The majority of SaaS companies are making a big mistake that is lowering their revenue.
I use to make it too… This mistake exists because SaaS is changing. People are more comfortable with bringing software into their business which means that they’re finding and buying SaaS differently than before.
That’s all SaaS is, it’s just software as a service. It’s any software that helps a business make more money that they pay for monthly or annually.
This is where SaaS founders are messing up big time.
When a customer wants to work with you they’ve already evaluated the competition and decided that you are the software for them. They already know that they want your software and they have their wallet out.
When a customer wants to work with you they’ve already evaluated the competition and decided that you are the software for them. They already know that they want your software and they have their wallet out.
What they don’t know is how much they want to commit to your software.
- Do they want to bring your software into every team of their business (sales, marketing, operations, customer service, etc.)?
- How long do they want to commit to your software (1 year, 2 years, 3 years)?
The mistake we’re making as SaaS founders is that we’re forgetting about a big part of the customer experience.
The customer experience is how somebody who wants to buy a product from your company feels while buying that product. This experience starts with the first time they learn about your product and continues through their first purchase into later purchases.
The goal of a customer experience is to show people what your product can offer them, tell them what is the best option out of your priced packages, have them buy your product, and then keep giving them valuable products or upgrades.
Your packages are the different features that somebody can choose from. Usually there are 3 packages to choose from with the most expensive package offering the most features.
Each package is paid for monthly, but if you pay annually customers can save money (typically 20%). The longer they commit to your product the cheaper it is.
As SaaS founders we forget that people may be ready to buy but they’re confused on what package to buy and how long to commit to the software for.
This is the part of the customer experience where people know they want to buy but they don’t know what they want to buy.
- Do they need the enterprise package (the most expensive package option) because they’re going to use this software across all of their teams?
- Do they trust your software to be the solution they need enough to buy the 3 year subscription?
We’re not putting enough of our efforts on this part of the customer experience. Customers can compare our different packages on our website but this doesn’t answer their most important question.
How much can I trust your software to do what it tells me it’s going to do?
When we try something new, we don’t spend our last dollar and hope for the best. We analyze and figure out what the best decision is. This decision is almost always the safe bet.
It’s the bet that says “I’ll try this software but at the least possible negative consequence for my business.”
In this case, the least possible negative consequence is to buy the cheapest package for the shortest contract available.
This is where there is a missing link in the customer experience.
If you fill this gap, you can win more of a customer’s business upfront.
In this case, we’re optimizing our sales processes to account for customers that aren’t sure of how much they want to commit to a new software.
These customers need reassurance and I know this because I am that customer. Recently, I brought on a new customer success product to help my team and I was in the same position. I was asking myself:
- How far are we bringing this into the business?
- How long are we committing to it?
What I needed was the missing link. I needed somebody to fill the gap between me knowing that I wanted to use this software and me wondering if I should buy a 3 year contract.
Which was the riskier bet?
I didn’t know. So, I went with the cheaper, smaller investment that would give the software time to prove its value to me. Then I could decide to bring it into more of my business and for a longer contract commitment.
It was the safe option.
But, I could have changed my mind. I would have taken another option if I had talked to someone from the software company who could tell me what I should do.
I would have changed my mind if their customer experience led me through that buying decision.
That’s the mistake we can avoid as SaaS founders.
We can fill the gap between “I know I want this product” and “How much of this product do I want?”.
Here’s how:
#1: Talk to your customers who are in the last possible step before buying about what concerns they have about team and time commitment
This is the step most often overlooked by SaaS founders that aren’t upselling their products. They have customers that are ready to buy but are forgetting that customers don’t actually know what they want to buy.
They just think they know.
Your sales team can clear up this decision for your customers by talking to the ones who are ready to buy. Have your sales team ask them questions like:
- What package are you leaning toward?
- Why do you think this package is best suited for your needs right now?
- What makes you more comfortable with a lower time-commitment package even though it’s a higher price?
Customers are going to have responses like,
- “I’m leaning towards the smaller package.”
- “This is best suited for me because I want to test the product before fully relying on it.”
- “The shorter time commitment means that if the product isn’t working for my team, we can walk away and find a better product faster.”
All of these responses are showing you a gap in your customer experience. Your customers are still wondering if your SaaS product is going to help them and so they are taking the smallest risk when they buy it.
Here’s what you’ll do with their responses.
#2 Figure out what content you can create based off of their concerns
All gaps in your customer experience can be filled with content that talks about their concerns and then shows them why they don’t need to be concerned.
In this case, your customers are having commitment issues. They’re nervous about buying a big package and adding a new customer success product into their current system.
You’re going to fill the gap in your customer experience by creating content that specifically calls out these concerns.
This content is just the answer to the concerns your customer was having before buying. It’s content that explains why your product isn’t a risk, that they will have full customer support while bringing your product into their business, and that if they need to walk away from it…they can.
Now, you’re going to use that content.
#3: Get your sales team to use this content with customers that are ready to buy
This content can be on your blog, in your email funnel, and in your sales scripts. As long as it is wherever your prospects are making their final buying decision, you can fill the gap in your content.
Then, you’re not making a major sales mistake and down selling your own products (without even realizing it).
How people are buying SaaS is changing and it has left a gap that needs to be filled.
Fill the gap, increase your revenue.
These are the type of SaaS business lessons that I talk about in my newsletter. The goal is to make your business better by showing you how to grow your SaaS company. I’ve sold 3 companies, invested in over 40, and coach SaaS founders looking to go to the next step. It all starts with this 3-part video series.
