The Ideal Sales & Marketing Org Structure for B2B SaaS

Today we have a new article on how to set up and scale a sales and marketing organization within a B2B SaaS company. Below I show and explain the actual org chart, comp structure, and sales and marketing KPIs for a $50M mid-market SaaS firm.

This might just be the most in-depth article on B2B SaaS sales and marketing you’ve ever seen.

If you like in-depth quality SaaS growth content like this, apply to join our growth mastermind community for SaaS CEOs and Founders with $1M to $250M in ARR. You can apply at www.saasrise.com.

The Ideal B2B SaaS Sales & Marketing Org Structure
By Ryan Allis, CEO & Founder of SaasRise

This article covers how to set up your sales and marketing organization as you scale as a software company, and provides a real example of org charts, KPIs, and comp structure.

Where did I learn all this? I spent ten years as CEO of iContact, growing the firm from a dorm room startup to $50M in ARR.

By the time we sold iContact for $169M, we’d grown our sales team to about 60 people, including 30 Sales Development Reps (SDRs), 25 Account Executives (AEs), and 15 Account Managers (AMs). 

Here’s the actual org chart of iContact when we had 250 employees and 70 folks working in the sales org.

Let’s zoom into the org chart for just the sales and marketing side of the organization. If your firm is smaller, you can use this as a roadmap for where you’re going as you build out your S&M team.

The Sales & Marketing Formula: Attention, Interest, Desire, Action, and Expansion

In the classic marketing formula AIDA (attention, interest, desire, action), it’s the role of the marketing department and SDRs to generate the Awareness, Interest, and Desire (they “AID” the sales org).

And it’s the role of the Account Executives to generate the Action (the purchase) and then the role of the Account Management team to expand the deal size over time through added seats, functionality, and product offerings.

It can all be summarized with the sales and marketing acronym AIDAE.

This is the way I like to think of the roles of the marketing team, SDRs, AEs, and AMs —> moving the stranger down the funnel into the evangelizer (see funnel diagram below).

Structuring a B2B SaaS Marketing Organization

Now, let’s zoom in further see what a full marketing department might look like in a $50M ARR firm, noting some of these responsibilities may be filled by either outsourced providers or agencies (or done by fewer people in a smaller org).

KPIs for B2B Marketing Organizations

As you expand out your marketing organization and turn into a lead generation machine with strong 6:1 LTV CAC ratios, here are the KPIs I find most helpful to track.

The Ideal Structure for a B2B SaaS Sales Organization

Now, let’s zoom in and see how a sales department would be optimally structured for a mid-market or enterprise B2B SaaS company. Take a close look at the table below which covers the focus, comp, and at-plan goal for each type of sales team member.

If you target SMBs (<$5k ACV) you wouldn't really need the AEs/AMs or outbound efforts. And larger than $100k ACV and you'd want to add field sales to this diagram.

Account Executive Compensation Structure

The table above is based on the golden rule of thumb that an AE’s total at-plan on target execution (OTE) compensation should be equal to 20% of the ARR they generate per year.

The general formula for an AE comp is 50% base, 50% variable, and make variable pay equal 10% of the new ARR they generate (paid out quarterly). 

So if you’re using outsourced AEs earning $50k per year all-in they need to be bringing in at least $250k per year in new ARR to justify that comp level, keeping in mind you also have to pay for the marketing support and sales support around them. And if you’re using U.S.-based AE’s earning $200k all-in (including a $100k bonus), they need to be bringing in $1M in new ARR per year to hit quota.

Do the math on your AEs. Are they generating 10x their bonus in new ARR and 5x their total comp in new ARR each year? They should be.

KPIs for B2B Sales Organizations

As you expand out your sales organization, here are the KPIs I find most helpful to track and manage to.

The most important KPI for a sales team of course is # of new deals closed per quarter and amount of new ARR closed per quarter. AE bonus compensation should roughly equate to 10% of the new ARR they close in a quarter. So if they close $250k of new ARR in a quarter, they’d earn a $25k bonus for the period.

Sales Motions for Consumer, SMB, Mid-Market, and Enterprise SaaS

There are a few differences in sales motion and thus headcount requirements depending on the price point and target market of your offerings.

Setting Up a Mid-Market Sales Organization at iContact

At iContact, we initially had no sales team and just a 15 day free trial and a self-service product. But after six years and reaching 25,000 SMB customers, we decided to add in a higher priced offering with a few extra features and a shared account manager and launched iContact Enterprise at an average annual contract value (ACV) of $20k. 

Over the next 4 years, we signed up around 1,000 of these Enterprise clients, adding an extra $20M to our top line revenue. We had to create an entirely new sales process suitable for the mid-market. 

Of course, we needed an entirely different sales organization structure to sell this higher priced product in this new motion. We brought in an SVP of Sales, Kevin Fitzgerald (now CEO of Tatango) to build out our mid-market sales org at iContact.

Since selling iContact, I’ve worked with many mid-market and enterprise B2B SaaS companies including Tatango, Seamless.ai, Clearstream, Retreaver, Sojern, and RXNT to help them implement our SaaS Growth System and help optimize and advise their CEOs and their Sales and Marketing organization. It’s from working with these firms over the last ten years (and by running the SaasRise masterminds) that I’ve learned many of the newer techniques discussed in this article.

The Importance of Outbound ABM Style Marketing in the Mid-Marketing and Enterprise

The more you sell your product for, the more you will be relying on your SDR team to conduct an ABM campaign via cold email, cold calling, and LinkedIn messaging, and your AE and Field Sales teams to “work the lead over many months” all supported by custom audience ad and retargeting ad “air cover” and a strong presence at events and tradeshows. 

The list for these ABM style outbound reachouts can be built using tools like ZoomInfo, Apollo, Seamless, RocketReach, Lusha, ListKit, LinkedIn Sales Navigator, Crunchbase, and Instantly. Then you can send out the emails themselves in Instantly, Apollo, or Reply.io.

Providing Digital Advertising Air Cover to the Same List of Prospects Your SDRs Are Reaching Out to

I always recommend setting up custom audience ads (also known as matched audience ads) on Meta, LinkedIn, Google Display, and Adroll about 30 days BEFORE you start engaging your prospects via email/LI/phone, as well as turning on retargeting ads, so that your prospects become are aware of your brand before they start getting messages from your SDRs.

Read my article ABM Advertising: How to Show Ads to Your Exact ICP for more on how to set up ads to provide air cover to your SDRs in advance of them reaching out via email, LinkedIn, and phone.

What Successful SaaS Firms Have Figured Out

In my experience, the main difference between a $5M/year and a $50M/year ARR B2B SaaS organization, is that the $50M per year ARR firm will have figured out:

1. Their Unit Economics (CAC, Churn, Lifespan, LTV) and the true long term value of a customer and know that LTV = (ARPA*(1/Churn))

2. CAC-based scaling of paid advertising across Meta, LinkedIn, Google, Bing, Adroll, affiliates, and review sites for paid search ads, display ads, lookalike ads, matched audience ads, and retargeting ads

3. Their SDR, AE, and AM sales system

4. Their Account Based Marketing Outbound reachout lists, with either an internal or outsourced SDR team that reaches out to 1000+ prospects daily via email, calling, and LinkedIn

5. How to use omnipresence digital ads via matched audience and retargeting to provide air cover to the prospects their SDR team is reaching out to

6. How to use their account management team and upsells to make revenue retention above 100% (where any revenue churn is more than offset by upgrades among this existing install base)

I hope this article on how to set up your sales and marketing team structure was helpful!

Join Our Wednesday SaaS CEO & Founder Mastermind Calls

If you like in-depth quality SaaS growth content like this, apply to join our community of SaaS CEOs and Founders with $1M to $100M in ARR. Apply at www.saasrise.com. We do 3 weekly mastermind calls for our members and also have a private Slack channel and WhatsApp group and provide an in-depth library of SaaS growth, fundraising, and exit resources. We offer a free two week trial then it’s $197/month if you stay. We also offer 1:1 CEO Coaching, group coaching, digital ad management, and exit prep consulting services.

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See you next week with more killer SaaS scaling content!

About the Author: Ryan Allis is the founder of SaasRise, a community for SaaS CEOs with $1M to $100M in ARR. Ryan previously led iContact as CEO and Co-Founder to $50M ARR and a $169M exit, raised $47M in equity capital and $6M in venture debt, and earned an MBA from Harvard Business School. Today, Ryan advises B2B SaaS CEOs on scaling up and helping them prepare for nine figure exits.

P.S. - Below are six valuable SaaS growth resources we’ve put out. I hope they are useful to you!

Six Helpful Free SaaS Growth Resources from SaasRise

The most in-depth guide for scaling up SaaS companies from $0 to $50M in ARR. Including over 1,200 slides on every aspect of SaaS scaling.

How to determine whether to scale up or down your marketing channels

How to calculate ARPA, LTV, Churn, Lifespan, CPL, CAC, and Max CAC

A fourteen page in-depth PDF on we take each CEO client through a six-phase process designed to increase lead volume, customer acquisition, and revenue growth — and then scale up the sales team, executive team, and investor support as we help you prepare for future fundraising rounds (if needed) or an exit (if desired).

A twenty page in-depth PDF on how to scale a B2B SaaS Company from $1M to $50M ARR. Covering CAC-based customer acquisition, sales team scaling, venture capital markets, and preparing for the exit.

The SaaS Growth Formula was written to help SaaS CEOs who are focused on growing their company's sales - by implementing a simple formula called The Growth Formula. This formula is for companies that have already established product/market fit, already have paying customers, and are now ready to scale up through scientific and CAC-based digital marketing, inbound sales, and outbound sales.

Join Our Saas Growth Mastermind for CEOs and Founders With $1M+ in ARR

If you like the above resources and want more stuff like this, apply to join SaasRise, our mastermind community for SaaS CEOs and Founders with $1M+ in ARR who are focused on scaling up MRR. Every Wednesday we jump on an optional mastermind call to support each other and share what is working with scaling our companies – and we support each other throughout the week in our private community on Slack, WhatsApp, and our own custom platform.

About The Author

We’ll see you next time with more great SaaS growth and scaling content!