When building out SaaS sales teams, there is an ever evolving strategy companies face on how to scale out revenue units. For the past 11 years the Bridge Group have been tracking the ever evolving trends of sales team’s composition and compensation. This year’s report is a deeper dive into the SDR (Sales Development Representative) side but still reviewing outbound vs inbound roles and face-to-face versus remote-sales roles.
THE SURVEY GROUP
Of all companies surveyed the average revenue was $24m ARR but 46% of the companies surveyed had an ARR under $19m (and only 27% have an ARR over $100m).
When taking a look at YoY growth, we see a growth deceleration as ARR revenues grow. Average growth rates for companies with revenues of $5m and below is 200%, between $5m and $20m.
SO……WHAT DO SDR’s DO?
At NZTE we are often asked how to benchmark an SDR’s efforts and the answer is unfortunately — it depends. The responses to this question for this survey were pretty evenly split in terms of KPI based activity and largely indicative of what works for a companies sales organization, so there is no clear winner here. SDR’s KPI’s can vary across three main categories, but they are all in relation to the funnel that an AE manages (see compensation section below for some additional notes):
- Setting introductory meetings (non qualified) — 37%
- Setting semi qualified meetings — 31%
- Passing on fully qualified opportunties to AE’s — 32%
WHAT KIND OF SDR’s?
SDR team structures vary between pure inbound and pure outbound, with the majority (74%) having either both kinds (inbound and outbound) at 25%, or a blended team structure (49%).
With teams that have both an inbound and outbound teams (25% of those surveyed), the ratio is roughly 2:1 of outbound vs inbound sales reps. The average ratio of SDR’s to AE’s is 1:2.6. This number is down from previous reports.
WHEN TO BRING ON SDR’S ?
We do see in past surveys that SDR’s don’t make sense economically until companies see average contract values (ACV’s) per customer beyond $4k minimum, ideally contracts or customer segments that generate $5k or more in ACV.
HOW LONG DO THEY STAY?
For many SaaS startups, cash is key and so performance expectations correlated to revenues banked are important for founders to understand. The challenge the current economy and SaaS market faces is that demand for SDR’s continues to rise. Corollary to this is an inverse trend in required experience when hiring SDR’s. Since 2010, the experience requirement has fallen 45% and now sits at 1.4 years average.
Time to ramp however, isn’t impacted by experience and we see this measurement sitting pretty steady at 3.2 months (there seems to be a bit of a blip in 2014)
However — average tenure of SDR’s is on a steady decline. In 2010 it was 3 years plus, in 2018 it now sits under half of that, at 1.5 years. If we add in experience, the least experienced reps have much shorter tenures.
When we subtract time to ramp and average tenure, we get to the real interesting metric of months at full productivity. This is similar to the Life Time Value metric SaaS companies often measure in regards to customers. This metric is dropping hard. In 2010 it was 2.9 years. This year it’s 15 months at full productivity.
But rep attrition (similar to another SaaS customer metric — Churn) can be extended if a focus is made on career paths internally for successful SDR’s.
But not all SDR’s are made equal. Total attrition averages 39% in the companies surveyed, with involuntary attrition taking up two thirds of that number. “Involuntary attrition” is associated from termination and most termination can be attributed to SDR’s not making quota (but is also based on other factors, such as not fitting in culturally). This all ties in nicely with the final section on quota and compensation as, on average, only 68% of reps achieved quota across all groups surveyed. This hasn’t shifted from last year and the rule of thumb that two thirds of your team will achieve quota remains true.
Base salary and on-target-earnings (OTE) are up slightly from last year. This is notable as it is the first significant raise in some years (we will have to see in next years survey if this is a trend based on current employment levels or just a statistical anomaly). The spilt between base and OTE has not shifted, but still a range. The mix is generally in the 40% to 60% range of base-to-OTE.
A notable observation in this years report is that reps who have KPI’s centered on setting appointments earn slightly less than those generating qualified opportunities. But SDR compensation is definitely growing in complexity and the variables are a broad spectrum (this report identified almost two dozen different schemas for calculating OTE compensation and incentives).
Quotas nudged up from 2016 but the responses ranged widely. For example Outbound SDR’s with an ACV’s of $200K+ went as low as a KPI of just 2 opportunities per month, where an Inbound SDR with an ACV of less than $5K went as high as 60.
To download the full report, please click here.