since Annual Contract Value, ACV, here is typically between $1 — $1k). “Low touch sales” SaaS are very much focused on optimizing every step of the customer journey, from visit to signup, signup to trial and trial to pay, in order to automate it as much as possible. In that perspective it’s almost impossible to build such a company, at scale, without a strong viral loop (a “powered by” or outstanding word of mouth).
- Market: Does your targeted market have enough customers ready to pay your product between $1 and $1k per year? (depending on your targeted ARR)
- Team: Is your founding team strongly product and design oriented?
- Product: Do you have a strong product viral loop? (powered by or product virality)
- Product: Is user onboarding frictionless?
- Product: Can your product be used “out of the box”? (a.k.a does not need custom setup)
- Lead generation: Do you have high volume and low cost lead generation channels available?
- Sales: Is the value proposition easy to perceive by the user?
- Sales: Is conversion from trial to pay seamless? (a.k.a doesn’t need a human effort, contract negotiation etc.)
- Customer support: Is your customer support model low-touch too? (highly automated)
Transactional: hunting rabbits and deers
The transactional model is an hybrid one as it requires a high volume, high velocity lead generation engine, but you can spend more on acquisition thanks to an higher ACV (typically >$3K), complemented by an inside sales team that will do product demos and close deals. Products with a high revenue expansion potential (= when a customer is likely to pay more and more over time) are a good fit as account expansion generally requires proactive account management (from customer success to account manager) which can be financially supported by this model.
- Market: Does your targeted market have enough customers ready to pay your product more than $3k per year?
- Team: Is your founding team product and marketing / sales oriented?
- Product: Does your product provide enough “quantified value” (time, efficiency or money gain) that can justify a $3K+ a year investment for the customer?
- Product: Does your product need integration with customer’s existing stack?
- Lead generation: Do you have high volume lead generation channels available?
- Sales: Do you need product demo and “human” onboarding to convert a customer?
- Sales: Are your customers ready to commit for yearly plan?
- Sales: Does your product have high account revenue expansion potential?
- Customer support: Does your product need dedicated customer support / success / account management teams?
Enterprise: hunting elephants and whales
The enterprise model is characterized by very long sales cycles requiring an enterprise grade product, from features to SLAs and security guarantee, and extremely strong (and costly) customer support. The vast majority of SaaS founders won’t start with this model and won’t even think about it.
- Market: do you have enough customers that can pay your product $100k+ per year?
- Team: Is the founding team enterprise compatible and experienced?
- Product: Is your product “enterprise ready”?
- Sales: Can you attract “enterprise” sales talents?
- Support: Can you build enterprise grade customer support and account management teams?