SaaS Account Executive data and market insight
Bridge Group is a B2B SaaS sales consultant. We hold them in very high regard and connect Bridge with our portfolio companies when there is a need. They do strategic assessments, write playbooks, and can also do management training and coaching. We did a Q&A with Kyle Smith at Bridge (ksmith@bridgegroupinc.com) about what he is seeing in the enterprise SaaS sales market. A summary of the conversation is below.
Experience of new hire AE’s is up. Over the past 2 years, because of the tighter environment, experience required at hire for account executives has gone up a full year at 3.6 years. Employers have become more picky about who they’re hiring. You’ll see 150 to 200 applications on good job postings, and we haven’t seen that in a long time.
AE efficiency came down, materially. Ramp time also has gone up by 1.5 months for a total of 5.7 months. More importantly, win rates are also down to 19%. 22% to 25% was always the expectation, but now we’re at 19% which is a big move. If you’re talking about pipeline coverage, a loss in close rate from 25% to 19% means you need 5x pipeline coverage instead of 4x.
Quotas are up. Quotas are now $800k on median, but have only increased 2% annually over 12 years. A rep that hits that quota can expect to make $190k a year. Kyle doesn’t believe in raising quota just to raise quota. There needs to be logic and reason behind it, otherwise you’re demotivating the AE’s. If quota does go up, you need to increase spend on marketing, release new product to sell, or give AE’s more tools to hit that higher quota. If you increase quota without providing the rep more ways to win, you’ll ultimately lose your best reps.
The ROI on AE’s is still good. The return on a rep measured as bookings achieved divided by total compensation stands at 4.1x. The 25th and 75th percentiles are 3.2x and 4.8x, respectively. These are still good numbers, but they are down.
Hitting quota is harder. The percentage of the team hitting quota is 51%, down from 65%. Back when the teams were hitting 65%, the overachievers were far outperforming the underachievers, so the team overall was still hitting quota. At 51% however, teams as an aggregate are no longer hitting quota.
Make your reps do prospecting. Account executives have become less dismissive about prospecting and are doing more of it. AE’s need more active deals because they’re not closing as many as they used to, so they’re being more pro-active. Kyle believes every rep, no matter the tier, should be doing some outbounding. Sitting around waiting for an SDR or marketing to funnel you a lead means you’re highly likely to miss or have volatile quota attainment. Sales leaders want consistency and repeatability in rep performance, so doing some level of prospecting does improve rep consistency. Individuals that can self-generate some level of pipeline always have more value than those that don’t.
Bridge is an outstanding firm for righting or building the enterprise sales engine. Reach out to them. We’ll continue to interview Kyle quarterly and share data they release.
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