The raw number of salespeople that startups need to hire is far higher than you think.
Let's take an example, with a hypothetical sales team that is doubling in size from 20 → 40 reps in one year. For the sake of this exercise, we're going to assume that the sales team is 50% SDRs and 50% Account Executives.
Sales Development Representative Attrition
You can expect an SDR to stay in their seat for a year. You might be able to extend this a few months longer, say to 14-15 months. Go beyond this and there's a very high chance they will leave your company for greener pastures.
The good news is that most SDRs don't actually leave. In fact compared to hiring Account Executives, they're much more likely to stay with you for years. Rather, they move into other roles within the company.
Most of the time, SDRs become Account Executives. Other common roles include marketing, recruiting, product and SDR leadership. It can be useful to view the SDR role as the equivalent of a rotational grad program that bigger companies do (with the exception that SDRs actually provide real value during their first year)
The 10 SDRs that we’re starting with in this hypothetical example all need to be backfilled, because 2 have left, and the other 8 are being promoted.
Here's how this looks in a table form with Year 1 starting with 10 SDRs, and then starting afresh with Year 2 where you hire 20 SDRs. To illustrate this a little further, I’m adding a third year with the same team size and hiring goals as the second year.
As you can see, this never ends - which is why sales leaders spend so much time interviewing candidates. You need a continual pipeline of talent.
Account Executive Attrition
The good news is that Account Executives aren't subject to the same up or out trajectory as SDRs. You don't need them to move into another role in a year - in some ways it's the opposite, you can keep Account Executives very happy by giving them a territory and enough time to really see the fruits of their labor. However this doesn't mean they stay around forever.
Let’s run a scenario where we are starting with an Account Executive team of 10 and we are trying to grow it to 20 reps.
Assumptions:
- The average Account Executive stays in your sales team for 2 years
- 75% of the SDRs who have been at your company for a year are promoted into Account Executive roles
- 100% of the SDRs you promote into Account Executive roles make it to their first year as an AEs
- 25% of AEs hired in as Account Executives don’t make it to their first year anniversary
What this means
- Due to attrition, you lose half (5) of your team of 10 Account Executives
- You have 8 SDRs that you can promote from, and you promote 6 of them
So to grow your team from 10 → 20 Account Executives you need to hire 9 people as AEs, before you account for anyone not working out in the first year.
If we assume a 25% failure rate in Account Executives being hired, you now need to hire 12 reps (with the assumption that you end the year with 9 of these reps remaining).
The bottom line: to grow from 10 → 20 reps you need to hire 18 reps (including 6 promotions)
For fun I also included a third year where you keep the team size the exact same. This is where you can really the the power of a strong SDR program as a future talent pipeline for the sales organization. While you lost 10 of your existing AEs to attrition, you had 13 SDRs ready to be promoted. The downside to this approach in Year 3 is that you have a very junior Account Executive team.
Next Steps & The Reality of SaaS
The numbers I have used as examples and benchmarks are based on clients I have worked with.
Compared to the broader industry, these clients don't churn and burn through teams.
Real attrition numbers are often higher than this.
Either way - I highly recommend you honestly run the numbers on your sales team. For the sake of accurately forecasting your recruiting needs include every candidate who’s started on your team (even that guy who disappeared on day 2). That person still took a recruiting cycle to get to that point.
B2B software companies need salespeople - and a lot of them.
And if you’d like help scaling your sales team with someone who understands how to find great SaaS talent, book time to speak with me here.