Diving into the B2B SaaS sales tech stack

B2B SaaS sales focuses heavily on generating and converting new leads. Although the overall sales journey has largely remained the same over the years, the space has still seen a significant amount of tech innovation aimed at simplifying or automating parts of what is a highly complex process. B2B SaaS sales teams often come across several challenges owing to the intricate nature of products, difficulty in qualifying leads, long sales cycles, and multiple buyer side stakeholders, amongst others. What has further added to the complexity of each of these challenges, has been the digital shift in the B2B sales landscape. While the digital nature of sales started off as a compulsion shaped by the pandemic, recent signs point towards the likelihood that the digital shift is here to stay.

Research from 麦肯锡 highlights the growing preference of both buyers and sellers to continue to operate in a virtual manner, and suggests that only about 20% of B2B buyers hope to return to in-person sales. Self-serve and remote interactions have made it easier for buyers to get information, place orders, and arrange service. Customers have enjoyed this speed and convenience, with data showing that 70-80% of B2B decision makers prefer remote interactions or digital self-service. In addition, B2B buyers have also started to show comfort in making large new purchases and reorders online. 70% of B2B decision makers say they are open to making new, fully self-serve or remote purchases in excess of $50k, and 27% are willing to spend more than $500k+.

The transition to a remote model also offers several advantages to B2B sales teams. Sales processes switching from in-person to digital offers a wider pool of potential customers, and although this comes with the caveat of increased competition, a hubspot study has shown that 64% of sales leaders who invested in remote selling met or exceeded revenue targets in 2020. In addition, a remote first model allows sales teams to spend more time actually dealing with customers instead of spending hours on the road traveling between meetings. A McKinsey study indicated that going remote could help sales reps reach four times as many accounts in the same amount of time and generate up to 50% more revenue. Given the likelihood of this digital shift continuing in the long term, it has become important for B2B SaaS companies to take a deeper look into their tech stack and arm their sales teams with the best possible tools to enable them to close more deals and close them faster.

The B2B SaaS sales funnel

Once a lead is generated, it enters the sales funnel. This funnel can further be divided into three sub categories – Top of the Funnel (TOFU), Middle of the Funnel (MOFU), and Bottom of the Funnel (BOFU), with each sub category representing how advanced a lead is in the sales journey. As we delved deeper into each part of the funnel, we spent time mapping each segment and understanding the processes and nuances involved, as well as the specific pain points faced by B2B SaaS sales teams.

TOFU

The top of the funnel covers the discovery and qualification stages of the sales cycle. Discovery involves researching the background of the prospect and their company, which helps a salesperson deliver a customized and relevant pitch later in the sales cycle. During the qualification stage, an SDM (sales development manager) usually reaches out to a prospect to understand their specific pain points and gauge if the prospect’s company falls within their ICP (ideal customer profile). This is usually done through a lead scoring system which assess the prospects suitability as a customer. If all goes well, the lead moves further into the pipeline.

Challenges faced by salespeople in the TOFU often revolve around lack of quality or relevancy in the leads received. This usually leads to salespeople spending time chasing irrelevant / low intent leads and often causes delays in reaching the actual high intent prospects, who tend to churn out and look for other alternatives. This part of the funnel has seen some innovation in the recent past, with players such as Qualified (recently raised a $95mn Series C round led by Sapphire, with participation from Tiger Global, Norwest, Redpoint and Salesforce Ventures) helping companies accelerate their pipelines through identifying and qualifying the most suitable visitors by uncovering signals of buying intent, and instantly starting sales conversations with them. Qualified FY22 report highlights its strong growth trajectory, with the company seeing a 400% y/y growth in revenue and a 150% net revenue retention rate. Drift, a Salesloft company (raised a $60mn Series C round in 2018 led by Sequoia, and acquired by Vista Equity Partners in 2021) is another playing solving for the TOFU, focusing on chatbot led conversational marketing, sales, and service. Drift also scopes buying signals to give insights to sales reps on which accounts are high intent and to focus on, and adds a collaborative virtual deal room which helps sales reps personalize every deal. In addition to these, there have also been startups solving for quicker inbound lead conversion through qualifying, routing and scheduling meetings with sales reps right at the point of signing up. This is aimed at solving for the pain point a prospect faces once they land on the buyer's website and sign up, but then have to wait for a long time (often a few days) to speak to a sales rep, which ultimately leads to many leads petering out. Chili Piper (US based, raised a $33mn Series B led by Tiger Global) and RevenueHero (India based, recently raised seed funding) are startups focusing on this tangent. While these startups and several others have tried to make TOFU process more efficient, the pain point of lack of relevant and quality leads is still quite universally present and often acts a bottleneck for the rest of the funnel.

MOFU

The MOFU is characterized by collaboration and a large degree of back and forth between the sales rep and the lead. In addition, at this stage of the funnel, the sales rep usually has to interact with multiple stakeholders on the lead’s side as the deal goes through the pitch and the objection handling phase. A detailed pitch is often followed up with questions and concerns from the lead, followed by personalized demo’s and other collateral which give the lead more insight about the product. This part of the process has historically seen sales reps having to speak with multiple stakeholders across multiple channels, and has seen significant innovation from startups aiming to make this process seamless and more efficient.

While some players have built one-stop virtual data rooms meant for all kinds of collaboration, communication and sharing of collateral between the sales rep and prospects, others have focused on mutual success plans to help sales reps and prospects align with deal objectives and the major milestones required to accomplish those objectives. This part of the funnel has also seen players focusing on niche aspects such as helping sales reps curate personalized demos for their prospects and others which help sales reps manage their collateral and pitch the right content to the appropriate prospect. Some of the larger players in this space include the likes of Highspot (raised a $248mn Series F in Jan ’22 led by B Cap and D1 Cap) which helps B2B SaaS companies manage content, train sales reps as well as engage buyers. Highspot’s content management & buyer engagement also allows the designing of custom landing pages, email, and social templates to allow collaboration between buyers and sellers, and the platform has seen revenue grow 935% over the last 3 years with a last 12 month ARR net retention of 130%+. Seismic (raised a $170mn Series G in Aug ’21 led by Permira) is another such player which offers personalized sales coaching plans and insights to improve sales performance, along with features to enable buyer engagement through virtual data rooms for sales content management and AI guided contextual content recommendations to drive deals faster. Seismic recently crossed the $280mn ARR mark and now serves 2200+ customers worldwide. Showpad (raised $70mn in Jun '19 led by Insight and Dawn) is another player which focuses on learning / coaching and buyer engagement and analytics. Its buyer engagement features offer a digital sales room type brandable microsite where sellers can share content and invited stakeholders can participate in discussions to close deals quicker. The space has also seen Indian startups emerge, with the likes of Boomerang (raised a $3.75mn Series A in April '22) offering a collaboration platform with a shared view across buyer milestones through a joint mutual success plan, and other such as GTM Buddy (raised $2mn Seed in Feb ’21) focusing on capturing the entire value chain of the MOFU by offering features across content management, content discovery, analytics, buyer engagement and digital sales rooms.

Although all such solutions help in making a sales rep’s life easier, the primary question to be addressed when evaluating value propositions in the MOFU is if they solve for a core need, or are rather “good to have” solutions. Value props that fall in the former bucket are always more likely to end up scaling.

BOFU

The BOFU covers the stages of negotiation and closing of a deal before forwarding a prospect (now client, in case of a deal won) to the onboarding and customer success management (CSM) team. The prospect usually enters this stage once the value of the product and its fit with the prospect’s company has been established, and all queries and objections from the prospect’s side have been catered to. The negotiation stage also tends to involve significant back-and-forth and collaboration with multiple stakeholders from both the buyer’s as well as the seller’s side. Consistent engagement during this stage is often critical to ensure a deal is successfully closed.

While some startups building for the BOFU have focused on solving for seamless collaboration during the quote to cash process, others have concentrated on helping their clients navigate the documentation and approval process during deal closures. GetAccept , which raised a $20mn Series B in Dec '20 led by Bessemer, focuses heavily on the proposal to contracting stage of the pipeline, and includes virtual deal room features as well as basic insights and analytics into engagement with the prospect. DealHub.io , which raised a $60mn Series C in Jun ’22 led by Alpha Wave, also focuses on the quote to cash process and includes a virtual deal room for collaboration on multimedia, T&C, pricing, proposals, e-signatures etc.? The documentation and approval sub-segment has seen scaled players in the form of Docusign (IPO’d in April ’18 on the NASDAQ) and PandaDoc (raised a Series C at a $1bn valuation in Sep ’21), which focus on creating, signing and managing sales agreements. Although contract management remains a critical process for every business, innovating newer features with significant value add in a segment where user behavior has become somewhat cemented can be a tricky and often futile exercise. Furthermore, proving a right to win and scaling up given the competition then becomes incredibly challenging.

Road ahead

The good news for startups building in this space, is that the macro-environment around B2B SaaS continues to remain extremely positive. The global SaaS market size is expected to grow at a CAGR of 27.5% from $130bn in 2021 to $716.5bn in 2028. Moving deeper, the global sales engagement software market was valued at $5bn in 2021, and is expected to grow to $7.4bn in 2022 (+48% y/y). Over the span of 2022 to 2032, the market is anticipated to grow to $29.6bn at a CAGR of 14.9%. Increasing adoption of cloud-based solutions is expected to boost demand, and the increased integration of AI in sales engagement is expected to add to the advantage of cloud-based engagement software. Research from Zendesk further elucidates the growing potential of startups building for the B2B Sales tech stack. Their research indicates that most sales teams use an average of 4.7 tools and that 46% plan to add more tools over the next year. In addition, 80% of organizations also reported plans to increase their budget for CRM and other sales tools.

With that being said, the inherent challenges in B2B SaaS sales still remain ever-present and require deep domain expertise to navigate through. As we look forward to more startups building in this space, we’re excited to meet founders who’ve “been there, done that” and have a demonstrated history of sales, GTM and tech experience. If you are a founder building in this space or otherwise looking for your first institutional VC cheque, drop me an email at [email protected].