Everything You Need To Know About A SaaS Sales Funnel

What Is A SaaS Sales Funnel?

In the world of sales and marketing, sales funnels remain an essential tool as they capture a buyer’s journey in its entirety, from the initial awareness of a problem to developing an interest in a product or service for a desired solution, the critical decision-making process wherein a potential buyer evaluates which product will best fit the bill and the final act of purchase.

In essence, this is a visualisation-based, non-linear model tracking a prospect’s behaviour and activities (read interest and commitment) before a deal can be closed. 

As the ultimate goal of SaaS companies is to turn potential customers and free users into paying subscribers, a sales funnel helps them identify the gaps that deter would-be buyers. Once the bottlenecks are known, companies can review their strategies and tailor their efforts at every stage to improve conversion.

For example, if pricing is a constraint with a prospect at the final stage of a sales funnel, a SaaS player may offer a workable plan or pricing. Converting a lead could be a tenuous process, though, as prospects may move back and forth in the sales funnel long before a sales decision is reached.

Given that a sales funnel is all about a customer’s journey, it can reveal valuable insights into sales leads such as where the prospects are coming from, their specific requirements and the time they take for decision-making. These are critical factors based on which SaaS companies can customise marketing initiatives and generate useful marketing metrics such as increasing reach and enhancing pre-sales engagement.

How A Four-Stage Sales Funnel Works

Ideally, a SaaS sales funnel enables companies to focus on those most likely to convert from free trials or freemium products into paying customers. Here are the four distinct stages which can take SaaS sales to the next level:

Awareness: This is when potential customers become aware of a pain point and explore a suitable product or a service for the first time. Details of these products/services may reach prospects through content, marketing campaigns, social media feeds or word-of-mouth referrals. Plus, there can be free trials or other promotional activities to gain traction. The key is to attract a big audience at the top of the sales funnel from where sales leads will be generated.

Interest: In the next phase, prospects may show interest by signing up for newsletters, downloading free trials for a hands-on experience or contacting relevant teams for more information.

Decision-making is the evaluation stage when potential customers start comparing similar products/services to gauge their suitability. This may lead to a neck-and-neck situation among competitors, and many SaaS companies offer free trials to ensure that prospects can experience the full value of their products.

Action: Finally comes the purchase phase, with prospects becoming paying customers. However, the sales funnel continues to be active as companies monitor existing customers for upselling and cross-selling.

Sales Funnel Vs Sales Pipeline: How They Differ

These two terms are sometimes used interchangeably, but there is a crucial difference. While the sales funnel focusses on a buyer’s journey and provides holistic insights into how a deal happens, the sales pipeline is a linear exercise to analyse an organisation’s sales process, from pushing an initial lead to deal closing and standard post-sale services.

Understandably, both terms are interlinked in many ways. But a sales pipeline generates different metrics such as setting sales targets, budgeting and forecasting. Here is a look at the four key components of a sales pipeline:

Lead generation: Effective marketing is crucial to bring potential customers to the top of the sales funnel (its widest part). Once there, the sales team contacts these potential customers to determine whether they are a good fit for the company’s products or services. Leads are typically identified when prospects sign up for demos/free trials or enquire via email or phone.

The sales team will then evaluate them based on various parameters such as requirements, product/service match, budget and purchase timeframe. For example, if a business is planning to buy a SaaS product in the next financial year, it will be further down the sales pipeline compared to those eyeing an immediate purchase.  

Preparing proposal & customising offers: If everything works out during an assessment, sales will prepare a proposal (along with customised offers, if required) and finalise the contract after discussions. 

Deal closing: This is the final phase when a customer is gained or lost. In case of a successful deal closure, the SaaS company will sign a sales contract with a qualified prospect.

Metrics & goal setting: Unlike sales funnels, sales pipelines quantify outcomes and set up important metrics by analysing sales leads. These will help monitor a company’s/sales team’s performance, rework strategies and forecast sales goals.    

Five Ways To Optimise A SaaS Sales Funnel

• Create brand awareness: For early stage SaaS companies, creating awareness around the brand is essential before aggressively promoting products and services. Utilising top-of-the-funnel (TOFU) content such as blog posts, ebooks, white papers, tutorials and how-tos can effectively showcase product benefits.
• Promote products & services: Effective promotion of products and services is crucial for converting free usage to paid subscriptions or upselling to existing customers. This can be accomplished through targeted digital campaigns, newsletters, social media and other means.
• Optimise outreach: Optimise content with keywords, align it with search intent and use various platforms to establish authority and credibility.
• Identify strong leads: Develop a process to identify and prioritise promising leads based on authority, intent and actions taken. Lead scoring is a widely adopted method employed by marketing and sales teams to assess the likelihood of a purchase.
• Foster user habits: Encouraging daily tool usage is critical for success. Using strategies like push notifications to promote everyday use, familiarise people with the technology and provide visibility into outcomes are all-important.