How to Build a SaaS Sales Pipeline that Converts
How to Build a SaaS Sales Pipeline that Converts
From cold to gold
Thanks to Scott Cowley of The Sales Mastermind, who wrote and contributed this article (so you know it’s good).
This post is for leaders of two types of early-stage SaaS:
You have some paying customers, most likely from the Triple F group - friends, family, and fools, and you're trying to sell to non-Triple Fs … or …
You have built a customer base from only referrals and need to branch out for sustainability.
If you are pre-product or have zero paying customers, I recommend other articles like:
Below, we'll go through three stages of a pipeline that converts:
Lead Generation
Deal Discovery
Closing
Before we get started, let me introduce myself.
Hi, my name is Scott and I accidentally gave myself the moniker "The Sales Mastermind." I work with SaaS founders who sell, but aren't *sales* people.
One way I help is, The Sales Mastermind Newsletter. It's a 4 mins or less, free, hyper-actionable newsletter every Sunday, with a one-click unsubscribe.
Lead Generation
A lead is anyone who has opted in to you/your product/your business. Leads are the step before you have a chance to qualify them.
To close a deal, you first have to open a conversation. This is lead generation.
The first step in generating leads is to decide on a sub-niche to target.
A sub-niche is the smallest possible group of people with the pains you're trying to solve.
You want at least three beats in the early days of working out your sub-niche. These are industry (1), geography (2), and pain (3). Some examples:
(1) Dentists in (2) London who are still (3) doing their bookkeeping themselves.
(1) Gym owners in (2) Thailand who are struggling (3) with filling their classes.
(1) Electricians in (2) Mexico who aren't (3) converting enough site visits.
Best Practices:
Aim small, miss small - the smaller the sub-niche, the faster you can validate if that audience is receptive.
Smaller than you think - even the above should be narrower—the smaller the sub-niche, the better.
Small businesses - target small businesses with a willingness to try new approaches. The fewer people involved in the buying decision, the faster you'll get feedback on your offer.
Pain first - when picking a sub-niche, come up with the pain first, then the industry, and then the geography. But when speaking to your sub-niche phrase, it is industry, geography, and pain. For example, "Dentists in London who are still doing their bookkeeping themselves."
Buyers to target
Once you have a sub-niche, it's time to pick a buyer (or three).
In any given customer, there will only be a few people who care about the pain you solve, and there will be even fewer people who can definitively say yes.
Focus on Economic Buyers. EBs can say buy when no one else wants to. They can also find money for new projects, as they don't need permission from other stakeholders. These are typically CEOs, MDs, Founders, and Owners of small businesses.
(NOTE: Just because they can unilaterally say Yes doesn't mean they won't involve their team)
Stay away from Users. Users are people who have the pain but not the power to solve that pain. They can be anything from (the worst) individual contributors to (slightly better) middle management or may even have a C-Suite title. But Users can't approve spending on their own, and they won't definitively say yes when others say no.
For the same role, some businesses will call the big boss "Founder," others "CEO," and others still "Managing Director." When picking your buyer for the sub-niche framework, describe them in a language they use for themselves.
Push vs Pull
Now you have a sub-niche and list of titles, it's time to generate interest.
Start by finding where they hang out. Common examples are social networks like LinkedIn, Facebook, Reddit, or private communities such as those hosted on Slack, Circle, or Skool.
Once we know where they are, we can push them (outbound) or pull them (inbound) towards us.
Pushing leads involves cold messaging, calling, or emailing buyers your hook, offer, and call to action.
Pulling leads involves posting content and driving them towards conversion events such as webinars, summits, etc.
Once you have engagement from your leads, it's time to decide if they're worth your investment.
Deal Discovery
One of the biggest mistakes in early-stage sellers is engaging with anyone and everyone who shows interest. Instead, you need to ruthlessly qualify leads to decide if they're worth your time.
This step is called qualification, and the goal is to uncover if there is a reasonable chance they will buy from you.
Qualification is a two-way street, but it is not an equal street.
Every hour the wrong people spend with you is only slightly wasted for them. They may learn something or use the meeting to show initiative and look good in front of their boss; overall, they still get something out of it.
But every hour you waste with bad fit buyers, or those outside your sub-niche, is one of only a few hours you can afford to spend on sales this week.
Therefore, it is your responsibility to be ruthless in speaking only to those who can and are willing to buy within a reasonable timeframe. Rule of thumb:
<10k annual contract value (ACV), this is days to weeks
10k-20k ACV, this is weeks
>20k ACV, this could be weeks to months
Qualify and plan accordingly.
Buyer Questions
For any buyer to make a buying decision, there are three questions that you need to answer:
Why should the buyer do anything?
As opposed to remaining in the status quo
Why should they buy now?
As opposed to waiting
Why should they buy from YOU?
As opposed to the 1000s of other ways to solve the problem you solve
You're on your way to a qualified deal if you can help the buyer find satisfactory answers.
uBANT
You also need to qualify any deal from a seller's perspective. For single decision-maker deals (i.e., the ones you want to start with), I love uBANT.
BANT has been around since the 70s. uBANT is an updated version for the 21st century. It stands for updated, budget, authority, need, and timing.
To make the most out of uBANT, imagine sitting in a meeting with your boss (imagine you have a boss) and justifying to your boss why this deal is worth your time.
Your boss is going to ask you the following questions:
Budget - if they believe in your product, can they afford it?
Authority - who needs to be in the conversation to get a "yes" from the Economic Buyer?
In small businesses, many Users can say "no," but typically, only 1-2 Economic Buyers can say yes.
Need - Why do they need the product you're selling? Why can't they ignore the pain or keep doing what they are doing now?
Timing - When does the buyer need to realize the change? Why that date?
If you can't find decent answers to the above, chances are the buyer can't either, and it's better to cut your losses.
It's ok for the seller to tell the buyer they're not a good fit. Save your time, effort, and energy for buyers more likely to buy soon.
Closing
Now you're confident there is a reasonable chance the buyer is qualified; it is up to you to make the deal happen.
Before you can close a deal, someone else has to decide to buy. Closing is the end for the seller (not the end for the buyer; see below), and it is a lagging indicator.
Also, buyers buy for their reasons and on their timelines. The seller is merely the facilitator who moves the deal forward.
Clarity
One of the most complicated pieces in sales is ensuring that you are selling the buyer the thing they want to buy.
That means you must first understand the outcome they want/need/crave. You need to be able to clearly articulate this back to them, and you need to link exactly how your product will satisfy their needs.
As mentioned above, the seller is often finished with a deal once the buyer signs a contract. However, the buyer is only done once the pain is solved. This is usually weeks or months after the contract.
Once the outcome is clear, buyers also need clarity on everything that happens next. Specifically:
How do they buy - self-sign up, sign a contract, add a credit card?
What happens, and in what order?
Who is responsible for each of the next XX steps?
Compelling Event
Humans experience more significant pain from a loss than joy from an equal gain. Buyers are human; they are risk-averse.
This means there has to be a persuasive reason for the deal to close.
Without this persuasive reason, most buyers will delay, as every day they delay is another day they don't lose.
Ideally, you want to tie their persuasive reason to a specific event or deadline called a compelling event.
The compelling event can be personal, professional, or organizational.
For example, buyers and sellers see an uptick in decision-making before they go on holiday. Planning the close date around a holiday is excellent as it draws a clear line in the sand.
Other examples of compelling events are:
Major personal milestones - like marriage or the birth of a child
Calendar specific - like the end of the week, month, quarter, or year
Company-specific - like budget season, new hires or starting a project in time for bonus.'
Proposals
Whenever possible, have the buyer sign an agreement.
Signatures protect you and them, and make sure the particulars are in writing.
Keep the proposal buyer-centric and focused. Remove slides/pages about the team or company history; if the buyer is desperate for this information, they'll ask.
Aspects of a great proposal are:
Product/Project description
How long they're committing for
Project objectives for the buyer
Summary of inclusions
Summary of known and standard exclusions
Project timelines with key milestones, especially for implementation/onboarding
Investment Options / Pricing
All further expectations from either side. For example, offering a discount for a case study
Space for signatures and dates from both sides
Feel free to also add great design, logos, and graphics.
Proposals are usually shared with the buyer's colleagues without you being there, so less is more and focus on the buyer's pain.
Once you've ironed out all the terms, completed two or three revised proposals, and the buyer is ready to start, it's time to agree on a date and collect signatures to close the deal.
Final Thoughts
Throughout this piece, we have covered all the steps required to build a SaaS sales pipeline that converts.
The final thought to leave you on is to remember that the buyer decides to buy before you make a sale. And the sales process starts after and ends before the buying journey.
So, if you optimize for one thing, optimize to match your sales process with the parts of the buyer journey where you can support the buyer the most.
Now, all that is left for you to do is follow the steps and close some deals.
If you want more from me, I can be found writing weekly newsletters for SaaS founders who sell but aren't *sales*people over on The Sales Mastermind.
Appendix
A few tactical ideas that didn't make the cut above:
If you absolutely can't BAMFAM, there is a backup
Drop Really Bombs; they're fun
And hey, if you want to dive deeper into strategies like this for growing your agency with recurring revenue, or getting your SaaS business unstuck, grab some time and chat with Nate.