Nothing impacts your W2 more than the company you sell for. Average sellers in great environments often earn significantly more than elite sellers in poor environments.
With the rise of AI, it’s never been more critical to get this right. AI is going to kill a lot of SaaS companies. It’s also going to create (and accelerate) new unicorns.
I’ll share two critical metrics you need to look at to evaluate where to work.
Then, I’ll share my perspective on evaluating the health of the sales org.
First, metrics:
Gross Retention Rate
Gross retention rate is how well you preserve your existing renewal base. Basic example: If a company has 10 customers spending $10,000 on average, they have a renewal baseline of $100,000. If one customer that spends $10,000 doesn’t renew, their gross retention is $90,000, or 90%.
This does not include upsell – it’s all about how well the company renews their base.
Really good is 90%+. Elite is 95%+. Anything in this range is a great sign of a “need-to-have” and sticky product.
Net Retention Rate
Net retention measures how much your customer revenue base grows each year. After you take out the lost renewals, and add in the renewals + expansion, is your customer base spend growing or shrinking?
Under 100% means the company is at risk of decreasing revenue year over year which makes growth extremely challenging. It’s also an indicator that the product is not sticky or a “must-have.”
100% means that between churn and expansion the customer base stays flat year over year. Any growth will have to come from New Logos – not ideal.
110%+ is good.
115%+ is great.
120%+ is best-in-class.
120% means that, on average, $100,000 of customer spend turns into $120,000 of spend at renewal. The company can hit good growth rates just off of current customers – new logos are a bonus.
Quality of Sales Org
There are a lot of tools to identify the quality of a sales org (Glassdoor, RepVue), etc.
But they have two issues:
- Lagging metrics
- Biased metrics
Definitely take a look at the websites that collect feedback from sellers. But I know of sales orgs with great reviews where the team is miserable, and sales orgs where scores are “meh” but people are happy and crushing their comp plans.
So validate what you are seeing with the people that know best: current AEs at the company you are evaluating. Try and talk to at least three, otherwise you may talk to an outlier.
You don’t just want feedback from the AE with an incredible territory living off of inbounds.
You don’t just want feedback from an AE that was just put on a PIP two days ago.
If you talk to three, you’ll likely get a real picture of the quality of the sales org you are considering joining.
I put together a list of questions you can ask to learn about:
- Product strength
- Executive team support
- Sales leadership effectiveness
- Compensation plan quality and upside
Find those here (feel free to make a copy): Example Interview Questions
Appreciate your time reading this! If you are already in a great sales org, keep your head down and create your success.
Kyle
