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A SaaS Approach to Sales Funnel Stages

saas sales funnel

At first glance, the SaaS sales funnel stages may look similar to those we see in the traditional B2B buyer journey, but they require a unique approach. The subscription-based business model and an exclusively digital sales process require SaaS companies to tailor their funnel strategy in new and innovative ways.

In this article, we’re going to explore exactly what it means to take an SaaS approach to the sales funnel, including:

  • Why the sales funnel is so important to SaaS companies
  • SaaS-specific strategies for each stage of the sales funnel
  • How SaaS companies can assess if their funnel strategy is working

Let’s get started.

Quick Takeaways

  • Focus on customer pain points and establishing buyer trust before emphasizing product features.
  • SaaS decision-stage content like free trials and online demos can be powerful tools for convincing customers to choose your solutions.
  • SaaS companies depend on renewals and upgrades to drive revenue, meaning their funnel management never ends with initial purchase.
  • Calculate your customer acquisition cost (CAC) and customer lifetime value (CLV) ratio to determine if your SaaS sales funnel strategy is working. 

What is the sales funnel and why is it important to SaaS?

By definition, the sales funnel is a map of the buyer journey, showing the increasing levels of interest that buyers have in a product on their way to making a final purchase. A simple sales funnel model used by many companies is AIDA:

AIDA is a commonly used sales funnel model.

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While AIDA is a common framework, it’s not the only one. In fact, most companies have their own unique versions of the sales funnel to align with their processes and strategies. For example, some may split the “interest” stage into two to include discovery (when buyers are exploring potential solutions) and evaluation (when they’re comparing top choices).

The key is to know your own sales funnel and clearly define the buyer actions at each stage and which of your teams (marketing, sales, customer success) are responsible for the corresponding response.

SaaS companies operate primarily under a subscription business model, meaning they depend on continuous customer acquisition and retention to earn revenue. For them, the funnel definitely does not end after an initial purchase — renewals and upselling both make a huge impact on revenue growth.

The real value of the sales funnel for SaaS companies is that it helps them automate, optimize, and scale at every stage of the buyer funnel. It provides a repeatable framework for acquiring and retaining customers.

Let’s take a closer look at each stage of the sales funnel and how SaaS companies can approach each one strategically.

A SaaS Approach to Sales Funnel Stages

Awareness

At the awareness stage of the SaaS sales funnel, buyers have just recognized their need and are beginning to search for solutions. They aren’t looking for particular brands — just products and services that can help them solve their problems.

There are two critical things SaaS companies need to know are this stage:

This very simple example powerfully demonstrates the difference between a pain point and a solution:

Example demonstrating the difference between a pain point (need to stop knee from bleeding) and a solution (bandage)

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When you consider this perspective, it becomes clear that the goal for SaaS companies at the awareness stage is not to hard sell products or highlight features. Instead, you can provide the highest value by emphasizing pain points and the results you can deliver.

Keeping in mind that buyers are generally doing their own research at this stage, the best ways to deliver value are:

  • Search engine optimization (SEO) – Creating high-value online content (like blogs) and landing pages that drive search rankings and organic traffic to your website.
  • Lead Magnets – Downloadable content like ebooks or webinars that demonstrate expertise and educate customers.
  • Unintrusive outbound strategies – Digital strategies like social media ads and Google ads, or traditional strategies like tradeshows, print ads, and TV or radio commercials.

For SaaS companies, the awareness stage is all about establishing your expertise, reputation, and ability to deliver value. All of these build critical brand trust, which makes buyers more likely to consider your solutions in later stages.

Interest

In the interest phase, customers know more about their problems and the potential solutions that exist to solve them. At this stage, SaaS companies can begin to communicate more directly about product features as long as they relate back to customer needs.

Tactics like content and ads will still resonate with buyers at this stage, but you’ll also have more information on buyers now that they’ve visited your website, interacted with your content, or clicked on your ads.

Use that information to do some more direct selling at this stage. Email is a powerful way to communicate with potential buyers and nurture leads. It’s also their most preferred way to hear from brands) and nurture leads after they’ve entered the funnel.

Email is preferred by buyers over all other forms of brand communication.

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Social selling also works in the interest stage, too. LinkedIn is the most common platform for B2B sales, but they also happen on Facebook and other sites.

At the interest stage, it’s all about making a formal connection that puts you on a buyer’s list of top potential choices.

Decision

At the decision stage, it’s all about getting your buyers to choose you over your competitors. Buyers are interacting directly with your sales team by now, and it’s time for sales reps to focus on features and benefits to demonstrate exactly how they deliver value.

SaaS companies have unique decision-stage content they can share with buyers to help them realize the unique value your products deliver to their company, like free trials and convenient online product demos.

Sales reps should also take steps to answer all remaining questions buyers have to help them make a decision. At the decision stage, these questions are often about pricing, competitive comparisons, and implementation.

Action

In the SaaS sales funnel, action first refers to initial subscription. But it doesn’t end there. It will eventually include upgrades, renewals, customer support interaction, testimonials, product reviews, referrals (and the like).

At the action stage, SaaS companies must switch from sales to customer experience mode. The biggest mistake you can make at this stage is to stop engaging with the customer just because they’ve made a purchase. Instead, your sales or customer support team should be following up to answer questions, ensure implementation goes smoothly, monitor customer satisfaction, and eventually upsell or ask for feedback.

How to Know if Your SaaS Sales Funnel is Working

There are two useful metrics you can measure to assess whether your sales funnel strategy is working: customer acquisition cost (CAC) and customer lifetime value (CLV). CAC is the average amount of money you spend to acquire a new user. CLV is the average amount of money a customer spends during their time with your company.

As it relates to your sales funnel, you specifically want to understand the CLV:CAC ratio.

CLV:CAC ratio is calculated by dividing CLV by CAC.

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Your CLV:CAC ratio should always be less than one. If it’s not, then you’re spending more money on customers than you’re making, and it’s time to revamp your approach. 

An additional success indicator you can measure your monthly recurring revenue (MRR). It’s one of the most important revenue metrics for SaaS companies because it shows that your business is growing over time. It also shows that your process for moving buyers through the funnel (and retaining them later on) is working effectively.

Power Your Sales Funnel with Outbound Success

Outbound sales is a key driver of successful SaaS sales funnel strategy. RevBoss’s outbound email software and lead generation services are custom-built for startups, SaaS companies, consultancies, marketing agencies, and other B2B organizations. 

Schedule a quick call with us and find out how we can help you win more clients.

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