The Land and Expand strategy is a highly effective approach for mid-market SaaS (Software-as-a-Service) companies due to its ability to drive sustainable growth and maximize customer lifetime value.
Who is this template for?
This sales compensation template is ideal for mid-market SaaS companies with a land & expand growth strategy. Additional criteria includes:
- When your expansion <= 20% of total revenue
- Multiple sales reps spread across different verticals
- Excel spreadsheets no longer serve your complex comp plans
- Multiple KPIs to track
Designing sales compensation plans for land & expand strategy/mid-market companies
Use our free sales compensation template to give your SaaS business a head start to designing effective comp plans for your account executives, sales development reps, business development reps, customer success managers, and account managers.
Before we dive into how to design your comp plan, let’s cover some groundwork.
Metrics you should have handy to use this template effectively:
- Projected revenue for the year
- Targeted growth rate for the year
- What percentage of overall revenue do you want to pay as sales compensation?
- The number of deals your sales reps close every quarter
- Your average deal size
- Your sales quota
- Your average sales cycle
- The percentage of your top, core, and low sales performers
- Your average quota attainment percentage
- Payout triggers
With those metrics at your fingertips, your next step is to understand what behaviors sales reps should be compensated for and what their KPIs should look like. Let’s take it case by case.
The role of an Account Executive in the SaaS Land and Expand strategy is crucial for driving revenue growth and expanding customer relationships. Their primary focus is on closing new deals and expanding existing accounts while identifying opportunities for upselling and cross-selling.
Behaviors that Account Executives should be hired and coached for:
- Relationship Building: Account Executives should excel at building strong, long-term relationships with customers. They should have the ability to connect on a personal level, understand customer needs, and act as a trusted advisor throughout the customer journey.
- Customer-Centric Approach: Account Executives must possess a deep understanding of customer success principles. They should prioritize customer satisfaction, actively listen to customer feedback, and proactively address any issues or challenges that arise.
- Consultative Selling: Account Executives should be skilled in consultative selling techniques. This involves asking probing questions, actively listening, and tailoring solutions to meet the unique needs of each customer. They should focus on providing value and positioning the SaaS solution as a strategic asset for the customer's business.
- Expansion Mindset: Account Executives should have a natural inclination towards identifying expansion opportunities within existing accounts. They should be proactive in uncovering customer needs, cross-selling additional products or features, and positioning upsell opportunities that align with the customer's growth plans.
- Collaboration and Communication: Account Executives need to be effective collaborators and communicators. They should work seamlessly with cross-functional teams, such as Sales, Customer Success, and Support, to ensure a cohesive customer experience. Strong communication skills are essential for conveying value propositions, negotiating, and addressing customer concerns.
- Results-Orientation: Account Executives should be driven by results and possess a strong sense of ownership over their sales targets. They should be motivated to achieve and exceed revenue goals, while also prioritizing the long-term success and expansion of customer relationships.
Account Executive KPIs (Key Performance Indicators):
- Sales quota attainment - Quota attainment measures the percentage of the Account Executive's assigned revenue target that they achieve within a given period. It demonstrates their overall performance in driving revenue growth and expanding customer relationships.
- Pipeline Growth: The growth of the Account Executive's sales pipeline shows their effectiveness in prospecting, qualifying leads, and building a robust pipeline of potential customers for expansion opportunities.
- Deal Velocity: This KPI measures the average time it takes for an Account Executive to close deals. A shorter deal velocity indicates efficiency and productivity in moving prospects through the sales process and expanding customer relationships.
- Average deal size - This is the average monetary value of deals closed by the Account Executive. This KPI helps assess their ability to close deals of varying sizes and indicates the overall revenue potential they bring to the company.
- Expansion Revenue: This KPI measures the amount of revenue generated from upsells, cross-sells, and expansion opportunities within existing customer accounts. It reflects the Account Executive's success in identifying and capitalizing on expansion potential.
- Expansion Rate: This KPI calculates the percentage of customers who expand their usage or adopt additional products or features within a specific period. It demonstrates the Account Executive's effectiveness in driving expansion within the existing customer base.
- Sales pipeline velocity: This KPI measures how quickly opportunities move through the sales pipeline.
- Customer Retention: Customer retention rate is a critical KPI in a Land and Expand business. It measures the percentage of customers that renew their contracts or continue using the SaaS solution. Account Executives play a key role in fostering customer loyalty and ensuring high retention rates.
- Customer Lifetime Value (CLTV): CLTV measures the total value a customer brings to the company over their lifetime as a customer. Account Executives contribute to CLTV by driving customer expansion, increasing usage, and maximizing revenue opportunities within existing accounts.
- Renewal rate: This KPI measures the proportion of customers who renew their subscription or contract at the end of a specified period.
For a SaaS business with a Land & Expand growth strategy, Account Managers work in tandem with Customer Success Managers to deeply understand what customers value and need, and spot and help close these opportunities. More often than not, Account Managers at a SaaS company are the face of the company for customers, forging lasting relationships, and helping customers constantly improve their workflows and succeed.
At a lot of SaaS businesses, Account Managers are also in-charge of expansion. However, this could deviate them from doing what they do best - nurturing customer relationships and ensuring customer success. Navigating expansion opportunities requires a very specific skill set focused on sales, negotiation, and revenue growth, already acquired by Account Executives. By letting Account Executives handle expansion instead of Account Managers, organizations can leverage their expertise to drive revenue expansion and maximize the value of existing customer relationships.
Behaviors that Account Managers should be hired and coached for:
- Relationship Management: Account Managers are responsible for building and maintaining strong relationships with customers. They serve as the main point of contact, fostering trust, and acting as advocates for the customer within the organization. This relationship-building aspect is crucial for customer retention and expansion.
- Customer Success and Adoption: Account Managers focus on ensuring customer success and driving adoption of your product. They work closely with customers to understand their goals, provide guidance on best practices, and help them derive maximum value from the product. By ensuring successful adoption, Account Managers set the foundation for future expansion opportunities.
- Expansion Strategy and Revenue Growth: Account Managers play a pivotal role in working closely with Account Executives in driving revenue expansion within existing accounts. AEs and AMs closely work to identify upsell, cross-sell, and upgrade opportunities based on customer needs, usage patterns, and business objectives.
- Renewals and Retention: Account Managers are responsible for managing the renewal process and ensuring high customer retention rates. They proactively engage with customers, address any concerns, and demonstrate ongoing value to encourage contract renewals. Retaining existing customers is essential in a Land and Expand business model, and Account Managers play a key role in fostering customer loyalty.
- Customer Advocacy and Feedback: Account Managers act as advocates for the customer within the organization. They gather customer feedback, relay it to relevant teams, and work to address customer needs and concerns. This feedback loop is crucial for driving product enhancements, improving customer satisfaction, and identifying expansion opportunities.
- Collaboration with Internal Teams: Account Managers collaborate closely with other internal teams, such as Customer Success, Sales, and Product Management, to ensure a seamless customer experience. They communicate customer feedback, expansion opportunities, and advocate for customer needs within the organization. This collaboration is essential for driving customer-centric initiatives and maximizing customer success.
- Strategic Planning: Account Managers take a strategic approach to account management. They analyze customer usage data, track key metrics, and develop account plans to identify growth opportunities, mitigate risks, and align the SaaS solution to the customer's evolving needs. This strategic planning helps drive customer expansion and long-term success.
Account Manager KPIs (Key Performance Indicators):
- Customer Retention and Lifetime Value (CLV): Retaining existing customers is crucial in a land and expand strategy, eventually driving up the total revenue a business can expect to generate during their relationship with the customer. KPIs related to customer retention may include achieving high customer renewal rates, reducing churn, and ensuring customer satisfaction through feedback or Net Promoter Score (NPS) surveys.
- Customer Engagement: Account Managers are responsible for actively engaging with customers, understanding their needs, and building strong relationships. KPIs related to customer engagement may include the frequency of customer interactions, customer meeting targets, or customer engagement scores.
- Customer Health and Adoption: Account Managers monitor the health and adoption of their accounts. KPIs related to customer health and adoption may include tracking product usage metrics, user adoption rates, feature adoption, and customer satisfaction scores.
- Customer Advocacy: Account Managers play a crucial role in advocating for customers within the organization. KPIs related to customer advocacy may include gathering customer testimonials, case studies, or referrals that demonstrate their ability to cultivate strong customer relationships and drive advocacy.
- Churn Rate: Churn rate represents the rate at which customers stop using a product, cancel their subscriptions, or discontinue their services. By closely monitoring churn rate, Account Managers can proactively address customer needs, strengthen relationships, and drive customer success. It helps them focus on retaining and expanding existing accounts, ultimately contributing to the growth and sustainability of your SaaS business.
Sales Development Representative/Business Development Representative
Sales Development Representatives (SDRs) and Business Development Representatives (BDRs) play crucial roles in the initial stages of customer acquisition and expansion. In a "land and expand" strategy, the coordinated efforts of SDRs and BDRs are essential for identifying, qualifying, and nurturing both new leads and existing customers. This approach aims to establish a strong foothold within an organization by initially addressing specific pain points and then strategically expanding the adoption of the SaaS product as the customer's needs evolve.
Behaviors that Sales Development Representatives/Business Development Representatives should be hired and coached for:
- Relationship Building: Coaching BDRs to build strong, trust-based relationships with existing customers is critical. They should be trained in nurturing ongoing conversations and providing continuous value to the customer.
- Effective Prospecting: SDRs need to master the art of finding high-quality leads. This involves using various tools and techniques to identify potential customers who fit the ideal customer profile.
- Value Proposition: SDRs should thoroughly understand the product's value proposition and be able to communicate it concisely and persuasively to prospects. This includes highlighting how the product can address specific pain points and provide tangible benefits.
- Consultative Selling: BDRs should develop consultative selling skills, understanding the customer's evolving needs and challenges. This enables them to recommend relevant upsells or cross-sells that align with the customer's goals.
- Product Knowledge: In-depth product knowledge is essential for BDRs to effectively identify opportunities for upselling and cross-selling. They should be able to connect the dots between the customer's needs and the additional value the SaaS product can provide.
- Negotiation and Objection Handling: As BDRs present upselling opportunities, they may encounter objections. Coaching should cover effective objection handling techniques and negotiation skills to address customer concerns and close deals.
Sales Development Representatives KPIs (Key Performance Indicators):
1. Lead Generation
- Number of Leads Generated: This KPI measures the quantity of leads that SDRs identify and bring into the sales funnel.
- Lead Source Diversity: It tracks the variety of sources (e.g., inbound inquiries, outbound prospecting) from which SDRs are generating leads.
- Lead Quality: Evaluating the percentage of leads that meet predefined qualification criteria ensures SDRs are targeting the right prospects.
2. Outreach and Engagement
- Outreach Activities: This includes metrics such as the number of cold calls made, emails sent, social media interactions, etc.
- Response Rate: Measures the percentage of leads that respond positively to SDR outreach efforts.
- Engagement Rate: Tracks the proportion of leads that engage in meaningful conversations or interactions after initial outreach.
3. Lead Qualification
- Qualified Leads Passed: The number of leads that meet specific criteria and are deemed qualified for further engagement by the sales team.
- BANT Qualification: Measures the percentage of leads that meet the "Budget, Authority, Need, Timeline" criteria, indicating their readiness for sales interaction.
4. Pipeline Contribution
- Opportunities Created: The number of qualified leads that progress into the sales pipeline as potential opportunities for conversion.
- Opportunity Conversion Rate: Evaluates how effectively SDRs' efforts result in opportunities moving forward in the sales process.
5. Data Accuracy and CRM Management
- Data Quality: The accuracy and completeness of lead data entered into the Customer Relationship Management (CRM) system.
- Timely Data Entry: Measures how promptly SDRs update CRM records after interactions to maintain accurate and up-to-date information.
6. Activity Metrics
- Calls per Day: The number of calls made by SDRs each day
- Emails per Day: The number of outreach emails sent daily
- Conversations per Day: The number of meaningful conversations or interactions initiated per day
Business Development Representatives KPIs (Key Performance Indicators):
1. Revenue Expansion
- Expansion Revenue: The monetary value of upsells, cross-sells, and additional services sold to existing customers.
- Upsell and Cross-Sell Conversion Rate: Measures the percentage of opportunities presented by BDRs that result in successful upsells or cross-sells.
2. Opportunity Generation
- Number of Opportunities Created: The quantity of new opportunities for upselling and cross-selling that BDRs identify and initiate.
- Opportunity Pipeline Value: The cumulative value of all potential upsell and cross-sell opportunities in the BDR's pipeline.
3. Customer Engagement
- Customer Interactions: Measures the frequency and quality of interactions with existing customers, including calls, emails, and meetings.
- Engagement Rate: Tracks the percentage of customers who engage in meaningful discussions about expansion opportunities.
4. Product Adoption
- Feature Adoption Rate: Measures the adoption of new features or modules within the SaaS product by existing customers.
- Usage Metrics: Tracks customer engagement metrics, such as logins, sessions, and usage frequency, to gauge product utilization.
5. Retention and Churn Prevention
- Churn Prevention Rate: Measures the percentage of customers at risk of churning who are successfully retained through BDR efforts.
- Customer Satisfaction: Utilizes feedback and Net Promoter Score (NPS) to assess customer satisfaction and identify potential upsell/cross-sell opportunities.
6. Negotiation and Deal Closure
- Average Deal Size: The average monetary value of upsell and cross-sell deals closed by BDRs.
- Time-to-Close: The average duration it takes for BDR-initiated opportunities to progress from initiation to closure.
7. Collaboration with Account Executives (AEs)
- Handoff Effectiveness: Measures the smoothness of the transition from BDRs to AEs once an opportunity is qualified and ready for negotiation.
- Collaboration Metrics: Tracks communication and alignment between BDRs and AEs to ensure a unified approach toward customer expansion.
8. Customer Feedback Loop
- Customer Insights: BDRs' ability to gather feedback from customers regarding their needs, challenges, and aspirations, which informs future expansion strategies.
9. Educational and Value-Driven Interactions
- Educational Interactions: The number of interactions where BDRs provide customers with valuable insights, tips, and best practices related to the SaaS product.
- Value Communication: Measures how effectively BDRs communicate the value and benefits of expanded product usage to customers
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