The challenge of scaling revenue through hiring...
For those organizations that tried to scale revenue by blunt force hiring of AEs and SDRs, and were disappointed by the results, here’s a possible explanation using a simple example:
Assume you’re looking for $10M in new logo revenue
Enterprise AE quota is $1M, so you need to hire 10 reps to generate $10M
But reps need ramp time, typically 6 months or so, so you’re not getting $10M this year, you’re getting $5M (if all goes perfectly)
But things usually don’t go perfectly, so factor in a 60% participation rate, and now you’re down to $3M.
You’ve already got a $7M hole in your target, and that will likely be bigger unless you made the commensurate investments in enablement, training, rev ops, SDR throughput, and marketing programs to support the new heads. It’s likely some of these things got missed or ignored, asymmetric investment runs rampant in most organizations.
Adding to the pain, because these other areas are starved of resources, the close rate of opportunity to win likely goes down, requiring even more at bats to close the same number of deals.
It’s becoming clear that investing in 10 new reps to secure $10M in revenue was never a viable plan.
Savvy sales leaders know this is true, so what do they do? Most over-hire and build in additional capacity knowing ramp time, gaps in enablement, plan participation, all will reduce the amount of revenue delivered.
It’s a vicious merry-go-round that leads to consistent ‘misses’, lots of finger pointing, low morale, and additional AE churn, usually from the best performing reps who tire of being scape-goated when the system is rigged against them.
There’s a better way, and its through a detailed understanding of your full funnel economics, understanding the key differences between marketing and sales and who is better at creating demand vs capturing demand, and building trust, alignment, predictability, accountability, and transparency across the entire GTM. You may be surprised to find that you can generate that incremental $10M in revenue and not hire a single new AE.