July 18, 2016

Clouded judgement: Convince your sales team to move from on-premise software to SaaS

By 2018, the enterprise SaaS market is expected to increase five times over and be worth a whopping $50.8 billion in revenue, representing over a quarter of the entire worldwide enterprise application market.

There’s no doubt about it: SaaS is the future of the software industry.

Last year, Microsoft announced their move towards a service model for their operating system, with Windows 10 being the last operating system that they’ll ever produce.

In 2013, when Adobe announced that they were switching over to a SaaS model, consumers were outraged. However, by December 2015, recurring revenue from subscriptions represented 74% of Adobe’s business and the company achieved record annual revenue of $4.8 billion.

Instead of shelling out $1,200–$2,500 upfront for a license to Adobe’s software suite, customers can now pay a smaller amount per month under the subscription model. SaaS’ pay-as-you-go and pay-for-what-you-use models make powerful tools readily available for practically any budget.

But you already know that. Your sales team, on the other hand, isn’t convinced.

So how do you convince salespeople who have been selling license-based software for most of their lives to switch over to SaaS sales?

Understanding SaaSphobia: Why your sales team is resisting the change

First things first: You need to understand why your sales team is resisting the change.

When your salespeople don’t want to switch to SaaS sales, it’s usually for one of three reasons: Fear, skepticism, or financial concerns. Let’s take a closer look at each.

1. Fear

Until now, your salespeople have probably spent their entire sales career selling software licenses, and now you’re asking them to abandon what they know and commit to something completely different.

Your team is probably afraid: They don’t know exactly what the transition is going to look like or how it will affect them; all they know is that everything they’re used to is about to change.

2. Skepticism

If your team has been in software sales for long, they’ve probably seen countless fads come and go over the years. Maybe they even believed in some of them, only to see them die out six months later.

Nowhere do things change as often as they do in the software industry, and your team might not be convinced that SaaS isn’t just another buzzword that’ll fizzle out by next year.

They’d rather stick with what they know than invest themselves in an idea that may or may not pan out in the long-term.

3. Financial concerns

Imagine you’re a salesperson with a commission rate of 10%. The software you’re selling can be purchased one of two ways: A five-year license for $30,000, or a SaaS contract for $500/month.

The five-year license nets you a $3,000 commission upfront, and the SaaS contract earns you $50/month. You earn the same amount over a five-year period, but you earn it a lot slower with the SaaS contract.

To the financially motivated, switching to SaaS sales might seem like a step backwards in their career.

Overcoming SaaSphobia: Leading the change

You may not agree with your salespeople’s concerns, but you can’t ignore them. It’s your responsibility to sell your team on SaaS so they’ll sell it to your customers.

Here are three ways to build a sales team that’s excited about SaaS.

1. Lead by example

Change has to start at the top. It isn’t fair to expect your salespeople to embrace SaaS sales if you’re going to keep chasing high-commission license deals.

Take charge of this transition by being the first to make the hard changes, like:

Reaching out to your existing accounts and informing them of the transition
Turning down lucrative license-based deals
Developing SaaS-specific sales documentation

If you want to inspire change, it has to start from within.

2. Add new salespeople

If you have a team full of SaaS cynics, hire a couple of optimists.

Sometimes a new face and attitude can make change a little easier. For example, you could hire:

A sales manager who knows how to lead a SaaS sales team
An experienced salesperson who has made a career out of SaaS sales
Or a junior sales rep who is excited to learn about SaaS sales

If you do onboard new reps, make sure they’re strong-willed enough not to give into your current team’s cynicism. It’ll be an uphill battle, so make sure they’re in it for the long run.

3. Trim the team

In a perfect world, your entire sales team will be excited about SaaS. But that isn’t always realistic.

If you’ve committed to a SaaS sales platform, you need a team that’s going to support that decision. In a perfect world, that would be the team you have now. But that isn’t always the case.

Sometimes you’re going to need to make cuts for the good of your product and team, but don’t worry: There are ways to fire someone while still providing value.

Be the change

The biggest mistake founders and managers make during this transition is forcing their team into SaaS sales before they’re ready.

If you tell your team, “Just try SaaS sales. You’ll see, it’ll be great.” they’re probably going to prove you wrong.

You’re asking them to make a huge change, and it’s your responsibility to make sure they’re ready for it.

You want a team that’s just as passionate about SaaS sales as they were license sales. That’ll take time, training, and commitment. But once you’ve created your first SaaS sales team, it’ll all be worth it.

Now get out there and show your team that SaaS is the future, and it’s a future to be excited about.