Product-Led Fundamentals

3 Types of SaaS Sales Models

There are three GTM sales motions found at B2B companies today. Each one seeks to maximize annual recurring revenue in different ways.

Joanna Huang

February 23, 2022
·
3
 min read

There are generally three GTM sales motions found at B2B software-as-a-service (SaaS) companies today. Each SaaS sales model seeks to maximize annual recurring revenue in different ways.

Traditional enterprise sales processes have been around for decades. Whereas, self-serve and hybrid models only emerged in the past several years.

Self-serve SaaS sales: The most efficient

Self-serve is a bottom-up sales process, with customers as the end users. We have a guide to free SaaS plans that dives into the details, but the benefits are easy to summarize:

  • Experience with the product increases momentum towards conversion,
  • Users generate leads, lowering customer acquisition costs, and
  • Retention increases, before and after conversion, when users get value from the free tier.

Users try out a product's free tier and potentially upgrade for more features. Self-serve pricing is affordable. In this sales model, deal sizes are small, but deal volume is high.

Self-serve sales model

A key component of self-serve is that there is no sales team. Customers sign up for the product for free instead of going through a lead form or demo. This product-led approach is increasingly common because it reduces customer acquisition costs.

Since customers decide how and when they upgrade, it’s up to cross-functional collaboration between product, sales and marketing to guide them along their journeys within the product. Product content raises awareness. Promotions create incentives. But still, the customer makes the final decision.

Support also tends to become self-serve. Knowledge bases, community forums, and other self-serve options help users resolve issues independently. Behind the scenes, analytics identify friction points so SaaS companies can continuously strive to build a frictionless self-serve product.

Benefits and challenges of self-serve selling

This model is heavily inspired by the product. Software-as-a-Service products are easy to use and purchase without hand-holding from sales reps. Creating a robust sales team simply isn't cost-efficient, given the pricing. For example, Calendly first began with a self-serve sales process. With the first paid tier being $8 a month, it wouldn't make sense to have a sales rep close just this one customer.

Self-serve is highly efficient. The limitation is that it's product-only, with no involvement from sales teams. It’s up to the customer to choose a higher service tier. B2B SaaS products have an untapped potential to accelerate sales for larger opportunities through a predictable outbound SaaS sales process.

Enterprise sales process: The biggest deals

While self-serve is simple and fully automated, enterprise selling is complex and high touch. It works top-down by convincing executive buyers of the product’s value. End users play little role in enterprise sales.

Enterprise SaaS sales model

Sales takes the lead in the enterprise model. Business development and account executives foster relationships within a prospective customer's organization. Ultimately, they want contact with the executive buyers who manage sizable teams and budgets. Through demos, negotiations, and due diligence, the account executive convinces the buyer that the product can transform the organization.

Marketing plays a supporting role in enterprise sales processes. Branding and awareness campaigns, market research, and other activities feed the sales funnel. Product roadmaps, social proof, and other sales tools help the sales team close the deals.

Complex enterprise SaaS products require dedicated support resources at every level, from executive buyers to the customer’s end-users.

Benefits and challenges of enterprise selling

Getting from prospects and leads to contracts and deployments takes time — months or years. Only at the end of this process do the customer’s employees actually use the product.

Both the sales team and buyer want this full-service approach because of the large deal size and enterprise product capabilities. The sales team must establish trust, explain a highly complex product, and tailor the deal. The buyer gets custom contracts, price negotiation, and a point of contact when problems occur.

That said, traditional enterprise selling has become less popular in recent years. Although executive buy-in is still needed for large deals, the drawn-out sales process and lack of initial adoption from end users is a big hurdle to closing deals. Today's buyers require a shorter, more agile SaaS sales cycle.

Hybrid SaaS sales models: The best of both

You might've noticed a bit of tug-of-war between the self-serve and enterprise sales models. How do you balance self-serve's scalable deal volume with enterprise selling’s profitable deal size? Do you have to pick between fully automated versus full-service?

Not at all! That's where the hybrid model, also known as the Product-Led Sales motion, comes in. Product-Led Sales marries bottom-up and top-down sales processes. Reps can turn free signups into paid users, or assist a team of active users into an enterprise tier.

Hybrid sales model

The first step is to separate prospective customers from the thousands of free users. Fortunately, the way customers use your product says a lot about their intent. Analytics and machine learning software spot these behaviors and flag high-intent Product-Qualified Leads (PQLs).

From there, you have a choice. Marketing-led programs make the most sense in early stages, such as moving free users to low-cost paid tiers. Automated marketing campaigns can reinforce the value PQLs are getting from your product, introduce features the PQLs haven’t used yet, and encourage them to make the next move.

When you want to move a team of active users — or an entire company — onto an enterprise tier, it’s time to bring in the SaaS sales reps. A hybrid SaaS sales process gives the team a head start towards establishing trust because there are already product champions within its organization that can help upsell internally. Reps can then present to executive buyers concrete use cases based on the value your product already provides the company. 

Benefits and challenges of hybrid sales models

Modern SaaS companies like Slack, Zapier, and Notion started out product-led and evolved into a hybrid SaaS sales model. It is a highly strategic GTM motion to choose. Of course, you can still keep a pure self-serve or pure enterprise motion alongside the hybrid model.

Most SaaS products today are user-friendly enough to leverage product-led acquisition—AND valuable enough for sales to speak with buyers at the right time to unlock additional revenue. A Product-Led Sales model combines effective automation with top-notch service. Your customers buy in the way they prefer, and your sales achieve non-linear growth.

There are purpose-built solutions for each SaaS sales process. Traditional CRMs are perfect for enterprise sales models. They track each prospect’s engagement with sales reps to manage the SaaS sales cycle. For tracking feature use and points of friction transactional self-serve sales processes, product analytics are perfect.

Yet hybrid tooling that combines sales and product data is still quite new. As Sapphire Ventures noted:

To date, in a hybrid PLG model, there has been a disconnect between the ‘Product-Led' and ‘Rep-Assist' sides of the equation. The product usage data required to bridge the gap has long been available, but a dedicated tool to serve this data to GTM teams has been lacking.

Product-Led Sales has proven so compelling that many companies spend months building an internal tool. Now, what if going hybrid was as easy as the other two models? With Calixa, it is.

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Product-Led Fundamentals

3 Types of SaaS Sales Models

Joanna Huang
|
Product Marketer
|
Calixa

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February 23, 2022
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There are generally three GTM sales motions found at B2B software-as-a-service (SaaS) companies today. Each SaaS sales model seeks to maximize annual recurring revenue in different ways.

Traditional enterprise sales processes have been around for decades. Whereas, self-serve and hybrid models only emerged in the past several years.

Self-serve SaaS sales: The most efficient

Self-serve is a bottom-up sales process, with customers as the end users. We have a guide to free SaaS plans that dives into the details, but the benefits are easy to summarize:

  • Experience with the product increases momentum towards conversion,
  • Users generate leads, lowering customer acquisition costs, and
  • Retention increases, before and after conversion, when users get value from the free tier.

Users try out a product's free tier and potentially upgrade for more features. Self-serve pricing is affordable. In this sales model, deal sizes are small, but deal volume is high.

Self-serve sales model

A key component of self-serve is that there is no sales team. Customers sign up for the product for free instead of going through a lead form or demo. This product-led approach is increasingly common because it reduces customer acquisition costs.

Since customers decide how and when they upgrade, it’s up to cross-functional collaboration between product, sales and marketing to guide them along their journeys within the product. Product content raises awareness. Promotions create incentives. But still, the customer makes the final decision.

Support also tends to become self-serve. Knowledge bases, community forums, and other self-serve options help users resolve issues independently. Behind the scenes, analytics identify friction points so SaaS companies can continuously strive to build a frictionless self-serve product.

Benefits and challenges of self-serve selling

This model is heavily inspired by the product. Software-as-a-Service products are easy to use and purchase without hand-holding from sales reps. Creating a robust sales team simply isn't cost-efficient, given the pricing. For example, Calendly first began with a self-serve sales process. With the first paid tier being $8 a month, it wouldn't make sense to have a sales rep close just this one customer.

Self-serve is highly efficient. The limitation is that it's product-only, with no involvement from sales teams. It’s up to the customer to choose a higher service tier. B2B SaaS products have an untapped potential to accelerate sales for larger opportunities through a predictable outbound SaaS sales process.

Enterprise sales process: The biggest deals

While self-serve is simple and fully automated, enterprise selling is complex and high touch. It works top-down by convincing executive buyers of the product’s value. End users play little role in enterprise sales.

Enterprise SaaS sales model

Sales takes the lead in the enterprise model. Business development and account executives foster relationships within a prospective customer's organization. Ultimately, they want contact with the executive buyers who manage sizable teams and budgets. Through demos, negotiations, and due diligence, the account executive convinces the buyer that the product can transform the organization.

Marketing plays a supporting role in enterprise sales processes. Branding and awareness campaigns, market research, and other activities feed the sales funnel. Product roadmaps, social proof, and other sales tools help the sales team close the deals.

Complex enterprise SaaS products require dedicated support resources at every level, from executive buyers to the customer’s end-users.

Benefits and challenges of enterprise selling

Getting from prospects and leads to contracts and deployments takes time — months or years. Only at the end of this process do the customer’s employees actually use the product.

Both the sales team and buyer want this full-service approach because of the large deal size and enterprise product capabilities. The sales team must establish trust, explain a highly complex product, and tailor the deal. The buyer gets custom contracts, price negotiation, and a point of contact when problems occur.

That said, traditional enterprise selling has become less popular in recent years. Although executive buy-in is still needed for large deals, the drawn-out sales process and lack of initial adoption from end users is a big hurdle to closing deals. Today's buyers require a shorter, more agile SaaS sales cycle.

Hybrid SaaS sales models: The best of both

You might've noticed a bit of tug-of-war between the self-serve and enterprise sales models. How do you balance self-serve's scalable deal volume with enterprise selling’s profitable deal size? Do you have to pick between fully automated versus full-service?

Not at all! That's where the hybrid model, also known as the Product-Led Sales motion, comes in. Product-Led Sales marries bottom-up and top-down sales processes. Reps can turn free signups into paid users, or assist a team of active users into an enterprise tier.

Hybrid sales model

The first step is to separate prospective customers from the thousands of free users. Fortunately, the way customers use your product says a lot about their intent. Analytics and machine learning software spot these behaviors and flag high-intent Product-Qualified Leads (PQLs).

From there, you have a choice. Marketing-led programs make the most sense in early stages, such as moving free users to low-cost paid tiers. Automated marketing campaigns can reinforce the value PQLs are getting from your product, introduce features the PQLs haven’t used yet, and encourage them to make the next move.

When you want to move a team of active users — or an entire company — onto an enterprise tier, it’s time to bring in the SaaS sales reps. A hybrid SaaS sales process gives the team a head start towards establishing trust because there are already product champions within its organization that can help upsell internally. Reps can then present to executive buyers concrete use cases based on the value your product already provides the company. 

Benefits and challenges of hybrid sales models

Modern SaaS companies like Slack, Zapier, and Notion started out product-led and evolved into a hybrid SaaS sales model. It is a highly strategic GTM motion to choose. Of course, you can still keep a pure self-serve or pure enterprise motion alongside the hybrid model.

Most SaaS products today are user-friendly enough to leverage product-led acquisition—AND valuable enough for sales to speak with buyers at the right time to unlock additional revenue. A Product-Led Sales model combines effective automation with top-notch service. Your customers buy in the way they prefer, and your sales achieve non-linear growth.

There are purpose-built solutions for each SaaS sales process. Traditional CRMs are perfect for enterprise sales models. They track each prospect’s engagement with sales reps to manage the SaaS sales cycle. For tracking feature use and points of friction transactional self-serve sales processes, product analytics are perfect.

Yet hybrid tooling that combines sales and product data is still quite new. As Sapphire Ventures noted:

To date, in a hybrid PLG model, there has been a disconnect between the ‘Product-Led' and ‘Rep-Assist' sides of the equation. The product usage data required to bridge the gap has long been available, but a dedicated tool to serve this data to GTM teams has been lacking.

Product-Led Sales has proven so compelling that many companies spend months building an internal tool. Now, what if going hybrid was as easy as the other two models? With Calixa, it is.