Lesson 5: Use the Right Metric To Measure Rep Quality
If you’re a sales leader at a SaaS business, you probably read about a new SaaS sales metric everyday. In fact, there are plenty of different metrics you can focus on and track. There are the obvious metrics like bookings, ARR, win rate, and ACV. There are also extremely valuable metrics that aren’t so obvious, such as The Sales Velocity Equation.
A New Metric In Town
I’ve been using one particular SaaS sales metric that has helped me better understand the value of my demo distribution by source. That metric is dollars per demo by source. I started thinking about this metric by accident when looking at my overall inside sales team performance.
I noticed that one of my Account Executives was delivering far more revenue than the other members of his team. When I looked at his close rate, however, it wasn’t significantly better than his peers. So, naturally, I attributed the difference to ACV. When I ran the report, however, it was actually a bit lower than the other members of his team.
What was going on?
I started digging into the numbers and noticed there was a discrepancy between how demos were being distributed amongst the team. I saw the discrepancy wasn’t just volume related, but also how demos from different sources were being distributed.
The rep who was leading my team in revenue was being fed more demos than his peers, and from our best lead sources (inbound and channel partners). Why was this happening?
This was happening because at this point in our company’s history, I hadn’t invested in demo distribution software (one of many big mistakes I’ve made, looking back), and SDRs were choosing the crowd favorite. The person they THOUGHT would give them the best chance of winning the deal. The channel team was doing the same thing.
Why This Hurts
By engaging in this type of behavior, the productivity of this rep was being skewed heavily. It was also leading to frustration by his peers, who wanted the same type of treatment. If you want to measure the production of your reps correctly, you need to make sure the following structure is in place:
Reps must perform the same quantity of demos
Reps must perform the same quality of demos (equal distribution from lead sources – we use and LOVE Chili Piper)
Your reps must work them through the same sales process
Once I set this up, I started looking at the expected dollars each rep would deliver per performed demo, by source. The equation is really simple for us, as we have three sources: inbound, outbound and channel.
Revenue by source ÷ # of Demos Performed by source = Dollars per demo by source
I love this metric because it gives you a quick “measuring stick” by which to judge your reps. This simple SaaS sales metric takes into consideration the source, the win rate and the average contract value, all wrapped up together, giving you a single metric to compare reps side-by-side.
If you want dig deeper and understand why some reps produce more and some produce less, you can simply break apart the formula and look at win rates and ACV.
This particular SaaS sales metric also helps you learn how to best distribute your demos or segment your team. Have someone with a high efficiency in channel? Consider moving them to a focused channel role. One of your reps delivers 2x the value on inbounds? Send her your inbounds and start watching and learning. Isolation can be your friend when you’re trying to learn how to improve rep efficiency.
There is no perfect SaaS sales metric, but there are plenty that you should be measuring to best understand your team or department performance. I added Dollars Per Demo by Source to my arsenal a few quarters ago and it’s given me a lightning quick way to assess how members of my team are performing by segment, and how to best distribute the leads to people who are most likely to succeed. I would love to hear more about different metrics you’re using to run your sales teams. Leave it in the comments section below!