There’s a set of questions I get asked all the time:
- Should you pay sales reps on renewals?
- Should you pay sales reps on upsells a long time down the road?
- Should you pay sales reps on … ?
I am a huge proponent of paying sales professionals well. But for these sorts of questions, my answer is almost always: No. Pay closers on closing. Period. At least, after you are past $2m or so and are ready to expand the sales team at least a tiny bit.
Why? Because you want to specialize. You need to, to scale in SaaS. We’ve all learned this over the past decade in SaaS:
- You want qualifiers qualifying — BDRs.
- You want openers opening — SDRs.
- You want closers closing — AEs.
- You want retainers retaining — CS.
- You want renewers renewing — CS or even Accounting, sometimes.
- You want upsellers upselling — AM or sometimes AEs.
- You want managers managing. Hire sales managers to manage each team of 6-8 AEs and 8-10 SDRs. Hire someone in sales ops as early as you can afford to, to manage repeatability, training, onboarding, etc. for the sales team.
- You want each rep only selling into the segments they are best at — so you segment your team into Small, Medium and Field/Large prospects. And later maybe even into industries and verticals. And direct and indirect. Etc. etc.
Specialize, specialize, specialize. It’s much, much more efficient for skilled professionals to only be doing what they are best at. More leads close, faster. More renewals renew, faster. High NPS. Everything goes up and faster when folks are in their optimal role.
How do you pay for this, you might ask? Ultimately, you have to pay for more folks on the sales team with higher quotas and higher efficiency. And more folks on the success and renewals team with higher net negative churn. But both generally work out fine, done right. Your AEs should be able to do more demos and more calls if they walk into work with 4 meetings already set up on the Google Calendar for them …
Of course, though in the early days this is impossible. 🙂 You don’t have the scale or the capital or the customer base. Or often really even enough reps to specialize.
But start as early as you can. And part of this is closers should be closer. Not renewing.
(note: an updated SaaStr Classic post)