9 SaaS Sales Terms You Need to Know

The global SaaS market went from being worth just under $50 billion in 2016 to over $145 billion in 2022. With this growth comes a huge opportunity for hungry tech entrepreneurs and sales professionals. If you’re new to the industry, there are several SaaS sales terms you’ll need to know to get started on the right foot.

Here are nine to add to your vocabulary.

1. Customer Journey

Seldom do leads land on your website and whip out their payment card and buy right away. Usually, there are several touchpoints along the way where a prospect first learns about your product, interacts with content and sales materials, reviews the pros and cons, speaks with a SaaS sales rep, and so on before finally making the decision to buy.

And it doesn’t end there. Even after buying, there’s the post-purchase stage where a customer decides if they want to continue using your product and recommend it to others.

This is collectively known as the customer journey, which breaks down like this.

Having a clear idea of how the customer journey unfolds is a necessary precursor to equipping your sales team for success.

2. Freemium

An increasingly popular way to get your foot in the door with leads and motivate them to use your product is by offering a “freemium” version, which includes “basic or limited features to users at no cost and then charges a premium for supplemental or advanced features.”

While it’s not the right business model for everyone, it can be a smart move for many businesses. And training SaaS sales reps to push it can be instrumental in fueling growth.

3. Marketing Qualified Lead (MQL)

An MQL is a lead toward the top of the sales funnel who has expressed some level of interest in your product but not enough to be passed off to your sales team.

This type of lead may show promise but doesn’t have the same amount of intent as an SQL, which I’ll discuss next. Therefore, an MQL is a lead that still requires nurturing from your marketing team and isn’t one your sales team should focus on yet.

4. Sales Qualified Lead (SQL)

An SQL is someone who has moved down the sales funnel to either the decision or action stage.

They have expressed a strong intent to buy and have a high lead score. Therefore, an SQL is a high-priority lead that your sales team would want to swiftly reach out to over an MQL.

5. Product Qualified Lead (PQL)

A PQL is a lead that has used your product, typically via a free trial or freemium version. They have experienced it in action firsthand and understand the value it offers.

Because of this level of engagement, PQLs have a much higher chance of converting than a lead higher in the sales funnel like an MQL. As a result, you’ll want your SaaS sales team to place a high priority on PQLs and perform systematic outreach to increase the odds of converting.

6. Lead Velocity Rate (LVR)

LVR is the growth percentage of qualified leads you generate month-to-month. While it doesn’t necessarily tell the whole story and can be a “vanity metric” if misused, I believe LVR is definitely something you want to be aware of, as it gives you a baseline reading of the trajectory your sales team is on.

For example, a steady increase in the number of qualified leads month-to-month usually indicates you’re on the right track and positioned for growth. Of course, it doesn’t mean much if your sales team isn’t converting leads, but more often than not, a positive LVR shows you’re in a good place.

As for the formula for calculating LVR, it is as follows.

7. Customer Lifecycle

This overlaps somewhat with the customer journey but focuses more on the post-conversion part of the process. Simply put, it’s the series of steps involved in a lead’s decision-making and extends beyond the purchase to product activation, renewal, and referral.

HubSpot illustrates the SaaS customer lifecycle perfectly with this graphic.

A big part of creating a successful SaaS company is fine-tuning your customer lifecycle so you’re able to fluidly move customers through the process while minimizing friction. To learn the fundamentals of the customer journey, I suggest reading this post from HubSpot.

8. Cohorts

Cohorts are a group of customers that share something in common, such as specific traits or behavior. A simple example would be a group of customers that purchase your product at the same time and go through the same onboarding process.

Performing cohorts analysis is important because it helps you understand what contributes to success so you can replicate it while also eliminating inefficiencies. If, for example, after experimenting with a new sales technique there was a surge in the number of customers signing up, this is likely a strategy you would want to repeat.

9. Value Gap

This is the difference between what a customer expects and what they actually get. A large value gap is problematic because it usually leads to customer dissatisfaction, which can reduce loyalty and increase churn.

Lowering the value gap requires a two-pronged approach, involving sales and the post-sale process of onboarding and customer service. The latter I won’t get into, but from the sales side of things, this means setting the right expectations from the start and ensuring your sales team provides customers with a realistic overview of product features and capabilities, as well as limitations.

Adding Key SaaS Sales Terms to Your Vocabulary

There’s been an explosion in the SaaS industry as of late. With market growth and revenue continuing to increase, there’s plenty of opportunity.

A critical starting point for breaking into the SaaS industry is having a command of essential SaaS sales terms. While the full “dictionary” is an extensive one, the terms listed above should help you get a basic grasp and ensure you focus on the right areas.

Looking to build an elite SaaS sales team using cutting-edge, science-based technology? See how HireDNA can help you find the right talent with 4x greater accuracy than traditional resumes and phone screening.

SaaS Sales Salary in 2023: How Much Should You Pay Top Talent?

Last year I wrote a post about how much sales reps earned in 2022. It offers plenty of great data on how much salespeople earned on average and how much you can expect to pay. But for this post, I want to zero in specifically on SaaS sales salary in 2023, which, as we’ll find out, is substantially higher than what a regular salesperson earns.

So if you’re recruiting in the SaaS industry, this information should be highly valuable to you. Let’s get right into it.

Crunching Multiple Data Sources

First off, let me say that, depending on which source you look at, there can be a considerable disparity in SaaS sales salary data. To gain the most objective insights possible, I crunched the data from three reputable sources to come up with a reasonable average across the board.

Here’s what I found.

Comparably’s Data

To start, let’s look at recent data from Comparably. According to their research, the US average in 2023 is $109,335, which is the highest of the three sources I looked at.

Note that this data specifically references salespeople in tech, which is over $17,000 more than the average salary of a regular salesperson at just $92,000.

Glassdoor’s Data

Next, there’s Glassdoor, which lists a SaaS sales salary that’s very close to Comparably’s. According to their findings, the average SaaS salesperson earns $108,003 in 2023 — just over $1,000 less than what Comparably’s data found.

ZipRecruiter’s Data

Last, there’s ZipRecruiter, which says the average US-based SaaS salesperson earns $82,141 in 2023, which is dramatically lower than what Comparably and Glassdoor found.

Note that ZipRecruiter mentions that the top earners in this profession commonly get as much as $155,000 a year. But overall, they place the average at just over $82,000.

The Overall Average

Based on the data from Comparably, Glassdoor, and ZipRecruiter, the average SaaS sales salary across the board comes out to $99,826 — just under $100k. There are a ton of variables and factors that determine how much a SaaS salesperson gets paid, including education, experience, location, and market demand.

But I feel this is a reasonable estimate for 2023. So that’s a pretty good number to have in mind when you’re hiring for this position. This brings me to my next point.

Expect to Pay More for a SaaS Sales Salary Than a Regular Sales Salary

Most salespeople make decent money. But it should be noted that SaaS sales reps, in particular, earn significantly more than regular generalist sales reps.

Just how big is the disparity?

According Glassdoor, the average salesperson salary in 2023 is $85,130, which is nearly $23,000 less than the $108,003 a SaaS salesperson earns.

And according to ZipRecruiter, the average salesperson earns just $50,042 in 2023, which is over $30,000 less than the $82,141 SaaS salespeople earn.

So as you can see, you can expect to pay a SaaS salesperson far more than a someone who handles general sales. The reason for this disparity?

HubSpot notes that “SaaS reps generally have a higher base pay than other salespeople because of the training, expertise, and high motivation they need to succeed.” That’s why they tend to earn more, which is something you’ll want to keep in mind if you’re in the SaaS industry.

Finding Quality SaaS Salespeople for a Reasonable Salary

As we’ve just learned, most SaaS salespeople command top tollar in 2023. Especially those that bring a wealth of knowledge, experience, and skills to the table.

For the rest of this post, I’d like to talk about how you can find top-tier SaaS sales reps without overpaying.

Hands down, one of the best tools for this is SaaS sales recruiting platform HireDNA.

It offers a wide array of SaaS recruiting features, including comprehensive assessments, data-driven skills validation, candidate screening, and more. But it all starts with first creating an ideal candidate profile.

A candidate profile focuses on essentials like sales experience, product knowledge, role requirements, personality traits, and of course, compensation. This allows you to set exactly how much you’re willing to pay, and candidates are filtered accordingly.

That way you’re on the same page right with earnings from the start. And because of HireDNA’s rigorous science-based methodology for recruiting, you can be sure that any SaaS sales candidate that’s recommended is the cream of the crop.

In fact, 92% of candidates suggested by HireDNA go on to be top performers within their first year. Besides that, companies that use HireDNA have a lower turnover rate, this 83% of candidates still being employed after the first year.

So if you want to streamline and improve your recruiting while simultaneously addressing salary, this is a great tool to have.

Closing Thoughts

One of the most fundamental yet important factors to consider when assembling a SaaS sales team is salary. This heavily impacts the overall caliber of your team and how well you can keep up with competitors.

While data sources vary and there are numerous variables that affect pay, the average annual salary for most SaaS sales reps in 2023 is just under $100,000. So that’s about what you can expect to pay.

Note that salesperson salary is something we’re always keeping an eye on, so be sure to keep reading our blog as new trends emerge.

And if you’d like to learn more about HireDNA and see it in action, go ahead and schedule a live demo today. Just fill out the secure online form and a team member will be in touch with you shortly.