A Step-by-Step Guide to Designing a High-Converting SaaS Sales Funnel
A SaaS business could have happy customers and higher revenue, but scaling it successfully requires focusing on the sales funnel.
An SaaS sales funnel guides leads from building product awareness to becoming loyal customers. As buyers become more cautious about the brands and products they associate with, it’s essential to provide value at each stage of the funnel.
Let’s examine the critical steps to designing a high-converting SaaS sales funnel to acquire quality leads and reduce churn rate.
What is a SaaS Sales Funnel?
A SaaS sales funnel is similar to an email marketing funnel — it’s a structured journey map that guides potential customers through the funnel until they become paying customers.
Think of it as a typical funnel—a large percentage of people enter the funnel, and only a handful reach the bottom. Each stage in the funnel represents the customers’ decision-making process, which means your marketing must address customers’ pain points and provide value.
Unlike e-commerce businesses, where simple and short promotions can increase conversions, software businesses require a strategic approach to presenting information. Customers purchasing a software subscription often require in-depth information that convinces them to move down the sales funnel.
The way you treat your customers along the journey also plays a vital role in determining who stays till the end.
The Importance of Building an SaaS Sales Funnel
Your SaaS product may be unique and well-priced, but it does not sell itself. SaaS customers compare and take a lot of time to decide on a product. You must establish a strong connection to move leads further down the sales funnel. There’s no better way than to stabilize each stage of your sales funnel.
Here are key reasons why a SaaS sales funnel changes the way your customers look at your business:
- Improved conversion rates: A well-designed Saas sales funnel removes bottlenecks in the customers’ journey, improving conversion rates.
- Enhanced customer experience: A sales funnel ensures leads receive the right information at the right time, building trust in your business.
- Increased revenue: Optimizing your sales funnel can help you find opportunities to upsell, cross sell, and increase average order value.
- Data-driven decision making: A sales funnel provides valuable customer data that can be used to track and improve your marketing approach.
- Scalability: The different stages in your SaaS sales funnel can help you accommodate growth and refine the stages to meet customer demands.
As a software business, you can gain a competitive advantage by providing a premium customer experience and higher conversion rates. Your marketing leads are more likely to buy in when you develop a deep understanding of their pain points across different stages in the funnel.
However, to get there, you need a thorough understanding of the various components in the sales funnel.
Key Components of a SaaS Sales Funnel
The table below breaks down the key components of a SaaS sales funnel.
| Component | Goal | Channels | Tactics |
|---|---|---|---|
| Top of the funnel (TOFU) | To create brand awareness by introducing your SaaS product to a wider range of audience | ‣ Content marketing ‣ Social media ‣ Search engine marketing ‣ Public relations ‣ Paid advertising | ‣ Blog posts ‣ Webinars ‣ White papers ‣ Email marketing ‣ Social media content |
| Middle of the funnel (MOFU) | To educate prospects and build relationships with people interested in your software subscription | ‣ Email marketing ‣ Content marketing ‣ Lead magnets ‣ Gated content | ‣ Personalized email campaigns ‣ Case studies ‣ Demos ‣ Free content |
| Bottom of the funnel (BOFU) | To deliver critical software information and persuade leads to act | ‣ Sales teams ‣ Sales demos ‣ Pricing information | ‣ Product demos ‣ Personalized sales pitches ‣ Customer testimonials |
Let’s learn about these components in detail below.
1. Top of the Funnel (TOFU)
TOFU is where you persuade a prospect with a need for your software services that you can provide solutions to their problems. Build credibility by introducing your software’s unique characteristics. You can send explainer videos and blog articles about how your product enhances customers’ productivity. If there are special features that make your software stand out, include them in the videos or articles, too.
The TOFU stage is best used to build interest in your business. Utilize different forms of digital marketing, including emails, to reach potential customers.
2. Middle of the Funnel (BOFU)
In this phase, the leads are aware of the capabilities of your software, making it easier to transition to in-depth videos and product demos.
You can reach potential customers through personalized emails, including discounts and coupons, if any.
Case studies are another way to pass on critical information about your software as a service. You can highlight the benefits and features of your product to build brand credibility.
People generally research your competitors and analyze options. This is a good time to tell leads how your software solves common issues and include pricing options.
3. Bottom of the Funnel (BOFU)
The ultimate aim in this stage is to convert SaaS leads into paying customers. So, this step requires reinforcing brand values and attributes. You may train your sales teams to close deals by addressing potential concerns before the lead asks.
Personalize the sales pitches according to each customer’s needs. For example, a merchandise company will have different uses for your SaaS product than a nursery. They may also require different subscription models and features.
The final step should be to convince leads to take the desired action such as “Scheduling a demo” or “Booking a consultation.” Utilize testimonials and reviews to instill trust and close deals quickly.
Leads go through the different stages a prospect travels, from learning about your product to becoming interested and finally, purchasing it.
SaaS Sales Funnel Stages
The table breaks down the stages of a typical SaaS sales funnel.
| Stage | Description | Key Metrics |
|---|---|---|
| Awareness | Potential customers become aware of your software product or service | ‣ Website traffic ‣ Impressions ‣ Reach |
| Interest | Prospects show interest by signing up for newsletters or engaging with the content about your software services | ‣ Click-through rates ‣ Engagement |
| Consideration | Leads evaluate whether your software product can solve their needs | ‣ Marketing qualified leads (MQL) ‣ Trial sign-ups |
| Purchase | The prospect decides to buy your software services after thorough research | ‣ New customer acquisition revenue |
Let’s take a closer look at these stages.
1. Awareness Stage
At this stage, leads are actively looking for a software product that can solve a particular pain point. They may review other SaaS companies and products. Sometimes, leads may not understand their problems fully, and not know which solution to pick.
They may have watched a product reel on Instagram or a business post on Linkedin. As the next step, these prospects will start looking up your online profiles and website for more information.
Traditional marketing tactics in this stage include:
Present easy-to-read information to get more eyes on your marketing materials. The key is emphasizing your product’s unique selling point without using too much business jargon.
2. Interest Stage
As people become interested in your software services or products and seek more information, they move up the sales funnel. This stage is all about prospects trusting that your service will be beneficial to them. If they do, they may provide their valid email address and download content or sign-up for a demo.
Ensure the users quickly grasp the features and benefits of your software services and product. The best way to present this information is through a navigable website. Include product prototypes or interactive demos to strengthen customers’ beliefs in your brand. When they see how you solve their pain points, prospects are more likely to convert.
3. Consideration Stage
This stage is about warming up leads to purchase your software subscriptions. Highlight your product benefits and features while showcasing your USP. You can also offer free trial or product demos to allow users to test them before making a purchase.
Based on your leads’ information, remove any obstacles to give them a clearer view of your product use. However, be cautious while telling your brand story. Prospects are actively reviewing other businesses, and overwhelming them can lead to lost sales.
4. Purchase Stage
The prospects have finally decided to purchase your product. Since SaaS companies run on subscriptions, it’s important to lock in similar deals.
Provide a seamless experience by minimizing form fields and optimizing the checkout pages. Use plenty of white space and a prominent CTA button to guide users through the last step in the SaaS sales funnel.
Moving a prospect through each stage is challenging and requires consistent communication. While there are other ways to reach a lead, email marketing streamlines communication, helping you reach users straight in their inboxes.
Let’s learn the specialty of email marketing in enhancing your SaaS sales funnel.
How Does Email Marketing Improve Reach and Conversions?
Since emails became popular, many businesses have been using them to grow their revenue. But SaaS email marketing is not exactly the same as other businesses because it requires constant experimentation and learning.
That’s why we put together the different ways email marketing can impact your brand conversions.
1. Nurturing Leads
In general, 68% of survey respondents across varied demographics said they prefer to receive brand communications through email. And this is no different for your software business. Emails allow you to create segmented email lists and send targeted content about your software services.
Tailoring email content as per leads’ interests, preferences, and stages in the SaaS funnel can help build stronger relationships.
2. Automation for Improved Conversions
SaaS clients are usually business owners or people in C-suite roles who may not always have the time to open and read your emails. Sending messages at the right time is crucial to nudge the lead down the sales funnel.
Automated email campaigns help you do that — you can set up rules to send emails after certain triggers, such as after someone signs up for your email list or clicks on the CTA button. Automation ensures timely and relevant communication, ascertaining your lead’s position in the sales funnel.
3. Better Marketing and Optimization
Email marketing is never a standalone marketing model; you can combine it with social media, ads, and other forms of digital communication to interest more leads. Coordinating email campaigns with optimized landing pages can guide leads smoothly across the sales funnel.
4. Enhanced Customer Relationships
As your software business gains more email subscribers, you can build better relationships by
leaving a question in your email sign-offs, encouraging them to reply to your messages, naturally increasing email response rates. Regularly staying in touch with your potential clients can keep your software services top of their minds.
Email marketing makes it easier to design and manage your SaaS sales funnel. For example, you can create an ideal customer profile and understand users in-depth by dividing them on shared characteristics.
We’ll learn the steps to design a foolproof SaaS sales funnel with email marketing as the main communication model.
Steps to Design a SaaS Sales Funnel
The table outlines the key steps to designing a top-notch sales funnel.
| Key Steps | How to do it |
|---|---|
| Define your target audience | ‣ Understand users’ demographics, psychographics, behavior, and geographic data ‣ Learn where they spend most of their time online and refine your strategies |
| Map the customer journey | ‣ Visualize the path potential customers take from initial awareness to the purchase decision ‣ Identify key touchpoints where customers interact with your brand |
| Create a compelling value proposition | ‣ Clearly articulate the unique benefits that make your brand unique ‣ Address customers’ pain points and differentiate yourself |
| Build your SaaS sales funnel | ‣ Attract potential customers through content and email marketing ‣ Nurture leads with lead magnets and other marketing tactics ‣ Convert leads into customers through sales pitches and demos |
| Optimize your landing pages | ‣ Create compelling and concise landing pages ‣ Align landing pages with ads ‣ Experiment with different elements to improve conversions |
At each step, craft an email campaign to keep users aware of your product offers. Your SaaS company will typically need three types of emails to move people from leads to paying customers. Each email will have different strategies and email tone depending on the user’s preferences.
Types of Emails for Your SaaS Sales Funnel
We’ll look at different strategies for each email and examples from popular brands.
1. Marketing Emails
Marketing emails are sent by SaaS companies to educate and nurture leads. These emails consist of high-quality product visuals, brand story, and value proposition.
Here are the types of marketing emails you can send:
- Welcome emails: To greet new email marketing subscribers and introduce them to your software services.
- Product onboarding emails: Guide new users through the product setup process, which makes it easier for the users to trust your software products.
- Educational emails: Share tips, best practices, and industry insights. Include case studies and relevant information to showcase the value of your software products and services.
- Promotional emails: Send relevant email coupons, discounts, and deals to persuade leads considering your software services.
- Upsell and cross sell emails: Promote complementary products or upgrades to the original product. This can enhance the overall impact of your software services.
SaaS Marketing Email Example
Here’s a typical SaaS marketing email from Arturia. They’ve explained the product in detail and included secondary CTAs after every paragraph, which increases the likelihood of conversions.
2. Lifecycle Emails
Lifecycle email marketing uses customer data to analyze their place in the email marketing customer journey and send relevant content. Since SaaS leads have different needs for your product, lifecycle emails help you target each of them with relevant content. These emails also develop a deeper bond with your leads, guiding them down the sales funnel.
SaaS Lifecycle Email Example
This lifecycle email from Zapier targets previous users with the latest software product features. Each feature or update is explained clearly with a CTA that takes them to a separate page.
3. Transactional Emails
SaaS brands use transactional emails to acknowledge user actions, such as billing and invoice emails, product updates, or similar emails. These emails are instant and are automatically sent after a user action, which is an important step in becoming a reliable software services brand.
SaaS Transactional Email Example
Slack is a software company that recognizes a user action by letting the team know that their trial period for Slack Pro has started. The business also includes other critical information such as the premium features that can be used in the Pro payment tier.
These emails have some of the highest open rates due to their immediacy. You can embed event invitations or product launch messages to increase impact.
It’s pivotal to optimize your sales funnel for all of the above emails to work well. We’ve gathered the ultimate list to increase your email marketing efficiency.
Best Practices to Optimize a SaaS Sales Funnel
Optimizing your SaaS sales funnel involves picking the right people and the right time to send emails. Although your leads require your software services, your email timing determines the success rate of conversions.
Here are other key strategies to consider:
- Refine your target audience: Create a detailed ideal customer profile (ICP) by understanding the purchase behavior and preferences. Define the target group that is more likely to benefit from your software services or products.
- Improve lead generation: Use various lead generation techniques to capture email addresses and nurture leads. Our Lead Magnet Multiplier Course dramatically boosts your sender reputation and drives up to 756% higher click rates on your lead magnets. You can also generate leads by offering free trials or demos of your software services.
- Streamline your sales cycle: Identify and remove unwanted steps that could overwhelm potential SaaS customers. This eliminates back-and-forth communication and saves your prospects’ time.
- Implement a CRM: Track and manage your customer interactions and sales pipeline with a CRM. People may express interest in your software products at various stages in the buyer’s journey, and maintaining all the contacts without a CRM can become challenging.
- Train your sales teams: Provide your team with sales enablement tools and train them to be aware of common pitfalls in the sales funnel. It’s okay to talk about your software’s pros and cons and be as transparent as possible.
- Make data-driven decisions: Software services can be complex business models that cannot function properly without accurate customer data. It’s important to regularly monitor your sales funnel and improve conversions.
Even when you adhere to every best practice mentioned above, you may occasionally face roadblocks in your sales funnel. This can come in the form of email deliverability issues, lower engagement rates, or lack of compliance and privacy.
A solid way to streamline all the above aspects is to use a reliable email marketing platform like Campaign Refinery.
Build Transparency and Scale your SaaS Business Effectively
We understand that any business is built on the foundation of trust and credibility. As a SaaS business, we know gaining people’s trust and building a like-minded community can be challenging.
At Campaign Refinery, our policies and processes are transparent — we ask potential clients to apply, determine eligibility and compatibility, and authenticate their email domains before onboarding them.
We also abide by email security protocols and standards, helping us provide the highest email deliverability rate on the market. These clear processes make it easier to scale your SaaS business while keeping your brand reliability in place.
Achieve sustainable growth and higher marketing revenue with Campaign Refinery — apply to become our client today!
