Selling Smart: The Insider's Guide to SaaS Success in India

Rahul Sasi, CEO of CloudSEK, a cybersecurity startup, had just finished the first prototype of his product. He really wanted to start selling the software but didn’t know where to begin. That’s when he got the call for a job interview. Sasi, being the ever-entrepreneurial founder, decided to use the interview as an opportunity to pitch his cybersecurity product. 

Round after round, he impressed every important stakeholder in the firm and by the time the ‘interviews’ ended, he had landed his first (India-based) client, and the then-nascent company had made its first sale. A cool Rs.18 lakhs in the bank!  

Today, 65% of CloudSEK’s customers are from India. 

65%. 

Let that sink in. 

While conventional SaaS sales wisdom says that the US is the market to target, many SaaS entrepreneurs are increasingly finding India to be a lucrative market. While they aren’t rejecting customers from the US, or for that matter, any other geography, they truly believe that India has enterprises that are willing to shell out serious moolah for good software. And they have a chance to scale up with the growth in the Indian SaaS market.

As Bob Dylan’s famous lines go--The Times They Are A-Changin'.

What people don’t realize about the Indian market’s potential for SaaS? 

One of Kuldeep Dhankar’s (co-founder of the cloud native monitoring platform Last9.io) favorite question is asking people to guess Salesforce’s ARR in India.

Most people don’t even get close.

Kuldeep says it is within a bowshot of ~USD 1 billion. 

Let that sink in! (Yes, we know we sound repetitive, but we are willing to take that risk.) 

Microsoft, according to reports (and Kuldeep), makes even more. Last9’s top three paying customers are also from India. And each of them pay similar prices as their US customers.  

Many tailwinds have propelled the domestic market to its present state--the implementation of GST, 4G/5G networks, transactions on online/ecommerce platforms increasing trust in online software, increasing openness from legacy businesses to adopt cutting-edge software and finally, the tech-savvy entrepreneur and investor class evangelizing its use. 

All this is to say that India has a growing SaaS potential and appetite for good software. But selling in India isn’t for the faint of heart.

What it takes to sell in India

Like all markets, the Indian SaaS market has its unique characteristics, and unless you deeply understand them, you’ll find it frustrating to sell software in India. 

1. Don’t pay for Zoom; pay for air tickets

Truth be told, India’s SaaS market is mostly the metros and a few large cities. So, investing your dollars in face-to-face meetings is prudent as you can get a lot more mind share with an in-person meeting. 

“In India, if you're not meeting your customer in the real, you're not selling efficiently. Not to say you cannot sell on video, but you are missing an opportunity to right-size your deals and build customer trust. I tell people if you meet a customer in person, your average deal size will be 20%, or 30% higher, guaranteed, and your renewal rates will go up. Don't buy Zoom; buy air tickets. That's been my mantra since ever,” said Kuldeep. 

2. Leverage your home pitch advantage

Unlike selling in the US, when selling in India, the founders have a home advantage. What do we mean by that? Because you studied here, perhaps did one or two jobs here, have your family and friends here, and even your professional network, you can easily reach out to folks you know from school, college, or your previous workplace and ask for introductions/meetings with target companies. 

“(You have) your people cheering for you. Log apko aise hi mila dete hain (people help you get meetings easily), ” said Kuldeep. 

While this might seem trivial at first glance, getting your foot inside the door is the most important(and the most expensive in terms of capital spent) thing for an early-stage founder. You need folks who can vouch for you and, in turn, your product even before you can make your first sales pitch. However, you’ll be surprised to know many people do not make their 1st-degree connections their first port of call when selling software. 

Also, believe in the country's network effort. Most high-up-the-foodchain folks, who are the people who sign on software-buying checks, are together in some WhatsApp groups or meet each other at industry events. If they find value in your product, the others will learn about it, too. 

Remember, your buyers are mostly the top 0.01% of India and they are most probably in NCR, MMR or Bangalore. These are short, inexpensive flights, in the same timezone and everyone speaks perfect English. There are no markets in the world that have these advantages.

3. Make the customer a part of your story; they’ll reciprocate better to an Indian company too 

It is important to understand the hierarchy in an enterprise sales setting, and one must convince multiple folks in an enterprise to get in. These folks don’t only have to like your product; they must first like you and believe in you because their jobs are at stake. And it is easier for you to sell an Indian origin story to an Indian buyer than anywhere else in the world. 

“The customer needs to buy into you as a person as well. You need to make them part of your story. Project the vision that.. if I am successful, which I will be, you are the reason I became successful,” said Rahul. 

“I used to constantly take feedback and give them credit for the product improvements. I always made sure that our vision was somehow in their heads because if people connect to the vision, then you make them part of a story, and then they will fight for you internally,” he adds. 

Rahul has just the right anecdote to drive home the point. 

When the security team of one of the country’s largest banks decided to go ahead with CloudSEK in its early days, the bank’s management sent an internal audit team to check on them to see if everything was legitimate. 

“I thought I'd never get this deal now. We were working out of an old, shady house. Six people came in, and we were sitting in a bedroom and working,” reminisced Rahul. 

“I told them our story and put all the documents in front of them. That's all I could do. Fortunately, the auditors sent a good report saying these guys are small but would eventually grow. And then we got that contract. This is why it is important to make people part of your story and show them the bigger picture.”

Sales, marketing, building the team, and everything in between 

Now that we know where to start, how do you scale the India GTM? We’ll let the experts answer that! 

Understand metrics that matter

While there are conventional metrics, here are two that matter a lot in the Indian context that you may not otherwise pay attention to. 

Salesperson Conversion ratio: “Can you communicate value to the end user? The number one criterion to evaluate a salesperson is not the revenue they bring in; it is their conversion ratio. If I give them ten accounts, how many of them will be converted? A guy sitting in Mumbai can give me all the revenue, but out of the ten accounts we gave him, he closed three, and he achieved the target because Mumbai has such a big market, but a guy sitting in Chennai would not have that luxury,” said Rahul. 

Cost per meeting: “If there is one metric that matters in SaaS, it is cost per meeting. It is basically everything the company spends and the meetings (in a selling context) they can generate. For example, it also includes the cost of engineers writing code.”

“That number is surprisingly revealing, and it solves a lot of things. Five years ago, this number used to be $900 for me. Today, the number on average is around $1500-$1600 because things have gotten more expensive… flights, hotels, all of that. But between $900 and $1500, you can have a ‘selling’ meeting in India. This number is about 10x in the European and American markets,” said Kuldeep.

He adds that since it may take a lot of meetings with the same customer to close a deal,  knowing the cost per meeting against the expected contract value will keep you honest about your pricing and your Sales effort.  

Feature requests must have a ‘dhanda’ (business) end goal 

We often hear from founders that Indian software buyers are notorious for asking for custom features. In the early days, you must really work with customers and make their requests a part of the product roadmap, but you must do it with a clear thought process. While this helps build trust and loyalty, which go a long way in the Indian market, you need not say yes to every feature request. 

And that’s where Kuldeep’s co-creation framework comes into play. 

Build any feature that matches all three criteria: 

1. Useful to more than the one asking
2. It is part of the current long-range roadmap 
3. Customer commits to pay and promote the feature

“You don't say no to a customer; you say that if these three conditions are met your answer is default Yes. Once they know this, they will not ask for custom features 9/10 times. Every quarter, every year, every SaaS company should have an internal product roadmap. The requested feature must directionally align with your roadmap. Else, the product team should be able to say no,” said Kuldeep. “But, to do this, you should have an open product roadmap visible to your customers so they have the trust that you aren’t making this up just to avoid building the feature.” 

Come up with a process from founder-led to ‘team-led’ sales 

The journey from being ‘the face’ of the company to letting the team take over is hard, especially in India, where people associate an early-stage brand with the founder’s personality. 

The transition must be carefully handled. Rahul did this shift with the help of videos. 

“Enablement is very important. So, I've recorded how I pitch and sell. Salespeople are supposed to watch, recreate, and record; someone must review them. And it has to be a constant and consistent process,” said Rahul. “When it comes to hiring salespeople, everyone has to take a module of our product and make a pitch video of how they will sell it to a customer. I watch them, I review them, and then we get those sales folks. Once we started doing that, our ACV increased to 200k, 250k. It first went to 100k, and then it kept going up.”

Get your numbers right

According to Kuldeep, one of the first things to do for a SaaS company is to hire a numbers person, such as a CFO or accountant. This is because the founder or founding team must know the numbers inside out to plan their strategy. 

“Hire somebody great to manage finance early on, even if they are a bit expensive. You don’t think much before hiring a good engineer; likewise, you shouldn’t think much about hiring a solid finance person. This person will obsess about the company’s financial situation. Accounting is about recording and telling the truth, finance is about predicting the future based on that truth,” said Kuldeep. 

“You also need the finance guy to tell the future because selling is about the future. Your finance guy will also ensure your contracts are enforceable and clean. This person can also be the go-to for your investors when they want to look at your numbers, Let them have a clean look at your data, managed by a professional who lives that reality. You will earn a lot of trust and support,” he added. 

Get the right partners early 

When it comes to Indian sales, it is important to identify boutique channel partners early. These are the folks with existing relationships with your target audience. 

“These are the people you should spend time with in the early days. If you give them 10-15% of the margin, they will happily take you to people whom they know. You should engage bigger partners only after you start seeing market demand, as at that point in time, those guys will come to you,” said Rahul. 

Hiring the right talent 

Rahul wants founders to focus on two critical aspects when hiring sales talent: hiring product sales (and not service sales) folks and hiring leaders who are doers. 

Rahul: “If you're a product company, you are actually selling use cases and how the product solves problems. But on the other hand, if you're a service company, you are selling a service; it could be anything. It is important for founders to get this, as selling these are two different skill sets.”

“One of the mistakes I made is we hired service people in the earlier days and expected them to sell product.”

“Well, they were able to sell, but they were not able to sell it well. So, it was important to have people who understand the product and who can pitch it.” 

Rahul: “You need people who are actively on the ground, pitching to customers. You don't need a VP of sales who will not pitch. So, your first VP of sales has to be the person who can sell. Someone just giving directions will piss people off.” 

Kuldeep adds that the talent shortage in India is certainly not as pronounced as before.  

Kuldeep: “There was a shortage of product designers in India. Now, Indian companies compete and win globally. We've made that happen in 5-6 short years.”

The ‘Big’ Pricing question 

Recently, Uber’s CEO Dara Khosrowshahi, in a conversation with Nandan Nilekani, said that Indians are extremely demanding but are not willing to pay for anything.

"India is one of the toughest markets out there. If we can succeed here, we can succeed anywhere,” he said. 

We think this is true for SaaS products, too. 

If you can succeed here, you can succeed anywhere. 

When it comes to selling in India, it is important for founders to know the lay of the land before deciding the pricing. 

Kuldeep, thanks to his vast experience, explains the process well. The starting point is deep research on the market and the existing pricing strategies.

“Why do companies buy software? When they're either saying, I don't have enough people or my people are too inefficient, or I need to amplify my people’s impact,” says Kuldeep. “As time and people get more expensive, the size of the total addressable market for software in the market grows. That's why India is such a massive market. Do you agree that salaries have become 10X in the last ten years? That has increased the demand for software as well. All roads to efficiency increase in the economy lead to software.” he adds. 

All that is fine, but how does one gauge the potential, you ask? Kuldeep has an answer to that, too. 

“Let’s say you are making marketing automation software. There are a hundred unicorns, and obviously they all market. Now, if you capture some of that budget, you are still getting very large contracts. As long as there are recurring spends by the big companies, there’s enough market right here. There's enough grass for me to graze my sheep..”

In short, Kuldeep is placing his bets on India’s home-grown billion-dollar giants. As long as the product can cater to their needs, you’ve got huge potential. 

“The purpose of software sales is to create new value. Once I know what the potential customer spends, say on, their cloud budget; I can determine what new value I create easily enough and quote accordingly. When I say that I’m quoting Rs 5-6 crore, for example, because I know your cloud budget is 80 Crs, and I am creating new value of 10 Crs , then my proposal is not absurd. If you're making a proposal, you need to deeply research What is the new value you are creating and make sure you are able to capture that value created in your proposal. Seen this way underpricing is dangerous because it often tells your customer that your confidence and ability to create new value is low,” said Kuldeep. 

Rahul shares this view. He is vociferous about the need never to quote a low price point just to land a logo. 

“The biggest lesson I learned is that nobody will value your product if you don't. We faced consequences whenever we priced it low, and it's very difficult to recover from that. Make sure that the pricing model is explainable. In enterprises, people consider you an inferior product if you have a low price point,” said Rahul. 

Kuldeep also drills down to who to sell to. 

For some context, there are three levels of target audiences: L1 (decision-makers, usually C-Suite), L2 (influencers, say, directors/VPs), and L3 (actual users).

“In India, the L1 just want to know which product will do the job best and is within their budget. They usually never go deeper than that. L2 is the one who really owns the outcomes and is, hence, your main target. The L3 sadly doesn’t have much say, unless your product is truly terrible to use and will make them inefficient” says Kuldeep.

Finally, Rahul has tips on how one can groom the product so that one can make more money from the same set of customers. 

“It is important to always look for ways to solve problems adjacent to your first product. While building additional features for your first product is one thing, you need to build other product lines that could solve related problems for your customers,” said Rahul. 

“Since they already trust you, they’d be open to testing, trying, and hopefully buying your ‘new’ products, too. That way, it is a win-win. You get more from the same customer and the customer is able to solve their pain points from a trusted vendor.”

Conclusion

While selling to the US is seen as the go-to way forward for any new SaaS company, there is certainly enough proof that companies can build a great business by focusing on India, too. There are already enough and more examples of companies who are making a dent with this model. 

The US is certainly a huge and mature market. However, thanks to globalization and global talent, India-based unicorns and up-and-coming startups and enterprises also respect and pay for good products. 

A recent Bain & Company report says, “From a domestic SaaS spend standpoint, US has a giant lead with about $140-150 billion, followed by UK with $13-15 billion and India at $2-3 billion. However, India’s domestic SaaS market has been growing at 30-35 per cent CAGR compared to 20-25 per cent and 15-20 per cent of growth of UK and US markets, respectively.”

There is enough (and certainly rapidly growing) market for domestic consumption. Selling in India, as we’ve indicated above, comes with a home-pitch advantage, too. 

“I have a feeling that we will see in the next few years that India's stock market will value Indian SaaS companies who sell in India highly because there is great potential,” said Kuldeep. 

We certainly hope that the prophecy turns true. Fingers crossed!