SaaS (Software as a Service) has become the most popular and practical sales delivery model for various business applications. In turn, the increasingly crowded SaaS industry managed to cross $157 billion in 2020.
Despite the high demand for cloud applications, it is not easy for newcomers to differentiate between multiple software sales models. The three most popular options—Self-serve, Transactional, and Enterprise—each bring unique pros and cons. Which SaaS sales model you choose can dictate how you structure your team and marketing budget, as well as which KPIs will act as the greatest indicator of success.
Self-Serve Sales Model
As the name suggests, this SaaS model doesn’t require direct sales activity. Instead, marketing is responsible for generating revenue in the self-service SaaS sales model.
Example of a self-serve sales model: SEMRush is an SEO and PPC auditing tool that offers limited features for free and a tiered pricing plan. If they sound familiar, it’s perhaps because you’ve seen one of their YouTube ads, seen an advertising banner, or heard news of their 2021 IPO. Point being, they’re aggressively spreading the word about their product in order to generate authority and interest prior to you even checking out their tool. Yes, they do have customer service to support clients, but their sales team is minimal for an organization of their size.
Who does this SaaS sales model best suit: Typically, this sales model accommodates software companies that generate enough awareness to capture the attention of the right target market. Ideally, the product is straightforward so almost anyone could use it without tutorials (though it’s wise to have self-guided training materials). It should also be one of the more affordable options on the market, and make sure to give customers subscription models that require minimal commitment (like month-to-month). Above all else, a free trial should be made available so your product can sell itself.
Benefits: This particular software sales model supports fast growth without the need for internal staffing to match. You also present fewer barriers to entry by making it so anyone can enlist within mere minutes.
Downsides: Oh no! Your enrollment numbers are dropping! If you have a self-serve SaaS sales model, it may be hard to pinpoint why. Perhaps your product is too confusing or lacks a beneficial feature. Maybe it’s your pricing or a competitor is poaching customers. Without having an established human relationship with customers, it’s trickier for self-serve companies to nurture loyalty or open communication.
Generally, expect customers to come and go and spend less per engagement than if you utilized one of the other sales models. Not all of them will be a good fit for your services and, without a sales representative to teach or upsell, many users won’t utilize tools to their full potential.
If the Self-Serve sales model is Target, this is Tiffany’s. Customers heavily interact with brand representatives both during and after the long sales cycle. They’re treated to high-end service or technology, with a price tag to match.
Example of an enterprise sales model: On the surface, BrightEdge may not seem significantly different from its cheaper keyword-tracking counterparts. You need to dig deeper and spend heavily to see true differences.
This is why BrightEdge layers sales and account services so heavily into their customer engagement strategy. You want to learn about pricing? First, you have to request a live demo. You want to peek behind the curtain and perhaps give BrightEdge a test run? First, you have to request a live demo.
However, the hands-on customer interactions don’t stop with the initial sales. Larger customers will receive regular facetime with customer success managers who help troubleshoot, demonstrate new product features, and brainstorm solutions.
Who does this SaaS sales model best suit: If you’d use the word premium to describe your products, this may be the ideal software sales strategy. You can focus on expert-level representatives that forge relationships with the right audiences who are uniquely positioned to afford and utilize your services as intended.
Benefits: The enterprise software sales model lends itself to higher customer satisfaction, retention, and upselling. High-touch customer reps can anticipate customer desires and pain points and react accordingly, as well as pass information to your product development team. You aren’t wasting your time marketing to faceless minnows since you’d rather spend resources on capturing (and keeping) the business world’s whales.
Downsides: Very little about the sales process is automated, meaning that you’ll need a well-trained internal team to drive growth. This requires a greater upfront investment in personnel, and there’s little opportunity to scale. What’s more, for better or for worse, the lack of upfront information or independent sign-up could scare off less committed prospects. If they conduct a price comparison between you and five other competitors, not publishing your pricing could exclude you from their research.
Transactional Sales Model
Self-serve and Enterprise SaaS sales models fall on opposite ends of a spectrum, leaving Transactional in the middle. There often remains an automated sign-up process supplemented by internal sales teams that may service upper-tiered customers. However, these brand representatives will generally be less involved with individual users, enabling them to handle more accounts.
Example of a transactional sales model: Optinmonster publishes its various plans online and lets users proceed down the funnel without human involvement. However, they also offer higher-paying customers enterprise-level support and the option to have a live demo.
Who does this SaaS sales model best suit: You want the best of both worlds, and you have the technology to accomplish this! It’s intuitive to use but sophisticated enough to upsell. Chances are, you’ve found some success with the Self-Serve model, and you’re ready to service some of your industry’s bigger players.
Benefits: By having a solution in place for diverse price points, you’re able to capture both the minnows and the whales. You’re able to balance efficiency with quality to enable growth while nurturing a loyal core of customers.
Downsides: As the midway solution between enterprise and self-serve, you also inherit some of their required costs. You need to invest in marketing to attract self-serve customers, as well as internal teams to support higher-paying customers. Balancing both entry-level and premium product plans can divide your attention so neither funnel is optimized.
Final Tips for Choosing the Right Software Sales Model
Essentially, your product should drive your strategy. Is your product easy to use or intricate? Affordable or expensive? Applicable to a broad audience or only select individuals.
Many emerging software companies start with the self-serve SaaS model and, as their product features grow, they shift into a transactional sales approach. However, if you have a sophisticated platform, starting with the enterprise model can let you build a small but consistent customer base.