When determining Sales Capacity, “it’s worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps. can be counted as half of a productive rep”

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In many SaaS businesses, sales reps play a key role in closing deals. In those situations, the number of productive sales people (Sales Capacity) will be a key driver of bookings. It is important to work backwards from any forecasts that are made, to ensure that there is enough sales capacity. I’ve seen many businesses miss their targets because they failed to hire enough productive salespeople early enough.

It’s also worth noting that some percentage of new sales hires won’t meet expectations, so that should be taken into consideration when setting hiring goals. Typically we have seen failure rates around 25-30% for field sales reps, but this varies by company. The failure rate is lower for inside sales reps.

When computing Sales Capacity, if a newer rep is still ramping and only expected to deliver 50% of quota, they can be counted as half of a productive rep. That is often referred to as Full Time Equivalent or FTE for short.

Another important metric to understand is the number of leads required to feed a sales rep. If you are adding sales reps, make sure you also have a clear plan of how you will drive the additional leads required.

More SaaS + Software Stats

Growing faster has twice as much impact on share price as improving margins

Internet sales strategies are the only sales method to see a decline in CAC, dropping from $0.54 to $0.42 between 2014 and 2015

While field sales remains the most popular way to sell for companies >$2.5MM revenue, companies with <$2.5MM revenue tended to use inside sales as their primary mode of distribution

More than 1/2 of SAAS companies increased their spending on customer retention last year

Our experiences with SaaS startups indicate that they usually start with a couple of lead generation programs such as Pay Per Click Google Ad-words, radio ads, etc

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

Unlike many other industries, if a software company grows at only 20%, it has a 92% chance of ceasing to exist within a few years

It’s common for startups to grow rapidly, doubling or tripling in size year over year, until they hit $5M in ARR

Account Churn Rate (ACR) = customers at beginning of month – customers at the end of month / customers at beginning of month

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

More Growth Strategy Stats

86% of SaaS businesses treat “New Customer Acquisition” as their highest growth priority, both in terms of executive support and funding available

Since churn is so important, wouldn’t it be useful if we could predict in advance which customers were most likely to churn?

In contrast to these, the median annual churn rate for smaller, private SaaS companies with less than $10M in revenue is 20%

Customer’s lifetime value (LTV)= average revenue per user (ARPU) / monthly churn rate

Gross dollar churn among companies with an internet go-to-market strategy saw a meaningful increase, up from 8% in 2015

SAAS companies that are focused mainly on enterprise sales have higher levels of professional services

The fastest growing SaaS companies scale their organizations rapidly, growing their teams by an average of 56% each year

SAAS companies need to track the number of visitors, trials and closed deals; And also track the conversion rates, with the goal of improving those over time

The metrics that matter for each sales funnel, vary from one company to the next depending on the steps involved in the funnel

They may forget what you said, but they will never forget how you made them feel.