Scaling Your Business With Revenue Intelligence
The power of leveraging data and competitive benchmarks to scale your business.
No matter how skilled your team is, it's hard to move opportunities along the sales funnel and create happy customers if you have not developed an organization centered around data-driven and proven growth playbooks.
Tomasz Tunguz is the co-author of Winning With Data, and he regularly writes about key topics within startups, including benchmarks, best practices, and team building. He is also a venture capitalist at Redpoint Ventures, where he leads an annual go-to-market survey.
This year, Redpoint received more than 500 responses to the survey. You'll see in the firmographics it's a diverse group that allows for objective insights that help fuel growth strategies. They do a superb job of gathering and sharing data points to leverage within your organization.
“If we have data, let’s go with data. If all we have are opinions, let’s go with mine.”
Five key takeaways you should consider:
1. Smaller teams perform better
This metric is a crucial insight because many companies don't optimize their sales rep to sales manager ratio. I've failed in this area previously, and if you are one of my former Director or VP of Sales reading this, I apologize (again). Sales teams with a ratio of sales rep to sales manager of 7:1 or less achieve quota 80-95% of the time. Sales teams with a ratio of sales rep to sales manager of greater than 7:1 miss their quota (attainment of 50% or less) more than twice as often.
If you have a seasoned, proven sales leader/manager, she could likely do well with more than 7 individual contributors reporting to her. She could probably excel with a team of 10-15 … for a short time. A bootstrapped company can't always keep the ratio in-line, but you need to plan to improve the mix over time. Other factors to consider is the complexity of sale, if the team is remote, travels frequently, or are all in the same office. If in the same office, effectively leading and coaching a larger sales or customer success team is more realistic. Same goes with experience level - your 20-year sales professional doesn't - or at least shouldn't - need the same level of 1 on 1 time as your new sales rep straight out of college.
2. Pick a Business Development Rep Metric
Of SDR/BDR teams, 60% use meeting counts for performance metrics, whereas 40% use pipeline value creation. However, the data shows it doesn't matter which way you go; you just need to pick a metric for your SDR/BDR teams and manage to it.
3. SDR/BDR Success Equates to Sales Rep Success
If your business development reps hit their numbers, so do account executives. When these teams hit 95% of their quota, 50% of AE teams achieve 95%+ goal attainment. There is a reason you see the fastest growing companies always hiring business development teams - because it works.
4. Net Dollar Retention Is The Favorable Customer Success Metric
The most common customer success metric used is net dollar retention, used by ~37% of survey respondents. Logo retention is second at ~33%. Getting this metric and retention right in your organization substantially reduces your cost of customer acquisition.
5. Leader Titles and Customer Focus
As revenue grows, most companies hire a CMO and CRO to lead Marketing and Sales. However, in Customer Success, most companies hired a VP or Director of CS at around $5m in ARR and then never appointed a Chief Customer Officer. Not having a CCO is a trend I hope to see change over time. I typically see companies are not genuinely customer-focused when they don't have a senior executive leader responsible for the happiness of customers. To maintain a customer-centric growth model as you scale, you need to have a senior-level CS leader who is accountable for customer satisfaction.
Tomasz and the team have linked the entire study here, which contains a tremendous amount of valuable insights and intelligence to grow your business and revenue.
About The Author
Ross Reed is a company growth expert and entrepreneur who has developed and led high-performing companies, from bootstrapped start-ups to global technology corporations, including INC 5000 fastest-growing companies.