In the SaaS world, metrics can be finicky beasts. What works at LinkedIn, Salesforce, Twilio, or Zendesk might not be transferable from one to the other, let alone work for you.
Questions around “how can I benchmark myself?” make leading an Account Executive group all the more challenging. We just published our 2017 SaaS AE Metrics & Compensation Report where we analyze the biggest shifts in recent years and provide core metrics to measure Account Executive teams.
Below I’ve picked out a few highlights.
Average Experience Required at Hire is 2.6 Years
In this year’s analysis, we found the average experience required at hire for an Account Executive role to be 2.6 years. We’ve been doing these reports since 2009 and that number has remained remarkably consistent.
Things get interesting when we look at experience required at hire as a factor of annual contract value (ACV). Not surprisingly, as ACV rises, companies require more sales experience from candidates. Respondents with $100K+ ACVs require nearly 70% more experience than those with ACVs below $5K (3.1 years and 1.8 years respectively).
But what’s driving this really?
It stands to reason that every company would like to hire grizzled, seasoned Account Executives…but experience like that comes at a price – more on that below. Perhaps, it isn’t that higher ACV companies are the only ones seeking more experience reps, but that lower ACV companies require less experience because they can’t compete with the compensation expectations coming at them from more experienced candidates.
Average AE Tenure is 2.4 Years
This has been remarkably consistent over the life of this research project. Average tenure has changed very little since 2009. There are far, far more Gen Y AEs in the workforce now than there were eight years ago. Maybe all the millennial “job-hopper” bashing was a tad premature.
But here’s something surprising.
Average tenure rises alongside ACV. Why would selling a higher ticket solution make Account Executives more likely to stay longer? In theory, these two should be unrelated. The finding persisted when we controlled for company revenues and other factors. One possible explanation relates to higher ACV companies targeting more experienced reps. Perhaps the impulse to change companies every 12-18 months declines as reps progress in their careers.
On-Target Earnings Reach New Highs
Continuing a seven-year trend, total compensation rose to record highs in 2017. We found an average base salary of $62K and on-target earnings of $126K. This reveals the typical 50% : 50% (base : variable) split. And keep in mind that this is national data. In many local markets—particularly hots ones like Boston, San Francisco, etc.—expect earnings to be 10%+ higher.
We also noted that the percentage of reps with six-figure plus OTEs has been steadily rising. Compared to 2012, nearly twice as many Account Executive compensation plans have AE reps earning $100K+ OTE. Over that same period, the percentage of compensation plans with reps earning $120K+ OTE nearly tripled.
For the first time in this project’s history, median on-target earnings exceed $110K.
As alluded to earlier, as ACV rises, so do on-target earnings. This is true even when controlling for required experience and other factors.
So what does this tell us?
It suggests that to find increased OTE, Account Executive reps should seek out companies with higher ACVs. For every jump in tier (from $5-25K to $25-100K for example), AE reps can expect earnings to increase by ~15%. That’s not insignificant.
These are a just a few of the findings in the 2017 SaaS AE Metrics & Compensation Report. I hope you’ll take a look and share your thoughts after you do.
Our featured author is Matt Bertuzzi, who runs Sales & Marketing Operations at The Bridge Group, Inc. Matt is 6x Salesforce MVP, Salesforce User Group leader, and recently released his first book Lightning Sales Ops.