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January 24, 2019www.opexengine.comwww.saasoptics.com
How Sales & SalesOps Metrics Drive SaaS Financial Performance in 2019
AboutSaaSOptics
Tim McCormickCEO
550+Customers
$4B+ManagedRevenue
$11BInAggregate
InvestedCapital
Subscription Management built for growing B2B SaaS and subscription businesses.
• Billing & Collections• Revenue Recognition• SaaS Metrics & Analytics
BenchmarkEngine SaaS Benchmarking
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• Proprietary benchmarking data platform
• Non-GAAP metrics and KPIs
• Annual benchmarking since 2007
• 350+ participating companies
• 2019 New Surveys:
• Q1: SaaS Sales Planning
• Q3: SaaS Employee & HRLauren Kelley, CEO & Founder
EARLY STAGE GROWTH STAGE ENTERPRISE
Compare your company to 60+ different peer groups
Budgeting, Planning & Diagnostic
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Apply metrics driven discipline to financial planning
Measure lagging & high performing KPIs
SaaS Valuation Metrics
Rule of 40: EBITDA + Revenue Growth• You can burn as much cash as you want if
your revenue growth justifies it
Unit Economics• CAC• CLTV/LTV• CLTV/CAC
Retention/Churn Rates
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$
Churn/Retention Rates
Customer/Logo Retention# of customers retained in a certain period (month or year)ØIndicates customer satisfaction, stickiness of
your products, customer value
Net Dollar RetentionChange in the net dollar contract value in a certain period (month or year)ØCombines customer retention with expansion
and discounting
Gross Dollar RetentionChange in the original contract value over a certain period (month or year)ØAre contracts retaining value or discounted?
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Recent SaaS IPOs
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High Sales & Marketing expense with high revenue growth rates:Average S&M expense: 59% and 41% annual revenue growth
66%
28%
54%
121%
52%43%
66%
44%
59%
39%31%
36%46%
0%
22%
66%
49%41%
0%
20%
40%
60%
80%
100%
120%
140%
CARBON BLACK, INC.
DROPBOX, INC.
DOCUSIGN INC
DOMO, INC. ELASTIC N.V. PIVOTAL SOFTWARE,
INC.
SMARTSHEET INC
ZUORA INC Average
Recent SaaS IPOs
S&M Expense as a % of Recognized Revenue Annual Revenue Growth
Source: OPEXEngine EdgarEngine
Sales Expense as a % of Revenue
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39%
36%
30% 29%31%
34%
25%
17%
13% 12%10%
18%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$1M-$10M $10M-$20M $20M-$40M $40M-$60M $60M-$100M $100M-$150M
2018 B-2-B SaaS Company Average Sales & Marketing Spend
Sales Marketing
Source: OPEXEngine BenchmarkEngine
Key Sales Performance Metrics
Key Sales performance metrics to track, benchmark and improve
• Sales Productivity: • ARR/rep, new ARR/rep, contract expansion
• Win/loss rate• Sales cycle length• Quota attainment
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Optimizing Sales
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Sales metrics
Sales performance
Financial performance
Sales metrics
Ø Headcount, incentives, territories, pipeline dollars, sales training and automation system investments
Sales performance
Ø Sales productivity, Win/loss rate, sales cycles, quota attainment
Sales Headcount
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10
25
48
65
113
131
0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00
$1M-$10M
$10M-$20M
$20M-$40M
$40M-$60M
$60M-$100M
$100M-$150M
Sales headcount (FTE)
Source: OPEXEngine BenchmarkEngine
Sales Structure
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The majority have both enterprise direct sales/field sales as well as channel/partner sales. An estimated one-third have transactional sales organizations.
7%
30%
52%
93%
0% 20% 40% 60% 80% 100%
Other
Transactional: self serve, limited sales outreach,
telesales
Channel/Partner sales
Enterprise direct sales / Field sales
Sales Structure
Sales Management Coverage
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1.4 2.9 16.2 14.8
36.8
215.4
0
50
100
150
200
250
$0 - $10M $10M - $50M $50M - $500M
Managers to Total Sales and Ratios
TotalManagers
Total Sales1:11
1:13
1:13
RatiosMgr:TotalSales
QC Rep= quota-carrying sales rep
Sales Structure Ratios
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21.5
4.7
30.5
47.8
18.0
72.1
0
10
20
30
40
50
60
70
80
90
100
SMB Enterprise Both
BDRs to QC Reps and Ratios
TotalBDRs
Total QCReps
RatiosBDR:QCR
1:2
1:4
1:2
4.5 8.1
14.4
47.8
18.0
72.1
0
10
20
30
40
50
60
70
80
90
100
SMB Enterprise Both
Sales Engineers to QC Reps and Ratios
TotalSalesEngineers
Total QCReps
1:5
1:2
1:11
RatiosSE:QCR
Comp Plans Vary by Position
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Lead Gen/Inside
SalesReps
Renewals
Different Variable %, OTE, Quotas, Objectives
Variable Compensation
www.opexengine.com2017 OPEXEngine. All rights reserved.
For internal use only; not for distribution.18
OPEX INSIGHT: New Account Reps and Reps who handle both New/Renewal Accounts average 50 percent variable of on target earnings (OTE) across company revenue size segments.
50%
50%
50%
50%
50%
50%
0% 10% 20% 30% 40% 50% 60%
$1-$50M
$50M-$100M
$100M-$1B
VARIABLE % OF OTE
New Account Rep Reps Both New / Renewals
Variable Compensation
www.opexengine.com2017 OPEXEngine. All rights reserved.
For internal use only; not for distribution.19
28%
30%
42%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
$1-$50M
$50M-$100M
$100M-$1B
VARIABLE % OF OTE
Renewal Rep
OPEX INSIGHT: Renewal Reps have less compensation at risk than reps handling new accounts. Larger companies shift more risk onto Renewal Reps than smaller companies. Companies with higher growth rates of all sizes have higher variable percent of OTE for Renewal Reps.
Sales Rep Productivity
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75%
33%39%
13%
17%
29%
14%
13%
17%
7%
8%
4%17%
4%8% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SMB Enterprise Both
Average Sales Rep Productivity
>$2M
$1.5M - $2M
$1.2M - $1.5M
$1M - $1.2M
$.8M - $1M
$.5M - $.8M
<$.5M
• 75% of SMB reps achieve less than $0.5M in bookings
• 50% of enterprise reps achieve over $1M in bookings
Why Reps Don’t Make Quota
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63%
63%
46%
42%
42%
35%
15%
19%
0% 20% 40% 60% 80%
Reps need better continuing education and management
Reps need better qualified leads
Reps need more leads
Reps need better initial sales training
Company sets stretch goals /doesn't expect 100% achievement
Reps need better sales tools in the selling process
Quotas are set too high for number of reps / market
Other
Reasons Companies Don't Achieve Quota
Sales Org Changes
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0% 50% 100%
OtherImplement new CRM or Sales mgt application
Quota decreaseSeparate hunters and farmers
Increase investment in sales trainingOther sales organizational changes
Change sales rep territory definitionsOther salary/commission changes
Add 10%+ FTEs to overall sales organizationQuota increase
Changes Companies Plan in 2017 to Sales Structures Segmented by Annual Revenue Growth
>50% Growth 20-50% Growth <20% Growth
SaaS Sales Planning Survey
PARTICIPATE NOWAll participants with valid input will receive free results and benchmarks and an analysis report
The 2019 SaaS SalesPlanningSurvey is sponsored by
24
And powered by OPEXEngine
Sales Planning Survey
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• Bookings and ARR Growth Rates
• New vs. renewal ARR
• Headcount and composition of sales organization
• Quota attainment & quota multiple
• Sales Productivity
• Win rates
• Pipeline coverage
Follow up after this webinar
Discussion (Lauren and Tim)
• Sales structure changes in 2019?• SalesOps – in Sales or Finance?• Hardest metric to track?• Easiest metric to track?• What do boards and investors want to see in
2019? - Has that changed over time?• What’s worked to improve visibility and the
forecast?
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SaaSOptics enables early stage and growing SaaS and subscription businesses the ability to eliminate their dependency on spreadsheets and streamline financial operations and reporting.
