The global business software and services market is expected to expand at a compound annual growth rate (CAGR) of 11.7% from 2022 to 2030.
Over the next decade, there will be a high demand for salespeople who can communicate software’s value to business decision-makers. And those who excel at this task will be well-compensated, for the average software sales rep is already earning around $126,000 per year, according to Glassdoor’s data.
Not to mention, tech companies are also known for their above-average benefits, work-life balance, and intellectually stimulating yet relaxed cultures. With all these advantages, you might be thinking about making the leap into software sales yourself.
Whether you’re coming from a sales background or are completely new to the profession, this article will teach you all you need to know about software sales for dummies to ensure it’s the right next step for you in your career.
What is Software Sales?
Software sales is the process of selling software products to businesses in order to help them solve a business problem. The goal of a software seller is to help decision-makers within the company understand how the software will help them improve a certain aspect of their business.
An example of software sales would be a sales rep selling an email marketing software like MailChimp to a marketing department’s VP of Marketing.
Here are some other examples of software sales:
- A BDR booking a meeting with a COO at a bank to demo a new fintech solution.
- An Account Executive demoing a project management software solution to a construction company’s decision-makers.
- A Customer Success Manager upselling a school to the upgrade of their k-12 software solution.
- A Sales Engineer walking a government agency’s data ops team through the diagnosis of their data management issues and explaining how the cloud database software can help them.
Often, these software products are sold as-a-service (SaaS), meaning they are subscription-based (month-to-month or year-to-year payments) and are hosted and maintained by the software vendor. This month-to-month or annual payment schedule makes it so you have customers over the long term, typically for at least a few years.
Many software products these days are also cloud-based. Customers log into an online portal, platform, or application from their desktop or mobile device to access the software and its features. They can do this from anywhere they have internet access.
Because software is typically quite complex, an entire team made up of Sales Development Reps, Account Executives, Customer Success Managers, and Sales Engineers is often required to generate, close, educate, and nurture customers. These salespeople are also handsomely paid.
How Much Do Software Salespeople Earn?
The average software salesperson earns $125,841 per year. Of that total, $85,838 is a base salary, the money they earn regardless of sales performance. And $40,004 is additional pay — typically commission payouts.
However, different software sales positions have different average earnings, and your earning potential increases as you move up the ladder from SDR to AE to Enterprise AE. Whereas a new SDR can expect to earn $50k-$80k per year, a seasoned Enterprise AE at a good company can expect over $200,000.
It’s important to know that most software salespeople are quota-carrying reps, so their total earnings are dependent in part upon their performance against their quota (e.g., 40k in closed revenue per quarter). This base/commission compensation plan provides them with both security and the ability to earn as much as their skill, will, and commission cap allow.
But, some software positions are not quota-carrying, as is the case for Sales Engineers and Customer Success Managers. But, like their quota-carrying counterparts, both still receive impressive base salaries and compensation in the form of profit-sharing.
Sales Engineers for example bring in about $117,000 annually on average, and software CSMs earn around $130,000 per year. It’s safe to say that after at least a year or two in software sales you should be making a comfortable six figures.
What Skills Are Necessary for Success in Software Sales?
There are various skills you’ll need to succeed in the world of software sales. Many are the same that you need to succeed in other sales positions, like relationship-building and persuasion, but others, like tech-savviness or virtual demoing, are particular to software sales.
Below is a list of skills a sales rep should develop to succeed in software sales:
- Relationship Building: Because the sales cycle is typically long, especially for enterprise software sales, reps have to develop rapport and trust with the prospect or risk losing them.
- Tech-Savviness: You don’t need to be a programmer, but you do need to be able to analyze a prospect’s issue, look over your software products, determine which will solve the issue, and then explain how it will do this to the customer.
- Persistence: B2B software sales often requires you to meet with multiple decision-makers and follow up consistently to schedule the next steps. SDRs have to be especially persistent since most leads don’t answer cold calls or emails on the first attempt.
- Effective Communication: It’s likely that you’ll be selling complex software to people who are unfamiliar with software. Therefore, you’ll have to explain how your product works to help them in plain, clear language without relying on jargon.
- Virtual Demoing: One of the most important stages in the software sales process is the demo, in which you remotely share your screen with a prospect and show them how the software’s features work to satisfy their specific needs. Sometimes demos will happen in person, but this is becoming a rarity.
- Education: As in all types of sales, you need to be able to educate your prospects about the function, benefits, and value of your product.
- Objection Handling: Because software can be so complex, misconceptions and misunderstandings about your platform may plague the mind of your typical buyer. You, therefore, have to master handling objections stemming from those causes.
The extent to which each of the above skills matters to your success also depends on your sales role. For example, a Sales Engineer is going to need a better understanding of software in general and your specific product than an SDR, who is going to spend more time talking about the benefits with leads than the nitty-gritty details of how it all works.
Software Sales Roles & Team Structure
In this software sales for dummies article, we’ve talked a lot about different software sales positions, so let’s take some time to go over each role’s responsibilities more in-depth. This will also help you choose which position seems most interesting to you and relevant to your background.
Below are the sales roles common in a software sales team:
- Sales/Business Development Reps: Entry-level position focused on prospecting for qualified leads through cold outreach like cold calling and emailing. Their goal is to book meetings for their AE.
- Account Executives: Closing position open to those with a few years of sales experience under their belt. Usually, an SDR fills the AE’s pipeline with SQLs, and the AE does discovery to uncover their needs, demos the solution, handles objections and negotiations, and closes the sale.
- Enterprise Account Executives: You likely need 5+ years in sales to get this position, especially at a top software company. They handle the larger accounts with longer sales cycles.
- Customer Success Manager: I’ve seen people from all backgrounds, including preschool teaching, get jobs as CSMs. You have to be skilled with relationship building, as your goal is to keep clients happy by helping them get the most out of the software. You’ll also facilitate upsells and cross-sells to grow the relationship.
- Sales Engineer: If you have a technical background, this may be the role for you. Sales Engineers assist AEs in selling complex software products by answering technical questions, holding technical discovery, giving technical presentations, and more.
- SDR Manager: These are usually former SDRs now managing a team of SDRs. It helps to understand the struggle of the SDR grind if you want to be a good coach.
- Sales Manager: This role is higher up than the SDR manager and is focused on managing Account Executives, tracking their performance, helping them hit revenue targets, and hiring new reps.
- Sales Director/VP of Sales: They manage and oversee the operations of the entire sales department. They create the sales plan to meet revenue targets, choose the team structure, and sometimes develop relationships with the biggest customers.
As for how managers structure their team, most software companies use the assembly line model, where different roles are responsible for different parts of the sales process. This structure was popularized in the seminal software sales book Predictive Revenue by Aaron Ross.
Here’s an example of a simplistic assembly line sales team structure:
https://blog.close.com/sales-management-3-models-of-sales-team-organization/
The assembly line is effective because it empowers salespeople to master their specific responsibilities instead of handling multiple parts of the sales process. An AE can focus on demoing and closing customers, while an SDR can hone their cold calling skills.
This specialization is critical to the success of a software sales team, which is likely operating in a competitive marketplace against other specialized salespeople.
The 6 Stages in the Software Sales Process
The typical software sales process is designed in such a way that it effectively and consistently turns strangers into long-term customers. Below we’ll go over the six different stages of the sales process.
1. Prospecting
SDRs and BDRs are typically given lists of potential companies that fit their ideal customer profile, as well as decision-makers within those companies who fit their buyer persona. Other times these reps will have to do research to find leads and their contact information on their own.
Equipped with a list, these prospecting reps then use cold calling, cold email, and social media selling to get these leads interested in their software solution. They often make personalized pitches that focus on how the solution can solve a relevant pain point for the lead and their business. Once the SDR gets an expression of interest, they can begin learning about the lead.
2. Qualification
The SDR will typically handle some early qualifications by asking basic questions about the lead’s role, company, and needs. This ensures that the lead is worth the time investment for their AE.
Once the lead is sufficiently interested and qualified, the SDR schedules a meeting on the calendar for them to meet with the AE to learn more about the solution. The lead has officially become a prospect.
3. Discovery
During this initial sales call or meeting, an AE asks the prospect more specific questions about their role, responsibilities, timeline, budget, and needs in order to both assess their level of qualification and start to capture information that will help the AE personalize a pitch and demo later on. This discovery conversation also forces back and forth conversation, which makes relationship building easier.
Once the AE is certain that the prospect is qualified and that they have a good grasp on the prospect’s main issues, they can then schedule a time to give the lead a personalized demo.
This allows them time to do more research and prepare a demo flow that will highlight the features most pertinent to the lead’s situation.
4. Presentation
During this phase, the AE gives web demos of the software to the company’s various decision-makers, either in one or multiple sessions. Each demo meeting typically lasts anywhere from 20-45 minutes.
Around 15 minutes are spent actually demoing the software, while the rest of the time is used for setup or for answering the customer’s questions. Sometimes AEs will also use a sales deck slideshow to introduce the software before diving into the platform.
An ideal demo will provide the leads with the overall context of the solution while also showing each decision-maker exactly how they can use the software to overcome their unique challenges. For more on demos, check out Forbes’ article on the 15 critical elements of software demos.
5. Closing
Now begins the closing stage of the sale. After the web demos, stakeholders are likely to have objections that the AE must handle in order to push the sale forward to a close.
After all objections about the solution and its effectiveness are handled, the AE sends over a contract, which may produce more objections regarding terms, pricing, and conditions.
The AE must therefore enter into negotiations with the decision-makers in order to get the signatures on the dotted line.
6. Customer Nurturing
After the prospect signs the contract, they are handed off to a customer success manager, who will usually help them with onboarding and training. Going forward, the CSM will also provide technical support, strategic guidance, and other forms of help. Ultimately, their goal is to retain the customer and expand the relationship through upsells and cross-sells.
4 Common Software Sales Techniques
For software sales for dummies, there are a few sales techniques that are especially important when selling software. Below we’ll cover four of the major ones.
Expertise in Your Product
As an Account Executive, you should be extremely familiar with your product, its features, its advantages, and its use cases. This makes you more capable of matching a feature to your prospect’s needs, and therefore more capable of selling them on its value.
LinkedIn Social Selling
LinkedIn is filled with B2B decision-makers eager to learn about new solutions to their business problems. This makes it a perfect environment for striking up relationships with leads and for initiating sales conversations.
Free Trials
One of the most effective software sales techniques is letting potential buyers use the software for free for a period of time — typically 14 or 30 days.
Users can test if the software works for their needs. They also tend to begin to feel a sense of ownership, which can make it hard to part with the technology.
Web Demos
Web demos take various forms. One of the most common is a one-to-one demo, where the salesperson demos the product to just one decision-maker and focuses on the features most prevalent to their job function and needs.
Another type is the one-to-many demo, where the salesperson demos the software to multiple people who want more of an overview of the entire software. This is more common at a conference or in a meeting with people who won’t be using the software directly but are stakeholders nevertheless.
Salespeople leverage web demos to show prospects how they will use the software on the job. Sometimes they will even hand over the controls to the prospect so they really get a feel for the software and its features.
Bottom Line: Software Sales for Dummies
Software sales is a lucrative field filled with productive and talented sales professionals who have an interest in technology and its effect on businesses.
Taking a job in software sales helps your career in various ways. For one, you’ll earn a good chunk of change. You’ll also expand your network and learn transferable skills like sales, persuasion, and tech acumen.
If you’d like to learn more about becoming a software salesperson and are new to sales, check out our ultimate guide on sales development jobs.
To gain a greater insight into what the future in software sales could hold for you, or which job you should apply for, read up on software sales career paths.