Common Sales Stages for SaaS Companies and How to Properly Manage Them

Introduction

In this article we’ll go over:

  1. The common sales stages for B2B SaaS companies
  2. Why properly tracking them is important
  3. The best practices on how to manage them

What are Sales Stages

On a high-level, sales stages track the progression of a sales opportunity throughout its lifecycle. The stages in a sales pipeline closely align with the buyer’s journey, and measure how far along a prospect is from making a purchasing decision.

Common Sales Stages for B2B SaaS Companies

When creating sales stages, it’s important to keep it simple. Stages that are too granular can cause frustration with your sales team, but stages that are too generic can convolute a deal’s progression. Below are the common stages in a SaaS company’s pipeline:

  • Discovery
  • Demo
  • Evaluation
  • Negotiation
  • Agreement Sent
  • Closed Won
  • Closed Lost

Discovery:

An opportunity typically starts when a qualified contact raises their hand indicating their interest. This can either be an inbound visitor submitting a contact form or a prospect responding to an outbound cadence asking for more information.

The first step in the sales cycle is to perform a discovery call. During this call, sales teams have three goals: 1) evaluate if the prospect meets the ideal customer profile, 2) identify the prospect’s pain points, and 3) determine if there is real interest in moving forward.

Demo Scheduled:

Coming out of the discovery call, a demo should have been scheduled as the next step. The primary goal of the demo is still to uncover the prospect’s pain points. But during the demo, the sales team can now relate how the product helps prospects achieve their goals.

Ideally, all decision-makers are present for the demo, not just the prospect who raised their hand. This ensures that the input from all stakeholders is captured and that the value of the product is demonstrated to all decision-makers.

Evaluation:

The next step is for the prospect to move to the “Evaluation” stage where they start a formal process internally to understand if your product fits their needs. The buyer is usually engaging in multiple conversations with similar vendors and is evaluating how they compare to one another. The important step here is to get a decision timeline from the buyer and confirm they have the budget to move forward.

Negotiation:

Once the buyer selects your company as a vendor finalist, negotiations can begin to agree on pricing and payment terms. During this stage, it’s important to work with the buyer on any internal purchasing hurdles like clearing compliance or legal guidelines. Multiple functions like the IT, Finance, and Legal department should be involved if needed to help push the deal to the finish line.

Agreement Sent:

The last stage of the deal is working towards a signature. Periodic follow-ups and check-in should be made to understand the expected close date. Once the contract is signed, the deal is moved to Closed Won. Some companies will have a stage called “Financed Reviewed” after the Closed Won stage to indicate that the finance team has billed the customer.

Why Properly Tracking Sales Stages is Important

Properly tracking sales stages allows you to better understand the health of your pipeline. As mentioned earlier, sales stages should align with the buyer’s journey. With proper stages, key fields in your CRM, and a standardized process, you can accurately track how far along the buyer is in making a purchasing decision. This helps to get a sense of timing: seeing which deals are likely to close within the current time period or how many deals are forecasted to close in future periods.

Moreover, tracking when a deal enters each stage helps to understand how efficient your team is at working deals. By analyzing the date stamps, we can answer questions like, “where do deals get stuck in the process”, “in what stages do most deals fall out of the process”, or “what’s the average length of the sales cycle.”

Pipeline Management Best Practices

Without a properly maintained sales process, we wouldn’t be able to trust the data in our CRM. Here are a few best practices to keep top-of-mind.

Date Stamping Sales Stages:

As mentioned earlier, date stamping when a deal enters a stage is critical for analyzing your pipeline efficiency. Date stamps should be captured for every stage in your sales cycle and should be updated when a deal enters each stage through automation.

Standardizing the Process:

When managing the pipeline, it’s important to standardize the Sales Activity that goes on within each stage and the Exit Criteria required for a deal to move to the next stage. Without standardization, we wouldn’t be able to trust that a deal is “truly” in a certain stage and that the buyer has all the information needed for that stage. Without standardization, we could potentially add friction to the buying process, or worst, lose the buyer’s trust.

Deals Should Not Move Backwards:

If you’re finding that deals are moving backward in the sales cycle, that is, they are going from one stage and then back to an earlier stage, then you might want to reevaluate your exit criteria. Deals should only move forward in the cycle. Backward moving deals will throw off your conversion analysis because an earlier stage will have a more recent date than a later stage.

Deals Should Not Skip Stages (without good reason):

This is not a hard and fast rule. Sometimes a warm lead may not need a discovery call or even a demo. In this example, the deal may start in the “Evaluation” stage. However, there should be automation in place that datestamps the earlier stages with the same date as the stage the deal started in.

A Closed Lost Deal Should Stay in Closed Lost:

A deal should not move out of “Closed Lost” and go through the sales cycle again. As mentioned in the beginning of the article, deals are sales opportunities for an Account. If that deal is closed, it doesn’t mean the Account is closed, it just means that the current sales opportunity is no longer available. If interest from the Account is revived at a later date, then an entirely new deal should be created to track the current sales cycle.

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