Pete Kazanjy - SaaS Sales Staffing Model
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Saas Sales Staffing Model from Founding Sales Book
https://twitter.com/foundingsales
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This is a Saas Sales Staffing growth model I put together for one of the companies I advise. It's based on experience in scaling our team at TalentBin. It's not perfect, but I tried to abstract it enough such that you can fit it to the realities of a variety of go to markets. There may be bugs in it. I haven't yet tested it by hiring 50 sales reps in 12 months. ; )

Hit File>Make a Copy to create your own, and you can start hacking on it.

Seriously, if you catch a bug, hit me at petekazanjy@stanfordalumni.org and I'll fix it. THANKS!

As you can see, once you've hit product-market fit, the one thing you can do to grow ARR, and by extension, enterprise value, is by successfully hiring, onboarding, and getting successful incremental sales staff. Imagine raising that next round at $10m ARR instead of $6m ARR? Or having a brass tacks convo with that corp dev staffer about what your "yeah, we'll consider that" number is. The higher your ARR, the better.
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Variables
Inside sales-style (smaller deals, faster cycles, lower win rate)
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Average Contract Value$15,000Your average contract value will modify how much revenue your AEs can book per month. This will be modified by your pricing crossed with the realities of the level of competition in your market.Yellow Cells are variables that you can change to fit your current go to market realities. Don't change non-yellow cell unless you know what you're doing ; )
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Win Rate20%Your win rate will also modify how much revenue your AEs book per month. It will be modified by the maturity of your solution, its go to market, and level of competition in deals.
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New Opps Per Week10The number of Opps that your AEs can handle per week (while still leaving time for pipeline management) gives a sense of funnel throughput. It is modified by how long a demo takes, if it has to be done outside or can be done via telepresence, and length of deal cycle. This number is also used for how many Opps an SE can handle in a week.
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Renewal Rate90%This model assumes 12 month contracts. This is the percentage of revenue that chooses to renew at the end of its 12 month contract. Also, because I'm lazy, I haven't added in the Accont Manager headcount cost associated with managing existing ARR. That's a todo! But if you want to hack on this, an AM should be able to manage $1m-$1.5m in business or so (depending on ACV - customer count per AM is what is more the constraint.)
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Implied Monthly Unit Wins$120,000The amount of bookings that should derive from a "unit" of revenue production - e.g. 1 SDR + 2 AEs. Or 1 SDR + 1 AE. Or 1 AE.
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Implied Unit Sales Cost$24,000The amount of your monthly bookings you'd be ok spending on cost of sales (related to cost of sales target percentage below)
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Monthly OTE
Annualized
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Implied AE Per Month (Fully burdened)
$15,000$12,000$144,000Note that what you can pay your AEs is an outcome of what the components of your GTM look like. If you can get a better deal, great. But paying above this will hurt margins.
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Implied SDR Cost (Fully burdened)
$6,600$5,280$63,360Note that what you can pay your SDRs is an outcome of what the components of your GTM look like. If you can get a better deal, great. But paying above this will hurt margins.
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Implied SE Cost (Fully burdened)$11,250$9,000$108,000Used Glassdoor information to target the cost of an SE in relation to a standard AE. Looks to be ~75%
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Implied Management Cost$2,400You may not encounter management cost until you get to 10 or 20 total reps (AEs+SDRs), depending on what your founding team looks like (can they manage the team?). But you need to budget for it.
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AE Class Size3This is how many AEs you think you can onboard in a given class such that they all stick (this may be a failing of this model, as it doesn't have AE attrition).
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SDR to AE Ratio0.5This is the ratio of SDRs to AEs you want to have. This is typically based on how many SDRs are needed to keep an AE calendar full weekly. The number of demos that an SDR can book per week is usually the result of how difficult prospects are to contact, engage, and book demos with. Ideally this would be linked to AE Opps to week, but I haven't abstracted the model to handle that.
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SE Support Deal Ratio10%The proportion of Opportunities that need SE involvement
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Target Cost of Sales20%This is the proportion of your bookings that you are willing to allocate to sales salary and commissions. Note that this is distributed across AE, SDR, and sales management overhead.
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Sales Management Overhead10%
How much you want to allocate to management overhead.
These should add up to 100% (I know, I should have them linked), but this proportion feels right. AE base will typically land at 100% of what an SDR's OTE is.
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AE Cost of Sales Proportion63%
How much of your cost of sales you want to allocate to AEs
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SDR Cost of Sales Proportion28%
How much of your cost of sales you want to allocate to SDRs.
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Month 1Month 2Month 3Month 4Month 5Month 6Month 7Month 8Month 9Month 10Month 11Month 12Month 13Month 14Month 15Month 16Month 17Month 18Month 19Month 20Month 21Month 22Month 23Month 24
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Bookings Model
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Ramped AEs111444777101010131313161616191919222222
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Opps Executed404040160160160280280280400400400520520520640640640760760760880880880
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Wins888323232565656808080104104104128128128152152152176176176
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Ramped AE Bookings$120,000$120,000$120,000$480,000$480,000$480,000$840,000$840,000$840,000$1,200,000$1,200,000$1,200,000$1,560,000$1,560,000$1,560,000$1,920,000$1,920,000$1,920,000$2,280,000$2,280,000$2,280,000$2,640,000$2,640,000$2,640,000
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Ramping AEs333333333333333333333333
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Opps Executed120120120120120120120120120120120120120120120120120120120120120120120120
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Onboarding Efficiency0%33%66%0%33%66%0%33%66%0%33%66%0%33%66%0%33%66%0%33%66%0%33%66%
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Wins07.9215.8407.9215.8407.9215.8407.9215.8407.9215.8407.9215.8407.9215.8407.9215.84
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Ramping AE Bookings$0$118,800$237,600$0$118,800$237,600$0$118,800$237,600$0$118,800$237,600$0$118,800$237,600$0$118,800$237,600$0$118,800$237,600$0$118,800$237,600
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# of SDRs (Supporting both ramped and ramping AEs)
222444555777888101010111111131313
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# of SEs (Supporting both ramped and ramping AEs)
000111111111222222222333
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Total Sales Staff666121212161616212121262626313131353535414141
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Total Monthly New Bookings$120,000$238,800$357,600$480,000$598,800$717,600$840,000$958,800$1,077,600$1,200,000$1,318,800$1,437,600$1,560,000$1,678,800$1,797,600$1,920,000$2,038,800$2,157,600$2,280,000$2,398,800$2,517,600$2,640,000$2,758,800$2,877,600
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Total Monthly Renewal Bookings00000000000$108,000$214,920$321,840$432,000$538,920$645,840$756,000$862,920$969,840$1,080,000$1,186,920$1,391,040$1,597,428
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Total Monthly Bookings$120,000$238,800$357,600$480,000$598,800$717,600$840,000$958,800$1,077,600$1,200,000$1,318,800$1,545,600$1,774,920$2,000,640$2,229,600$2,458,920$2,684,640$2,913,600$3,142,920$3,368,640$3,597,600$3,826,920$4,149,840$4,475,028
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Forward ARR RR$1,440,000$2,865,600$4,291,200$5,760,000$7,185,600$8,611,200$10,080,000$11,505,600$12,931,200$14,400,000$15,825,600$18,547,200$21,299,040$24,007,680$26,755,200$29,507,040$32,215,680$34,963,200$37,715,040$40,423,680$43,171,200$45,923,040$49,798,080$53,700,336
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Aggregate Bookings to Date$120,000$358,800$716,400$1,196,400$1,795,200$2,512,800$3,352,800$4,311,600$5,389,200$6,589,200$7,908,000$9,453,600$11,228,520$13,229,160$15,458,760$17,917,680$20,602,320$23,515,920$26,658,840$30,027,480$33,625,080$37,452,000$41,601,840$46,076,868
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Cost Model
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AE Salary Expense$60,000$60,000$60,000$105,000$105,000$105,000$150,000$150,000$150,000$195,000$195,000$195,000$240,000$240,000$240,000$285,000$285,000$285,000$330,000$330,000$330,000$375,000$375,000$375,000
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SDR Salary Expense$13,200$13,200$13,200$26,400$26,400$26,400$33,000$33,000$33,000$46,200$46,200$46,200$52,800$52,800$52,800$66,000$66,000$66,000$72,600$72,600$72,600$85,800$85,800$85,800
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SE Salary Expense$0$0$0$11,250$11,250$11,250$11,250$11,250$11,250$11,250$11,250$11,250$22,500$22,500$22,500$22,500$22,500$22,500$22,500$22,500$22,500$33,750$33,750$33,750
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Sales Management Addendum$7,320$7,320$7,320$13,140$13,140$13,140$18,300$18,300$18,300$24,120$24,120$24,120$29,280$29,280$29,280$35,100$35,100$35,100$40,260$40,260$40,260$46,080$46,080$46,080
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Total Sales Salary Expense$80,520$80,520$80,520$155,790$155,790$155,790$212,550$212,550$212,550$276,570$276,570$276,570$344,580$344,580$344,580$408,600$408,600$408,600$465,360$465,360$465,360$540,630$540,630$540,630
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Total Cost of New Sales67.10%33.72%22.52%32.46%26.02%21.71%25.30%22.17%19.72%23.05%20.97%19.24%22.09%20.53%19.17%21.28%20.04%18.94%20.41%19.40%18.48%20.48%19.60%18.79%
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Sales Contribution Margin$39,480$158,280$277,080$324,210$443,010$561,810$627,450$746,250$865,050$923,430$1,042,230$1,161,030$1,215,420$1,334,220$1,453,020$1,511,400$1,630,200$1,749,000$1,814,640$1,933,440$2,052,240$2,099,370$2,218,170$2,336,970
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Aggregate Contibution Margin$39,480$197,760$474,840$799,050$1,242,060$1,803,870$2,431,320$3,177,570$4,042,620$4,966,050$6,008,280$7,169,310$8,384,730$9,718,950$11,171,970$12,683,370$14,313,570$16,062,570$17,877,210$19,810,650$21,862,890$23,962,260$26,180,430$28,517,400
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