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Does your company generate more than $50M in revenue?
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Sales Efficiency
quota and comp
Sales Strategy / reporting
Sales Performance
Sales Capacity
SaaS Quick Ratio
CAC Payback Months
Churn Rate
Win Rate
% of Time Spent Selling
% of reps achieving less than 50% quota
% of reps achieving 80% + quota
AE Quota (Annual)
BDR Activity (per day)
Quota Over Assignment
On Target Earnings (OTE)
# of Measures
Accelerators
Draw Period
SPIFF budget per person
AE Ramp Time
BDR Ramp Time
AE: BDR
AE: SE
AE: AM
Span of control
Average Sales Cycle
Pipeline Coverage
Sales Headcount % of FTEs
Sales Expense % of OpEx
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4.0x-5.0x
Annual Churn Rate
10%-15%
Growth Enterprise
7%-12%
10-12
1.0x-1.5x
2.0x-4.0x
12-14
14-16
0.5x-1.0x
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7%-10%
Growth SMB
* Your company's ACV < $25K
* Your company's ACV > $25K
Scale SMB
1.0x-2.0x
Scale Enterprise
5%-7%
Description: The SaaS Quick Ratio measures a company’s ability to overcome churn, aka the “leaky bucket issue.” The optimal ratio of new and upsell to churn and downsell is generally ~4x or higher. Growth companies tend to have higher ratios given they are hyper focused on new sales to capture market share and have a smaller installed customer base (i.e. less opportunity to churn).
Calculation: (New + upsell ARR) (Churn + downsell ARR)
Calculation: (Previous period S&M expense) (Current period new & upsell ARR ) * 12
Explanation: The % of new opportunities that marketing is influencing
Description: CAC payback period tells you how many months after acquiring a cohort of customers you recoup your upfront investment. Growth companies are likely to have shorter CAC payback periods, because they tend to be hyper focused on fast paced growth and have yet to build out costly support functions such as customer success. Companies with higher LTV (lifetime value) for customers can support a higher CAC payback period.
Calculation: Current period new ARR Previous period S&M expense
Calculation: Churned ARR Start of year ARR
When your company sells to small and medium-sized businesses, there is often a shorter, less costly sales process; an out-of-the-box implementation; and less stickiness. Inevitably, SMBs are more likely to self-select into the wrong product. Similarly, smaller businesses are more prone to go out of business or encounter cash flow issues. If your software isn't mission critical to your customer's day-to-day operations, your software may be the first cost to go. With monthly or annual contracts, SMBs nearly always have a churn window approaching which allows them to subscribe and unsubscribe on a whim. Thus, "uncontrollable" churn generally hovers around 40%. For both segments, if the "uncontrollable" churn is higher than expected then you should reevaluate. Perhaps you are selling into the wrong segment or targeting the wrong end customers. Always diagnose why customers are leaving your product. Make sure that you systematically record and track churn reasons. Often, "uncontrollable" churn may be mistaken for controllable churn. Our tip: Ask for more detail when budget is cited as the main reason that a customer is leaving. Probe for more rich feedback on why the customer did not see value in your product.
See more : Six Tactics for Fast Churn Reduction
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Description: Sales Efficiency is a measure of how efficiently dollars spent on sales and marketing translate to new sales dollars. The metric measures how many dollars are generated for every one dollar spent.
Description: A company's churn rate is a strong indicator that they are selling into the right customer base (i.e. a customer that will receive maximum value from the product). The larger the business you target, the lower your churn rate must be to scale successfully - because your addressable customer logo count is smaller and you will churn through the addressable market. Furthermore, enterprise customers typically have annual billing and longer contract lengths, making it more difficult for them to churn than SMBs who typically have monthly billing with shorter contracts.
Calculation: (Previous period S&M expense) * 12 (Current period new & upsell ARR )
* Your company is generating < 50M in annual revenue and/or growing > 50% p.a
* Your company is generating > 50M in annual revenue and/or growing < 50% p.a.
20%-30%
% of reps achieving < 50% of quota
% of reps achieving > 80% of quota
70%-80%
60%-65%
0%-20%
GROWTH SMB
Explanation: The % of marketing spend that is focused on generating New Logo
Description: We calculate win rate as the closed won dollars as a percentage of the total closed won and close lost opportunities. The metric can be used to measure sales effectiveness. Win rates have a direct effect on pipeline coverage. If a company wins a high percentage of opportunities (high win rate) it can achieve targets with a lower pipeline coverage ratio.
Calculation: Closed won opportunities ($) Closed won + closed lost opportunities ($)
Calculation: Time spent on selling activities (time spent on non selling activities + time spent on selling activities)
Explanation: The % of marketing spend that is focused on supporting Sales Enablement
Description: A leading indicator for sales team performance is the percent of time that AEs spend on selling activities vs. non selling activities, such as updating the CRM, attending trainings, internal meetings, etc. Highly productive sales teams ensure that front line sellers are not overly burdened with administrative tasks so that they can devote enough time to prospects and customers.
Calculation: Number of reps achieving 50% or less quota attainment Total number of fully ramped quota carrying reps
Explanation: The % of marketing spend that is focused on generating Expansion revenue
Description: A measure of rep production across the sales team. It is important to look at individual rep performance to see if a few poor performers are causing overall poor performance. If more than 20% of your workforce is achieving below 50%, then you should consider if there are issues with hiring profiles, enablement, and demand generation.
Calculation: Number of reps achieving 80% quota attainment Total number of fully ramped quota carrying reps
Explanation: The % of marketing spend that is focused on generating renewals
Description: A measure of rep production across the sales team. On average, we expect 80% of reps to hit 80% of quota. If less of your workforce is achieving above 80%, then you should consider if there are issues with hiring profiles, enablement, and demand generation.
GROWTH ENTERPRISE
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SCALE SMB
SCALE ENTERPRISE
BDR Activities (per day)
Quota and Comp
$500K-750K
10% (max)
75-100
5%-10%
3 (max)
2x+
$600K-800K
$1.2M-1.7M
50-75
1-2 quarters
$1.0M-1.5M
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Calculation: Paid Digital Spend Total Program Spend
Explanation: Within marketing program spend, the average % allocated towards Paid Digital
Description: AE quotas are largely dependent on the average sales price (ASP) and selling motion (field vs. inside vs. hybrid). Reps selling into enterprise customers with high ASP tend to have larger quotas. As a general rule of thumb, companies should strive for quotas to be at least 5 times the reps on target earnings (OTE).
Calculation: Trade Show & Event Spend Total Program Spend
Explanation: Within marketing program spend, the average % allocated towards Trade Shows and Events
Description: BDR activity metrics (# of calls and emails) are important to track to ensure the team is generating sufficient and quality leads. Ultimately, the number of activities a BDR is able to successfully complete depends on the amount of customization required of the messaging to the prospect.
Description: Over-assigning quotas is a common strategy that companies utilize to ensure sales team meet the board determined target. However, over-assigning to the point that quotas are unattainable can demotivate reps and may indicate there was an issue in setting realistic targets. Best practice is over assignment of 5-10%. High variability in new markets may lead to greater over assignment, but we would advise caution assigning more than 10%.
Calculation: Total quota deployed Board plan
Explanation: The % of companies that listed Trade Shows as their top performing channel that impacts pipeline
Calculation: Base Salary + Variable Incentive
Explanation: The % of companies that listed Paid Digital as their top performing channel that impacts pipeline
Description: On target earnings for the different selling roles varies by the selling model and average sales price, but the pay mix (base vs. variable) is generally consistent across all companies. Variable income is the primary method to incentivize sellers to continually drive revenue. AEs will have the largest variable component as they have the largest control over the selling motion. Variable components decrease for roles focused on team quotas to incentivize collaboration (e.g., SEs). Pay Mix (Base %, Variable %) AE: 50%, 50% BDR: 75%, 25% SE: 80%, 20% AM: 60%, 40%
Calculation: Percent of companies with BDRs reporting into marketing
Explanation: The % of companies that responded that have BDRs sitting on the Marketing team
Description: There should be no more than 3 measures in a plan. If you have more than 3 measures, you risk diluting the rep's focus. In addition, the more measures you have the less each measure is weighted, thus decreasing the motivation to hit each of the measures if they all only make up a small percent of variable incentive (e.g., Measure D is 5% of the variable incentive).
Description: In order to drive optimal sales behavior and reward your sales organization, you should ensure that the accelerators (commision rate above 100% attainment) are lucrative and motivate your sales reps to continue selling above 100% of their quota. Accelerators should be 2x the base commision rate (base rate is the blended rate below 100%), and then can accelerate further at the point of excellence (e.g., where you typically expect the top 10% of your team to finish).
Explanation: Length of time between initial engagement with a prospective company and deal closed
Explanation: Measure of how well the inflow of prospective customers supports the sales targets
Description: The goal of a draw is to provide “subsidized incentive earnings” to reps while they ramp and onboard to the organization, in place of their variable compensation. Draws can either be non-recoverable (typical for new sales hires, or individuals changing roles in an organization), or recoverable (an advance on your variable target incentive). Recoverable draws are intended to be collected after the sales rep earns his or her commissions. The draw period correlates to the sales cycle length and the complexity of the sale. Most draws are 3 months in length (non-recoverable) and then a recoverable draw may be used to further ensure any gap in earnings can be addressed post the initial 3 month period. Commissions can still be earned while a rep is on a draw; they would just earn commissions for any performance above the draw amount.
Explanation: A measure of what percentage of resources are dedicated to selling and operations related to selling
Description: Spiffs should not make up more than 10% of a rep's variable compensation. Spiff's that account for more than 10% of a rep's variable compensation result in watering down original compensation plans and incentives, as well as companies overpaying for one-off performance. Ensure that your sales orgnaization does not expect a SPIFF every quarter. They should be leveraged to drive specific behaviors in a region, product, or role.
Span of Control
6-9 months
2-4:1
2-4 months
3:1
4:1
5-7:1
12+ months
2:1
7-8:1
Calculation: Time to full productivity (i.e. carrying a fully ramed quota)
Description: We recommend companies look at ramp time as time to full productivity (carrying a full quota), not time to first sale. Ramp time is most closely correlated to sales cycle length. Organizations with long sales cycles will typically have longer ramp times, as the rep will need time to build pipeline and experience a full sales cycle before being fully trained.
Description: The average tenure of a BDR/SDR is 1-2 years, so high functioning inside sales organizations are especially skilled at handling turnover. One of the most important aspects of successful turnover is ramping new hires as quickly and effectively as possible. To maximize BDR/SDR ramp, companies must have the right hiring profile and a well-functioning onboarding system in place.
Description: The ratio of account executives to BDRs/SDRs is dependent on the sales cycle and sales complexity. Selling to enterprise customers likely involves multiple stakeholders, so as a result have lower ratios (more BDR coverage per AE). It is fairly common for enterprise AEs to be supported by a BDR/SDR on a 1:1 ratio for strategic accounts.
Calculation: # of AEs : # of BDRs
Calculation: # of AEs : # of SEs
Description: The ratio of account executives to sales engineers is dependent on the technical complexity of the sale. Certain verticals require more technical and/or industry expertise resulting in lower ratios (more SE coverage per AE).
Calculation: # of AEs : # of Account Managers
Description: The ratio of account executives to account managers(AMs) is dependent on the scope of responsibility for the account managers and the target customer base. If AMs are responsible for upsells and renewals rather than exclusively upsells, the company may have a lower ratio. Furthermore, companies that sell to enterprise customers often use a "land and expand" approach, which is heavily dependent on successful upselling. Those companies tend to have lower ratios as well.
Description: We see lower ratios in companies that have combined player-coach roles. If there are no player coach roles, we would expect a ratio of 7-8:1. Spans of control greater than 8 result in too little time for training and development of individual contributors.
Calculation: # of individual contributors # of first line managers
6 - 9 mo.
4 : 1
2 - 4 mo.
12+ mo.
2 : 1
Calculation: Time of full productivity (i.e. carrying a fully ramed quota)
Description: The average tenure of a BDR/SDR is 1-2 years, so high functioning inside sales organizations are especially skilled at handling turnover. One of the most important aspects to successful turnover is ramping new hires as quickly and effectively as possible. To maximize BDR/SDR ramp, its companies must have the right hiring profile and a well-functioning onboarding system in place.
Calculation: # of AEs # of SEs
Description: The ratio of account executives to sales engineers is dependent on the technicality of the sale which is generally correlated with the average sales price. Large enterprise sales usually require more technical expertise and product demoing, so companies that sell into enterprise customers tend to have smaller ratios.
3 : 1
Calculation: # of AEs # of BDRs
0-20%
Explanation: A measure of sales performance compared to the sales targets set by company leadership for a set period
Description: The ratio of account executives to BDRs/SDRs is dependent on the sales cycle and sales complexity. Selling to enterprise customers likely requires multiple stakeholder involvement, so those companies tend to have smaller ratios. Its fairly common to enterprise AEs supported by a BDR on a 1:1 ratio for strategic accounts.
5 - 7x
7 - 8x
Calculation: # of AEs # of Account Managers
Blog: The ratio of account executives to account managers is dependent on the scope of responsibility for the account managers and the target customer base. If AMs are responsible for upsells and renewals rather than exclusively upsells, the company may have a lower ratio. furthermore, companies that sell to enterprise customers often use a "land and expand" approach, which is heavily dependent on successful upselling. Those companies tend to have lower ratios as well.
Calculation: # of AEs # of first line sales managers
Sales Strategy / Reporting
30%-35%
3x +
6-12 months
10%-20%
25%-30%
15%-30%
3-6 months
* Your company’s ACV < $25K
* Your company’s ACV > $25K
Calculation: The length of time between the creation of an opportunity with a prospective customer to when the deal is signed and closed (months)
Description: Average sales cycle is often correlated with average sales price (ASP). Companies with higher ASPs, that also sell into large enterprise companies, typically have a longer sales cycle due to the number of stakeholders involved in the sales process and larger budgets that need to be secured.
Explanation: The typical breakdown of how Marketing spend breaks down within total Sales and Marketing
Description: Pipeline coverage is a ratio to measure how much pipeline a company has compared to the amount of quota deployed. As a best practice, companies should target to have at least 3x coverage at the start of each quarter; however, the exact amount of pipeline coverage can be calculated by looking at win rate. For exmaple, If a company wins 20% of deals, then it should have closer to a 5x coverage.
Calculation: Open pipeline for given time period Quota for given time period
Calculation: Sales headcount Total headcount
Description: The ratio of sales headcount to overall company headcount. Growth stage companies typically prioritize sales before building out additional functions and therefore have a higher ratio. Later stage companies typically have built out more functions such as operations, marketing, and finance, and therefore the ratio will decrease over time.
Calculation: Sales expense Total operating expense
Description: A measure of how much of spending is dedicated to selling and operations related to selling (AE, BDRs, ops, support, etc.) as compared to total operating spend. Early stage companies, focused on fast paced growth, tend to have higher ratios as they prioritize spend in sales and lead generation to capture market share and build brand awareness.
driven in part by marketing efficiencies achieved at scalescale (e.g., more brand awareness, better processes, etc.). Stated another way, smaller companies have to work harder to get traction and don't yet have repeatable and efficient processes.
