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Is there an ideal ratio between sales reps and outbound lead generation reps?

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.

Pipeline-Based Approach

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.

Do you agree there’s no ideal ratio between outbound lead gen reps and sales reps?

Ori Yankelev is a Sales and Marketing Associate for OpenView Venture Partners, working with the firm’s portfolio on developing great business development and inside sales teams.

  • http://twitter.com/bridgegroupinc Trish Bertuzzi

    Interesting slice of our data Ori thanks for sharing. I would like to add one other variable to consider when talking about outbound lead gen rep to sales rep ratios and that is the territory itself.

    Is the territory highly saturated with your solution – less of a need for outbound focus. Is the territory highly saturated with your competitor’s solution – more of a need for outbound focus (assuming you have a replacement strategy). Has the territory been open for a while or have a new rep in play – more of a need for an outbound focus. Does the territory generate a significant amount of inbound leads – less of a need for an outbound focus.

    So, as you said, variables matter territory complexion is certainly one of them.

    • orisfa

      Hi Trish, thanks for commenting. You make a great point here, that i will touch upon in my next post on the market coverage based approach. It should go live in the next few days. If it’s alright with you i’ll incorporate some of your thoughts.

      Merry Christmas!
      -Ori

  • Russ_Somers

    Good thoughts, Ori – solving back to make the goals work makes sense. Curious to see your template for that – kindly send a copy to russ at invodo dot com.

  • http://www.cosential.com Dan Cornish

    I was wondering if a focused outbound sales effort can either skew or be skewed by a really good content marketing strategy. If you are hitting it out of the park with content marketing, then you should need fewer outbound reps as the potential customer base should be knowledgable about the product. I understand that both are necessary, but while we ramp up the original plan for workload and staffing can be greatly affected. Also I too am interested in the template and spreadsheet. Thanks and great article.

    • orisfa

      Dan, thanks for the comment. I love content marketing. OpenView loves content marketing, that’s why we blog and write so many ebooks etc…, but I think that the best way to answer your question is to refer you to another article that we just recently published on the OpenView Labs site: http://labs.openviewpartners.com/inbound-marketing-alone-wont-save-your-ass/

      The point of the article is that even once you’ve called everyone in your target market, you still need a market response team to respond to inbound inquiries (which to your point is different than outbound), but you also won’t have signed up all of your top prospects. If you read on to my next post on market coverage, it says that you should also take the size of your market into consideration: http://blog.openviewpartners.com/outbound-lead-generation-team-sizing-market-coverage/. Even if you have a solid content marketing program that generates inbound leads, you can use your outbound team to sharpen your focus on the top 1000-2000 accounts in your target market segment that you haven’t signed up yet. For most SaaS companies, this is still a worthwhile investment.

      -Ori

  • http://www.facebook.com/leib.lurie Leib Lurie

    I would like to see the template. We use mostly lead gen activities to create inbound inquiries, and get 25-50 a day. Which clse at 15-35%. when does outbound telemarketing make sense?

  • http://www.facebook.com/leib.lurie Leib Lurie

    Sorry, please send emulate to Leib at Lurie . Net

  • jim leboeuf

    Ori, can you send me the template? jim dot leboeuf @ cyber-ark dot com. Thanks so much, great read.

    • orisfa

      Jim, thanks for reading. I just sent the template to your email.

  • Thandology

    Hi Ori,
    i am very new in this space and must say i find these quite informative. Thank you very much.