Tired of waiting for an eternity to get cash for your SaaS sales? Waiting 134 days can damper your cash flow, leaving your business trailing behind in the fast-paced world of SaaS, where innovation races against time.
A short SaaS sales cycle is crucial for increasing sales velocity, driving revenue, and achieving your business goals faster. However, shortening the SaaS sales cycle is not about dropping a few stages of the cycle or spending less time on converting the prospects. It involves revamping the entire sales cycle and fine-tuning it to make it more efficient. The goal is to build a sales pipeline that works like a perfectly oiled engine.
In this article, we will share actionable tips you can follow to shorten SaaS sales cycles, streamline your sales process, and scale your business to greater heights.
The current challenges in SaaS sales
Sales cycles have become 3.8 weeks longer across all companies. The trend of longer sales cycles is evident across the industry, impacting both startups and enterprise businesses.
Several factors contribute to these extended sales cycles. The economic downturn has tightened budgets for B2B customers. Additionally, increased competition, with over 70,000 SaaS companies entering the market in 2024, is resulting in buyers preferring flexible payments, causing payment delays.
Moreover, customer acquisition costs have jumped by more than 65% in recent years, which has put more pressure on customer retention.
With these challenges, SaaS companies should be strategic in their business models and expenses. But why are the B2B sales cycles getting longer? Let’s find out.
Why are SaaS sales cycles lengthy?
As businesses increasingly rely on SaaS solutions to streamline operations, speeding up the sales process becomes critical both for companies and customers. Let us decode the multiple complexities that arise in a SaaS buying journey. By understanding them, businesses can reduce buying friction, unlock potential improvement opportunities, and optimize their sales cycle.
1. Product Complexity
SaaS products are often complex, with multiple modules, features, and workflows. More options and capabilities of a product result in a greater potential for complexity. People require more time to understand, use, and manage those features. Understandably, if you're selling a complex SaaS application, you must educate and guide your prospects before they sign up.
2. Lengthy and complex order approval process
Software buying decisions typically invoice a buying committee and not just an individual. The involvement of multiple stakeholders makes the buying process even more complex. These individuals have different roles and functions and work from different locations and time zones. Like members of various departments, buying committee members have different levels of seniority and varied interests. This process becomes more complex when a new decision-maker enters the process in the last 5% to 10% of the buying experience. This individual must often be engaged, educated, and sold from scratch.
3. Non-linear buying journey
The journey in B2B buying is not sequential. Different stages in the buying process include identifying problems, exploring solutions, and reaching an agreement. These stages happen simultaneously, in a separate order. Navigating through this process can indeed be challenging (and lengthy).
4. Pricing and payment challenges
Pricing and payment pose additional complexities in the B2B buying journey and contribute to prolonged sales cycles. Buyers seek the best prices and personalized pricing. Vendors generally are not left with options other than offering steep discounts and special offers to sell in lengthy, expensive sales cycles.
5. Huge investment required
The higher the price, the longer your B2B SaaS sales cycle will be. In fact, the longer sales cycle is like a byproduct of the intricate product-building process. Moreover, since SaaS products are expensive, more stakeholders are involved in buying. Every stakeholder needs to be convinced before the sale is initiated.
6. Tightened budgets
Previously, long-term contracts were favored for their commitment and often higher value. However, recent years have observed increased buying friction caused by financial constraints. The recent tech downturn has made long-term annual or multi-year contracts less desirable for buyers. With tighter budgets, SaaS customers find investing in new software more challenging and even harder to pay upfront. They either look for flexible payment options like BNPL or huge discounts to consider a purchase. Thus, buyers are hesitant to commit to contracts demanding substantial upfront payments.
8 proven ways to shorten SaaS sales cycles
As SaaS sales cycles naturally tend to lean towards the longer end of the scale, shortening them is usually at the top of the to-do lists of many SaaS founders. However, they do not know where to begin. We have listed the top eight ways you can reduce sales cycle time.
1. Find a Financing Solution That Fits
Several financing solutions may help bridge a cash flow gap caused by longer sales cycles. The key is to find the one that matches your situation.
For instance, Solutions like BNPL can cover working capital crunches and let you cover expenses while you wait for payments. On the other hand, non-dilutive funding can help you cover a more prominent, one-time expense you need to fund but don’t have the cash to take care of. It’s a good idea to review the various options available and identify the right solution for your business.
B2B Buy Now, Pay Later (BNPL) is a revolutionary approach allowing accelerated sales cycles. When a B2B deal is closed, BNPL provides immediate access to the entire contract value. This is regardless of when the customer settles his payment. This immediate access to funds boosts cash flow for swift allocation to expenses or growth.
B2B BNPL encourages buyers to commit to longer-term, higher-value contracts. It also allows immediate payment for high-value contracts while customers pay in manageable installments. It also increases Average Contract Value (ACV) without sacrificing potential customers.
One major BNPL player in the SaaS industry that has been assisting SaaS startups is Capchase Pay. It provides financial aid for buyers eager to access a SaaS product immediately. They allow customers to pay over time instead of an upfront lump sum, facilitating flexible payment installments. On the other hand, it ensures vendors receive the total contract value upfront and immediately post-deal closure.
2. Leverage automation to simplify processes
Using automation tools and targeted strategies can significantly reduce an average sales cycle. Automating certain parts of the sales cycle can drastically change how you approach your business operations. Automation eases data entry, lead qualification, and follow-ups in sales. By streamlining processes and saving time, your team can focus on strategic aspects of the sales process and reduce cycle time.
Additionally, you must understand that some tasks still require some human touch and can’t be 100% automated. For instance, lead research and outreach personalization might require a rep's time and effort. In such cases, automation can optimize the processes by equipping your team with the right resources.
Here is a list of the right sales stack to automate manual tasks and increase efficiency:,
- A sales CRM
- A communication platform
- Automation software
- Lead generation tools
- Lead scoring software
- A sales playbook app
- Documents/e-signatures programs
3. Have a transparent B2B SaaS pricing model
As a SaaS founder, you need to be clear on which of the pricing models you want to implement. If your pricing model is a bit complicated, your sales team might find themselves doing a lot of explaining. They'll need to break it down for the potential customer and ensure they understand it well enough to sell it internally. When the pricing model is confusing, it can make the prospect uneasy, and educating them about it takes time.
Now, imagine having a simple, fair, and competitive pricing model. It not only speeds up the sales process because reps can adapt it to fit the prospect's needs, but it also avoids the headache of managing and keeping things consistent. It's like having the best of both worlds – easy for the customer and smooth sailing for the team.
If your product is reasonably and competitively priced, you can close more deals (faster), attract more customers, and reduce churn. The correct pricing also results in a higher LTV from each customer, which all lead to a higher ARR.
Here are 5 B2B SaaS pricing models that you can consider for your business:
- Usage-based
- Tiered
- Value-based
- Freemium
- Per-user
4. Make the quote-to-cash process easy for prospects
The quote-to-cash (QTC) process includes many sales, order fulfillment, billing, and account management functions. The entire process—from product configuration and quote generation to closing the deal and managing revenue—is labor- and data-intensive and requires cross-functional collaboration. If your quote-to-cash is not streamlined, it will definitely take you longer to close deals.
Automating the quote-to-cash processes reduces the silos that exist in different departments. As a result, they have improved communication, resulting in a more efficient operation. The automation also reduces the sales cycle, which leads to more revenue gain through a better customer experience.
5. Adopt a multithreaded approach in sales
A report from Gartner states that the average complex B2B purchase involves 11 individual stakeholders. This sometimes flexes up to nearly 20 people. In general scenarios, sales reps connect with the person in charge of implementing your solution within their organization. However, with multiple people involved, reps must adopt a multithreaded approach.
Targeting key members within the buying committee and nurturing them can significantly streamline your sales cycle. In a multithreaded approach, the chances of successfully closing the deal persist, even if a key stakeholder departs. Additionally, this approach helps sales reps improve relationships across the buying committee.
6. Keep your marketing and sales teams aligned
Marketing and sales teams work to achieve the same goal—drive more sales. However, it is also true that there can be a disconnect between the marketing and sales teams. And this disconnect not only causes tension but can also cause substantial revenue loss.
Aligning marketing and sales teams can shorten the sales cycle. This happens because both departments more effectively understand both teams, what touchpoints they’re responsible for, and the impact of their actions on the other team.
By setting shared goals and objectives, businesses can ensure both sales and marketing teams work toward shared outcomes.
7. Ease your buyer’s journey
About 80% of B2B buyers expect the same buying experience as B2C customers. Make your buyer’s journey difficult, and you’ll find them with your competitors soon enough. On the contrary, easing your prospects’ journey can help you reduce sales cycle time efficiently. By creating a unified and streamlined customer journey across various channels and platforms, from awareness to loyalty, any gaps in the customer experience can be identified.
Post-sale engagements are also vital since SaaS isn't about making one-off sales. The initial sale is just a handshake; the upsells and cross-sells will prevent churn and revenue loss.
8. Use B2B sales tools and intent data
Leverage sales tools and intent data to ensure no leads fall through the cracks. CRM tools are designed to streamline various aspects of the sales process. The increased efficiency and productivity from simplifying tasks and automating workflows contribute to shortening the SaaS cycle. Sales teams can focus on high-value activities rather than figuring out buyer’s intent and high-value prospects.
Increase SaaS sales velocity with Capchase
In pursuing expedited SaaS sales cycles, leveraging advanced solutions is instrumental. One such success story unfolds with Capchase, a game-changing platform that accelerates cash flow for SaaS companies.
“As a SaaS company, reducing the friction in the sales cycle is certainly important and was the initial benefit I saw in Pay,”
— Ismail Nalwala, CEO of IOTAP
A standout success story comes from IoTAP, a B2B SaaS application specializing in subscription management and billing automation for IT businesses. With Capchase Pay, IoTAP experienced a remarkable transformation in its financial dynamics, reducing the sales cycle to just 30 days. The platform also saw a substantial increase in its sales velocity. This success exemplifies the tangible impact that strategic financing can have on the efficiency of SaaS sales cycles.
Wrapping up
So, are you ready to revolutionize your SaaS sales cycles and catapult your business into a new era of success? If yes, don't just leave our eight tips as words on a webpage. Put them into practice by reviewing your average sales cycle, identifying the gaps, and determining where you can improve! And, if along the way, you decide you need strategic financing to help you achieve your goals, don't hesitate to reach out to us.
Get in touch with our team today!
FAQs
1. How long is the average sales cycle?
The average sales cycle for a B2B SaaS company can range from a few weeks to several months. It can vary widely depending on the product's complexity, the buyer's decision-making process, and more factors.
2. What is a faster SaaS sales cycle?
A faster sales cycle is one where deals get closed faster than the average industry time, and there is less buying friction. Herein, the leads efficiently move from the initial contact to closing the deal in a shorter timeframe.
