10 years ago we wouldn’t write this post as it would be deemed unnecessary. The SaaS market wasn’t so crowded as it is now. All new SaaS companies could attract and retain users without difficulty. But the situation has changed.
According to Allied Market Research, the global SaaS market size:
- was valued at $121.33 billion in 2020
- is forecasted to reach $702.19 billion by 2030
- is predicted to grow at a CAGR of 18.82 percent from 2021 to 2030.
Consequently, those seeking a SaaS product to use now typically have options to choose from. This makes them picky, careful, and critical. Moreover, there is no guarantee that your potential buyer won’t lose interest in your product on the road to purchase. Thereby, a SaaS provider should expertly guide leads through its purchase SaaS funnel until they decide to become a customer. In other words, to buy your product, leads often have to get to the bottom of your pre-prepared SaaS marketing funnel.
A lot has been written about SaaS platform creation process. This time we speculate on how to build a sales funnel for SaaS.
What is the sales funnel and why is it important?
A sales pipeline or funnel is the marketing term describing the trip your prospects take on their way to purchase. The sales funnel includes several steps also known as the top, middle, and bottom of the pipeline. However, these steps might vary based on your brand’s sales model.
Sales pipelines help you visualize all the steps that leads take on their way to purchase. You can consider each step taken as a micro-conversion that can be improved to increase the ultimate conversion. In case you identify a higher-than-expected drop-off rate for some of these steps, you can analyze them to determine flaws and try to make enhancements. Using such marketing tools as Google Analytics will allow you to:
- analyze the flow of visitors and their behavior
- identify pages that have high drop-off rates
- define the number of visitors passing through each step of the funnel.
Any new prospect can enter your pipeline right at the top, the widest part of the pipeline. As leads get to the funnel, there are steps to take to keep going down right to the bottom. But leads can also leave your funnel at any point.
Each step prospects take while moving down is the next stage of the pipeline, leading them closer to the narrowest point. This point is the stage of decision or conversion.
Specifics of the SaaS sales funnel
Unlike e-commerce companies that strive to attract new clients by means of prompt marketing promotions, SaaS providers have to follow a more thoughtful and considered approach. They need to convince potential clients that the product they offer is the most suitable solution and build trust by ensuring engagement and demonstrating expertise.
Following the road to their purchasing decision, prospects hit multiple touchpoints. Keep in mind that the quality and relevance of your content and ads will impact the conversion rate. Analyzing your SaaS sales pipeline will enable you to identify flaws and figure out where and why potential customers leave and don’t convert.
SaaS sales funnel stages
Combing through marketing material, you’ll definitely find the abbreviation AIDA. It stands for 4 phases that average website visitor’s behavior corresponds to. These phases are:
You should apply the specific marketing approach so that a prospect will smoothly proceed on their sales funnel journey. It’s highly important to provide a prospect with corresponding content depending on the stage they’re in. Don’t forget that the wrong content at the wrong time might make the prospect leave your sales pipeline.
AIDA can be interpreted in different ways depending on different marketing sources. But we are sure that the HubSpot interpretation is the most suitable for the SaaS domain. HubSpot delineates the following Business-to-Business SaaS sales pipeline phases:
At this stage, the main purposes of your content strategy should be increasing interest, building a relationship of trust, and educating. This is due to the fact that your prospects have lots of questions and seek answers to them. Your leads might even be aren’t aware of the exact product that can help them solve the problem or achieve their goals.
Your prospects are researching your company and the product you offer. Chances are they came across one of your blog articles when surfing the internet or found a reference of your company on other websites.
To attract more prospects, you should work on raising brand awareness. The following activities will help you achieve that:
- Conduct advertising campaigns to promote the content you produce and your SaaS product
- Come up with a PR strategy and follow it to attract potential customers’ attention
- Develop a SEO strategy to increase organic traffic
At this stage, your purpose is to grow into a trustworthy source of information for your prospects. Each time they visit your website, they find more content which makes them step the next funnel stair. They enter the engagement stage by signing up to receive your company updates or sharing their email address to get free content. These actions signal that the prospect is open to the content you provide. It’s high time to add them to your database and keep informing them about your product and services.
To make use of your leads’ interest and enhance it, your brand should be constantly within their sight. Email outreach is a proven approach that will help you provide leads with valuable content including articles, case studies, handbooks, whitepapers, and webinar snippets.
Don’t forget to track how prospects interact with the material you send. Produce content that educates them in how your product might help them to solve their problem or achieve their goal. When you see that your prospects opened numerous emails, it’s high time to send them tutorial articles and success stories about using your product. Moreover, you can begin directing prospects to pages that describe your product to help them explore the solution features.
At this stage, it’s highly important to keep informing your potential customers about the benefits your product provides to move them closer to the purchase. You should keep nurturing your leads by sending them customer reviews, comparison articles, new case studies, etc. But it’s also the right time to offer a free trial to help leads see your product in action.
The trial period is the moment of truth – your prospect might become your customer or leave dissatisfied. Consider also implementing the freemium model as part of the stage of exploration. Limited by a narrow list of the free plan’s abilities, your prospects might be willing to upgrade. You should encourage them to do that by highlighting the benefits provided by the payable version of your product.
This is when you already have to sell your product and, what’s even more important, to retain your existing customers. As each SaaS service is subscription-based, you should take care of your monthly recurring revenue. Thereby, concentrating solely on attracting clients is not a forward-looking approach. Keep in mind that retention activities should be included in your customer acquisition strategy.
The following activities will help you ensure your clients’ retention:
- Provide clients with surveys to measure their satisfaction. Analyze this feedback to enhance your SaaS solution.
- Invite your active customers to beta-test a new tool for free to collect their feedback and provide them with more value.
- Send clients personalized newsletters educating about your SaaS solution’s updates and corporate news and other informative domain-related content.
- Engage your customers providing custom-tailored promotion offerings.
How to track sales funnel effectiveness
So that maximally improve your sales pipeline, you should choose and monitor proper KPIs. Below we describe some of the most important metrics just to give you food for thought.
This metric is sometimes called attrition rate. It’s the rate at which clients stop using your product or service over a specific period of time. This metric signals the longevity of the SaaS solution you offer and drop-off points you should enhance. In case you offer a freemium plan, focus on drop-off points in which your clients quit using your solution or often refuse payable plan subscriptions.
The number of potential buyers
In case you have a steady stream of prospects, you’ll definitely have new leads who are likely to become your regular customers.
We advise tracking the following things when monitoring your prospects:
- the amount of leads (what number of prospects do you have?)
- the amount of qualified leads (what number of prospects can afford your product, have the right permission level, and want your product as soon as possible?)
- sources of leads (where are your prospects coming from?)
- lead velocity rates (what is the growth percentage of qualified leads month over month?)
- marketing-qualified leads (what is the number of leads that have been reviewed by your marketing team and satisfy the criteria necessary to be transferred to your sales team?)
- sales-qualified leads (what is the number of leads who have moved through your sales funnel to a position where your sales team can try to turn them into active clients?)
Your conversion rate can be a sort of litmus test of your sales process and is a necessary metric to measure. There are lots of kinds of conversions when it comes to sales pipelines. But the most important conversion type is the one that converts your prospect into a paying client.
Use the following basic formula:
(Won deals / Prospects) * 100
The result will also tell you how effective your sales pipeline is and how precisely you’re qualifying prospects.
The metrics above are among the most important ones to track for your SaaS product. But we suggest you not limit yourself to them and also track:
- sales velocity (the measurement of how fast a lead moves through your sales funnel and generates revenue)
- lead acquisition and client acquisition costs (all costs associated with getting one prospect or client)
- customer lifetime value (the total worth to your business of a customer over the entire period of your relationship)
- monthly and annual recurring revenue
We hope our article was helpful enough to help you build a funnel for SaaS. Always make sure that your leads’ journeys through your website make sense. Since you’re willing to attract the right audience to purchase your SaaS products, properly advertise them. Once visitors get to your website, let them see a lead magnet offer and guide them through all the stages of your pipeline until you convert them into your regular customers.