Who would I rather lose? 1 AE or 2 SDRs?
I got challenged on one of my ‘hot takes’ the other day.
I often bring up how AEs are “only” processing Opps and, therefore, shouldn’t be put on a pedestal as they are in many case.
“Toni, would you rather have 2 SDRs resign or 1 AE?”
Without hesitation, I answered.
“I’d rather see the AE move on.”
Why is that?
To explain this, let me backtrack a bit – I promise I’ll come back to it.
What I see a lot is that people have some AEs hitting 30% and others 300%.
Or, you have a strong home market that is working great, but your new market for some reason isn’t.
Or, you have 0utbound working great in one region, but it’s simply not happening in another.
So why is that?
A lot of times that people are blaming this on “this is a good rep, this one is not” or “outbound doesn’t work in this market, it’s a culture thing” or even “our home market is ‘mature’ this new market isn’t”
Those are all great wanna-be explanations. Especially because they sound so simple and “feel” like they should make sense.
But in 99% of the cases, they are just wrong.
Trust me. I wish it were that simple.
To get to the real answer is to really dig deep into your funnel. While everyone has a “capacity” overview (usually called “Quota on the Street”) almost everyone is forgetting the other side of that equation: Opportunity supply.
Essentially, you need to hit the sweet spot of supply and demand.
Supply means, how many Opps your funnel produces to “feed” those AEs.
If you have too few Opps but too much Quota, then AEs will be grumpy. That’s bad. But it’s also inefficient.
You theoretically do not need as many AEs. You could be saving CAC here.
If you have the opposite problem of too many Opps vs. too little Quota, you basically produce lazy AEs. They start being picky about which Opps to work on. Or the more empathetic view is they are overworked needing to make prioritization decisions that aren’t best for the business.
Again, you could be using this CAC better.
The team and I did this analysis every quarter to make sure we are correctly balanced. Sometimes – because of AEs leaving or surprisingly many staying – we had to use the buffer to fine-tune the balance. We always kept the buffer between 0-20%
So, the real reason why some reps hit and some don’t, why some markets are great, and some aren’t, and why some channels work somewhere but not somewhere else might actually be that your balance is off.
Too many vs. too few Opps for a Rep – instead of a good vs. bad rep
Too many vs. too few Opps for a market – instead of a mature vs. developing market
Too many Opps leading to de-prioritizing the “harder” Opps (usually outbound) – instead of Outbound not working in one market’s culture.
We eventually made this “capacity model” part of our operating model. Just to keep it all nicely balanced all the time. And to allow us to play “what if this rep leaves” scenarios.
So back to the original question. Why would I rather have 1 AE leave instead of 2 SDRs?
It is always a much easier time to manage “Lazy” but target-hitting AEs than to manage a full team not hitting.
So you instead want to keep the supply up vs. demand.
Want more?This post was originally written as part of Toni’s regular Revenue Letter. If you want to be one of the first to receive content like this straight in your inbox, sign up here.