SaaS Modeling Technique: AE and SDR Assumption Drivers

This kind of business model has sales directors sitting their making sales calls all day long trying to sign up new recurring revenue customers that might be paying $300 to $600 per month. It is often B2B SaaS that is being sold. If this is your model, it is important to create economic forecasts to figure out if the math works for what you are paying sales people vs. the lifetime value of new customers.
Relevant Template:
When it comes to modeling techniques for Software-as-a-Service (SaaS) businesses driven by Sales Director and Account Executive ratios, there are several key considerations to keep in mind. Here are some possible modeling techniques to consider:
  • Determine the ideal Sales Director to Account Executive ratio: The first step in modeling a SaaS business driven by sales director and account executive ratios is to determine the ideal ratio of sales directors to account executives. This can be done by analyzing historical data and industry benchmarks to see what ratios have worked well in the past.
  • Forecast sales growth based on sales team size: Once the ideal Sales Director to Account Executive ratio has been determined, it's possible to forecast sales growth based on the size of the sales team. This can be done by defining quota attainment over time for AEs, quota's being new account signups per month.
  • Analyze conversion rates by sales team: Another important consideration when modeling a SaaS business is the conversion rates of each sales team. By analyzing the conversion rates of each sales team, it's possible to identify areas where improvements can be made to increase revenue.
  • Evaluate the impact of customer retention: In addition to sales growth, customer retention is also a key factor in the success of a SaaS business. By modeling the impact of customer retention on revenue growth, it's possible to identify strategies for improving customer retention rates.
  • Consider the impact of pricing changes: Finally, when modeling a SaaS business, it's important to consider the impact of pricing changes on revenue growth. By analyzing historical data and industry benchmarks, it's possible to identify the optimal pricing strategy for maximizing revenue growth.
Overall, modeling a SaaS business driven by sales director and account executive ratios requires careful consideration of a range of factors, including team size, conversion rates, customer retention, and pricing strategy. By using a combination of statistical techniques, ratios, and industry benchmarks, it's possible to build a comprehensive model that can help guide decision-making and drive revenue growth.

AEs vs SDRs: Job Functions / Roles:

In a SaaS (Software as a Service) business, SDRs (Sales Development Representatives) and AEs (Account Executives) are both crucial members of the sales team.

The exact ratio of SDRs to AEs will depend on the company's sales goals, the size of the sales team, and the specific market being targeted. Some SaaS companies may have a larger percentage of AEs if they are targeting enterprise-level customers with longer sales cycles and larger deals. Other SaaS companies may have a larger percentage of SDRs if they are targeting a broader market with shorter sales cycles and lower price points.

The role of an SDR is to qualify leads and set appointments for the AEs to close deals. They typically work with inbound leads generated through marketing efforts, as well as outbound prospecting efforts. They use a variety of communication channels, such as email, phone, and social media, to initiate conversations with potential customers and assess whether they are a good fit for the company's product or service. Once a lead is qualified and ready to move forward, the SDR hands them off to an AE.

The role of an AE is to close deals with qualified leads. They work closely with potential customers to understand their needs and determine how the company's product or service can meet those needs. They provide product demos, answer questions, negotiate terms, and ultimately close deals. AEs are typically compensated based on the revenue they bring in, which gives them a strong incentive to close deals and drive business growth.

Overall, SDRs and AEs work in tandem to drive revenue growth for the company. The SDRs generate leads and set appointments, while the AEs close deals and bring in revenue. Both roles require strong communication skills, a deep understanding of the product or service being sold, and the ability to build relationships with potential customers.