How to Build a SaaS Sales Funnel in 8 Steps

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8 Steps to Develop a SaaS Sales Funnel

The sales process is the cornerstone of almost any successful business. Selling software-as-a-service (SaaS) is a bit different than selling typical products because the sales process tends to be longer. This is mostly because tech sales are one of the most expensive types of sales and purchasing a subscription to a software service represents a considerable financial commitment. Prospects are going to want to take their time and wait until they’re absolutely certain about their decision before they make a purchase. If you’re selling a B2B service, there may be multiple levels of decision-making going on behind the scenes that can further drag out the sales process.

While this makes SaaS sales a uniquely challenging arena, it also allows plenty of opportunities throughout the process to guide prospects toward a purchase. Building an effective SaaS sales funnel ensures these opportunities are being seized every time.

What Is a SaaS Sales Funnel?

A SaaS sales funnel is an iterative, multi-step process that represents the customer journey during the sales cycle. It starts the very first time a customer hears about your brand and extends beyond their first purchase. A well-designed SaaS sales funnel can help you track prospects as they move through the sales process, which makes it possible to adjust your sales strategy according to their behavior. 

From the perspective of a SaaS sales rep, the sales funnel acts as a roadmap that guides (or funnels) the sales process from awareness to close. Each step in the sales funnel builds upon the previous step, and each “yes” from the customer serves as a bridge to the next step in the process. This means the job of the SaaS sales rep is much more than getting the prospect to say “yes, I’d like to purchase your service.” Their job is to get each of those incremental “yeses” that move the prospect through the funnel one step at a time, leading up to that final “yes” at the bottom of the funnel.

Here are eight steps you can use to develop an effective SaaS sales funnel:

1. Find Out Who Your Prospects Are

Before you can begin designing your sales funnel, you need to understand the prospects that will be traveling through it. Building a prospect profile can help with this. It should look similar to the customer persona that marketers develop, but it should focus more heavily on the kinds of sales tactics and communication styles that are the best fit for your ideal prospect.

One of the best ways to identify the characteristics of your ideal prospect is to analyze your existing customer base. Ask yourself why each of these customers chose to do business with you. What were their biggest pain points that led them to seek out your service? What were their biggest hesitations during the sales process? Which role in the companies you sell to is typically the decision-maker? 

2. Create Your Messaging

Now that you’ve pinpointed the characteristics of your best prospects, you can start to design messaging that will appeal to them. It’s essential for your sales and marketing efforts, not just your software, to align with your ideal prospect’s needs. Customers don’t necessarily want to hear about every single detail of your service, and inundating them with too much information early on will only overwhelm them. 

Your messaging should highlight the aspects of your service that will appeal most to your ideal prospect. This can only be accomplished when you have a thorough understanding of who your most qualified prospects are and have identified which elements of your service will provide the greatest value to those prospects.

3. Determine Your Funnel’s Stages

Once you understand your ideal prospect and have developed messaging that will appeal to them specifically, you should organize your efforts into distinct steps. The way you organize your funnel will depend on what you’ve discovered about your ideal prospect and how you’ve planned your messaging, but most sales funnels are organized around some variation of the acronym AIDA: Awareness, Interest, Desire, and Action.

Following is a breakdown of the general AIDA layout, but you should customize the exact steps in your funnel according to what works best for your business and your customers. 

Awareness (top of funnel)

The top of the funnel is all about driving web traffic and lead generation. At this point, the lead knows they have a problem that needs solving and they’re researching a solution. However, they probably aren’t too concerned with the finer details of the service yet; they’re just trying to feel out their options and start to generate a list of possibilities.

Your goal at the top of the funnel should be to ensure the lead is aware that your service can solve their problem. One of the best ways to do this is to maintain a website with strong SEO. that will draw in leads who are already searching for the type of solution your company offers. Your website should contain informative, authoritative content that makes customers feel confident your brand is highly qualified to meet their needs.

Interest and desire (middle of funnel)

In the middle section of the funnel, the lead has more or less settled on the options they’re considering and they’re beginning to evaluate each option in earnest. Once the lead starts showing interest in your service and digging deeper into the possibility of doing business with you, they are no longer just a lead and have now become a prospect. They’ve moved past the research stage and have clear intent to buy, but they haven’t decided for sure that they’ll buy from you.

Now, you should direct your focus toward building desire by encouraging engagement and demonstrating value. This is the best time to direct them toward marketing material like case studies that will show them specifically why your service is a better alternative to the other services they’re considering.

Action (bottom of funnel)

If the prospect reaches the bottom of the funnel, they have decided that your service is one of the top contenders on their list. They are now making final considerations such as pricing and the logistics of implementation.

Your goals at the bottom of the funnel should be to develop the relationship with the prospect further and ultimately close the sale. Now is the time to pull out your best tactics that will prompt them to take action and commit to a sale.

4. Start Building a Prospect List

Whereas finding out who your prospects are involves describing your ideal prospect, building a prospect list entails using that profile to identify qualified leads to target. It’s a good idea to start out with a broad search and then narrow down the best leads from there. Focus on the key characteristics you’ve identified in an ideal prospect and take note of any and every lead that matches that profile. From there, you can narrow your list down to the most promising candidates.

When you’ve identified a prospect, research their company in detail—learning everything you can about their business will help you avoid wasting time pursuing unqualified leads. By the time you reach out to the prospect, you should be confident they need your solution badly and that they have the means to purchase it.

5. Create an Outbound Campaign

There are two kinds of lead generation: inbound and outbound. Inbound leads take the initiative to contact you first. These potential customers are usually gained through content marketing and SEO efforts.

Outbound lead generation is the opposite—you reach out to qualified leads and initiate first contact with them through tactics like direct advertising, cold calling, or email marketing. To create an outbound campaign, you’ll leverage the information you’ve learned about each of your leads so far to try to establish a conversation and hopefully begin a business relationship.

It’s good to maintain inbound marketing material that will generate a steady stream of organic leads, but your most promising prospects will likely be the ones you identify and pursue via your outbound marketing efforts.

6. Create a Closing Strategy

Once a prospect makes it to the bottom of the funnel, you’ve probably invested significant time and effort into moving them toward a sale. Your closing strategy will determine whether or not all that hard work at the top and middle of the funnel paid off. The best way to develop a closing strategy that will work on your prospects is often simply to listen to them.

Listen more than you talk: It’s tempting to go into “hard sell” mode when the finish line is in sight, but the numbers suggest this isn’t an effective tactic. Instead of leading the conversation with an elaborate pitch, try asking questions and let the customer do the talking. You’ll be surprised by how much more you’ll learn about the customer’s needs and values, and the additional information will make it easier to guide the conversation toward a sale.

Personalize: This is where you can put all the information you learned while building a prospect list to good use. Let the customer know you understand their needs and pain points and offer them a relevant, personalized sales experience. If you’ve listened more than you’ve talked, you should have plenty of information to cater to the customers’ specific priorities.

7. What About a Demo?

A product demonstration is a common element of SaaS sales funnels. However, the right placement of the product demo within the sales funnel is a matter of debate. Some sales reps position the demo very early in the sales process to try to establish value up front, but this tactic can actually do more harm than good. 

If you put all your cards on the table before you’ve had a chance to learn a bit more about the prospect, you’ll miss the best opportunities to personalize your sales tactics. Giving the product demo too early in the funnel results in a more generic demonstration that appeals to no one in particular. Hold off on the demo until later and leverage it at the bottom of the funnel.

8. Track Your Success

Sales funnels are iterative, meaning part of their value comes from the fact that they can be improved with each new cycle. You should pay attention to metrics that will help you continuously assess how well your sales funnel is working and where there’s room for growth. 

Here are a few important SaaS sales metrics you can use to monitor the success of your sales pipeline. Keep in mind that not every metric is relevant to every sales funnel. The best ones to track depend on the way your sales funnel in particular is set up.

Beyond the Sales Process

After the sale is closed, the prospect exits the bottom of the funnel as a customer and the process is technically over. However, once your SaaS sales strategy has done its work, the customer’s journey continues and your retention strategy comes into play. This is especially important in a SaaS sales model because customers will need to be given ongoing reasons to renew their subscriptions. 

It’s not easy to design a successful SaaS sales funnel. Building a funnel that works reliably is one of the most common challenges related to startup sales. If you need help building a successful sales strategy or you want feedback on the one you already have in place, you can get in touch with a qualified advisor.

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Daniel A. Chen

Daniel A. Chen

Head of BD - Brightside
Wharton MBA

Simple Things

Daniel Chen is the Head of Business Development at Brightside, a financial care solution that helps working families improve their financial health. He started his career as a Senior Auditor at KPMG Canada, then moved on to work as an Assistant Controller at eBay before embarking on his entrepreneurial journey with Lightside Games and Levanto Financial. Prior to joining Brightside, Daniel served as Quicken's Head of Business Development, where he oversaw partnerships and launched new businesses. In addition to this, he has an MBA from Wharton Business School and is a certified public accountant.

Wharton MBA
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Michael Litt

Michael Litt

Co-Founder & CEO - Vidyard
GTM & Generative AI Expert

Y Combinator

Michael Litt has established a notable presence in the business world as a Founder, CEO, and Investor. He successfully raised $85 million in funding for Vidyard while leading a team with over 300 members. His dedication to Go-to-Market (GTM) strategies and sales technology is reflected in the numerous Generative AI products developed at Vidyard. In addition to his role at Vidyard, Michael also serves as an investor at Garage Capital, a firm that has backed more than 150 companies, with 12 of them achieving valuations surpassing $1 billion.

CEO Vidyard
Raised $85M
Partner Garage Capital
Y Combinator
Angel Investor
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Robin Daniels

Robin Daniels

CMO - WeWork Matterport
Growth and GTM Expert


Robin is a three-time CMO with more than 20 years of experience in marketing and growth leadership roles at companies like Salesforce, Box, LinkedIn, Matterport, and WeWork. He's done 3 IPOs, several acquisitions, and led companies through hyper-growth to become household names. Robin now works as an advisor, speaker, and motivator to fast-growth companies around the world.

Took 3 companies public
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