SaaS Benchmarking – Sales Cost and Sales Target

SaaS Benchmarking – Sales Cost and Sales Target

Contents

This post provides SaaS entrepreneurs, Business Managers and Investors with the top 75 best practice benchmarks for your SaaS and Software business. Within this chapter we are covering Benchmarks to derive your Selling Cost.
Sales Benchmarks are relevant to

– .. capture On-Target Earnings (OTE) of sales staff

– .. capture Sales commissions and

– .. capture Annual Sales Targets (Quota)




Depending on your Sales Model and your location your Sales Cost can vary significantly, e.g. the cost for a Direct Field Sales Rep are significantly higher than for an Inside Sales Rep, the cost of a Sales Manager in San Francisco is significantly higher than in the Mid West. It is relevant to capture the yearly total-cost-to-company in your sales plan which depends on your Sales Model.

If you are selling via a direct salesforce, you must capture the fully loaded cost of the Salesforce. If the Sales Unit represents a partner channel, you must capture the commissions you pay to the partner. If the Sales unit represents an inbound/outbound sales team, you should capture the total cost of that team.

And last but not least, the quota of a Sales Unit drives its performance which again very much depends on your sales model as well as your cost of selling

Benchmarks to capture On-Target Earnings (OTE) of sales staff

On-Target Earnings by Types of Sales Reps

Field Sales Reps earn most ($220k), 3.4 times more than Sales Engineer ($64k)
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGSALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

On-Target Earning per Inside Sales Rep

OTE for ISRs are varying greatly between 60-130$k
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGSALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALES

 

On-Target Earnings by Types of Sales Reps

Field Sales Reps (SRs) make 70% more in OTE than Business Development Reps and 215% more than Inside SRs
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGSALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

Ratio Of Sales to Headcount in Public Companies by Years since Founding

The ratio increases from 1.5 in Year 1 to 2.1 in Year 7
ALL SALES TEAM ATTRIBUTESTEAM PROFILESTRUCTURE

 

Years of Experience Required per Inside Sales Rep

Average experience prior to hire is 2.7 years
ALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALESTEAM PROFILEEXPERIENCE

 

Average Tenure per Inside Sales Rep

Average Tenure per Inside Sales Repp averages 2.5 years
ALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALESTEAM PROFILETENURE

 

Annual Attrition Rates / Turnover for Inside Sales Reps

Most companies have annual sales attrition of 15-25%

 

Ratio between Executive and Inside Sales Reps within Inside Sales Team

Average Executive to Rep Ratio: 1:7
ALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALESTEAM PROFILESTRUCTUREMANAGEMENT

 

Average On-Target Earnings per Sales Development Rep

OTE average $72.1k with a 64% base component
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGSALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPS

 

Share of Incentive Components in Variable Compensation of Sales Development Rep

A quarter of companies tie largest share of compensation to won opportunities
FINANCIAL METRICSSALES COMP & QUOTAQUOTA BASEALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPS

 

Total Annual Variable Pay for Sales Representatives

Sales Representatives in smaller companies make an average variable pay of $100k, they make significantly less in larger companies
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGSALL SALES TEAM ATTRIBUTESTEAM TYPEFIELD/OUTSIDE SALES

 

Inside Sales Salaries (Median – U.S. National Average)

Inside Sales Salaries start a $45k per year

 

Median Salaries of Sales Representatives (Incentive Only)

Median OTE of sales reps (incentive only) starts at $54 k per year
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGSALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

Median Salaries of Account Management Manager/Director

Median salary of account management manager starts at $113 k per year
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNING

 

Median Salaries of Account Executive (US National Average)

Median salary of account executive manager starts at $77 k per year
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNING

 

Median Salaries of Customer Service Representative

Median salary of customer service rep starts at $33 k per year
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGS

 

Median Salaries of Sales Engineer

Median salary of sales engineer starts at $64 k per year
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGSALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPS

 

Benchmarks to capture Sales Commissions

Average Commissions by Sales Activity

Average Sales Commission for New Business are at 8-9% of ARR Quota
FINANCIAL METRICSSALES COMP & QUOTASALES COMMISSIONSALL PROCESSESCUSTOMER LIFETIME VALUERENEWALEXPANSION (UP-/CROSS SELL)ALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

Average Sales Commissions by Sales Activity

Sales Commission average 8-9% for New Business, 6% for Upsell Bussiness and 2% for Renewal Business
FINANCIAL METRICSSALES COMP & QUOTASALES COMMISSIONSALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

Sales Commissions by Sales Model

Median Sales Commission for Inside Sales at 9% and for Field Sales at 10%
FINANCIAL METRICSSALES COMP & QUOTASALES COMMISSIONSCOMPANY PROFILESALES MODELFIELD SALESINSIDE SALESONLINE SALESCHANNEL SALES

 

Benchmarks to capture Annual Sales Targets (Quota)

Sales Quota per Year by Sales Functions

Quota for Outside Sales Reps is up to 3x higher than for Inside Sales Reps
FINANCIAL METRICSSALES COMP & QUOTAQUOTAALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

ARR Quota per Quarter and per Year by Sales Functions

Quota for FSR ($800k-$1300k/year) is almost 2 times higher than that of ISR ($630k-$720k/year)
FINANCIAL METRICSSALES COMP & QUOTAQUOTAALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

Ratio of Quota and Salary by Sales Functions

ISR and FSR have somewhat similar ratios
FINANCIAL METRICSSALES COMP & QUOTAON TARGET EARNINGSQUOTAALL SALES TEAM ATTRIBUTESTEAM TYPESALES DEV REPSINSIDE SALESFIELD/OUTSIDE SALES

 

Sales Quota for Inside and Outside Sales Reps

Quota for Outside Sales Reps is much higher than for Inside Sales Reps
FINANCIAL METRICSSALES COMP & QUOTAQUOTAALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALESFIELD/OUTSIDE SALES

 

Quota Base for Inside Sales Reps Compensation

Three quarter of companies assign their inside sales reps individual over shared quotas
FINANCIAL METRICSSALES COMP & QUOTAQUOTA BASEALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALES

 

Relative Win Rate of Inside Sales Team by Deal Size Quartile

Large deals (quartile 4) are 20% less likely to be won than average deals
FINANCIAL METRICSSALES COMP & QUOTADEALS WONCOMPANY PROFILECONTRACT & PRICINGCONTRACT SIZEALL SALES TEAM ATTRIBUTESTEAM TYPEINSIDE SALES

 

Quota Attainment of First Line Manager and Sales Team by Company Size

While Sales Managers achieve 81% of quota, Sales Teams achieve an average of 75%
FINANCIAL METRICSSALES COMP & QUOTAQUOTA ACHIEVEMENTALL SALES TEAM ATTRIBUTESTEAM TYPEFIELD/OUTSIDE SALES

 

Leave a comment

Your email address will not be published.