Over the past several months I have written a number of articles and blog posts about outbound lead generation team reporting structures, and how to establish the right goals for your outbound lead generation team. I’ve also done some informal research on a topic that I’m asked about frequently — the ratio between outbound lead generation reps and sales reps at software companies. Typically, when sales and lead generation leaders at our portfolio companies ask me about this ratio, they are using it as a method to validate the size of their outbound lead generation team.
However, if you truly understand your sales activity funnel and target market segments, the ratio between outbound lead generation reps and sales reps is practically irrelevant. Instead, there are two much more rational approaches to sizing your outbound lead generation team — the pipeline-based approach, and the market-coverage-based approach.
These two approaches are consistent with the overall goals of any outbound lead generation initiative — to create pipeline and penetrate new markets. Additionally, these two approaches can be used simultaneously to help you make your final decision.
For the pipeline-based approach your mission is to build a team that will have enough capacity to get to your goal of building pipeline. The best way to estimate the required capacity is to use the sales activity funnel to 1) back into the number of calls or activities your team will need to make in order hit the goals, and 2) estimate the number calls and activities that one rep will be able to complete using your own company experience and industry benchmarks. (Feel free to leave a comment if you’d like me to email you a copy of the template to plug your own numbers in.)
If you consider the sample numbers provided in the sales activity funnel blog post, your lead generation team must be able to make 205 calls per day to generate 82 appointments per month, which should result in 35 opportunities. If an average outbound lead generation rep makes about 50 calls per day, then you will need about four reps on your team to reach your goal.
By extrapolating data collected by the BridgeGroup in their 2012 Lead Gen Metrics Report on 41 software and SaaS companies, we found that, on average, lead generation reps make roughly 50 calls per day While 50 calls per day may be a good number to use for estimating should you not have any historical data on hand, this number will vary based on a variety factors including the target market segment, target buyer personas, and average deal size.
There is typically an inverse relationship between a single rep’s capacity and the sophistication of the buyers combined with the complexity of the sales. That is because more complex sales will require a more calculated, personalized and targeted approach compared to a transactional sale.
As long as this math makes sense for your organization and your sales team is properly staffed, then the ratio of outbound lead generation reps to sales reps shouldn’t matter. However, you’ll still want to make sure that your team is staffed to have adequate market coverage.
In my next blog post I’ll dive into the market-coverage-based approach.