About this episode
Joel Arnold, VP of Revenue Operations at Union Square Consulting, shares a real-world case study of how his previous company tripled sales efficiency during an economic downturn in 2020. With deep RevOps expertise, Arnold demonstrates that downturns are not just crises to survive, but opportunities to build a more efficient revenue machine.
The core insight is that downturns offer a rare chance to right-size your revenue engine by balancing lead generation, sales capacity, and marketing efficiency—and companies that do this carefully outperform those that cut blindly. Drawing on a Harvard Business Review study of 2008 financial crisis survivors, Arnold and Eddie Reynolds highlight that organizations breaking costs into efficient vs. inefficient buckets—rather than cutting across the board—emerged stronger and captured market share. Arnold's company did exactly this: they identified that their sales team was oversized relative to lead flow, moved junior AEs back into BDR roles to shore up pipeline, cut only the lowest performers and unproductive marketing channels, and reallocated savings to high-ROI initiatives.
The result was not layoffs but rebalancing. In just three to four months, bookings jumped 30-40% despite the crisis. The bigger win was architectural: the company built capacity models, lead-value attribution, and ROI frameworks for every channel and role. These mechanisms made it possible to predict when and where to hire next, and to spot bottlenecks before they broke pipeline. When the market recovered, the company already had the playbook to scale fast—while competitors who had cut indiscriminately were still figuring out how to rebuild.
This episode covers identifying low-performing AEs and marketing channels, sizing teams to lead flow rather than revenue targets, calculating ROI per lead source, and why "more salespeople equals more sales" is a dangerous myth. Arnold and Reynolds also debate the ideal balance between inbound leads, prospecting, and the role of BDRs in enterprise vs. transactional sales.
What we cover in this episode
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2:30
Don't let a good crisis go to waste Framing downturns as opportunities for learning, growth, and organizational restructuring instead of pure survival mode.
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5:00
Harvard Business Review 2008 study Companies that cut costs strategically (not blindly) and reallocated to efficient initiatives outperformed peers during the financial crisis.
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8:45
Engaging leadership through framing How to reframe efficiency initiatives to leadership by shifting from growth-focused language to cost-savings and risk-mitigation language.
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13:00
Capacity models and metrics Understanding max deal capacity per rep, lead volume needed to fill that capacity, and using these ratios to right-size teams.
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22:00
Lead value and channel ROI Calculating estimated value of leads by stage, comparing cost-per-lead across channels (BDR, marketing, AE prospecting), and prioritizing highest ROI sources.
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32:00
Identifying top performers Evaluating AEs on win rates, deal size, and process adherence; marketing channels and campaigns by attribution and ROI.
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38:00
Rebalancing and restructuring Moving junior AEs back to BDR roles, cutting low performers, defunding low-ROI marketing, and reallocating savings to high-return initiatives.
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44:00
Long-term growth setup How efficiency work during downturns builds visibility and predictive capacity models that enable faster scaling and smarter hiring once the market recovers.
The lines worth sharing
Don't let a good crisis go to waste. It's an opportunity for learning, growth, change, and to overcome old school thought.
Joel Arnold · 2:45
If you don't have enough lead volume to feed your sales team, you'll have salespeople making cold calls all day. That's the situation we're trying to avoid.
Joel Arnold · 20:15
Companies that cut costs carefully during downturns came out stronger than competitors. They used the crisis to build a better mousetrap and capture market share.
Eddie Reynolds · 5:30
There's nothing wrong with a fully utilized sales executive. We tripled production per headcount just by getting things into balance and providing the right lead flow.
Joel Arnold · 40:00
Common questions from this episode
How do you calculate the right number of leads per account executive?
Interview sales managers about max deal capacity (accounting for deal size, complexity, and sales cycle length). Monitor if reps maintain process quality at that capacity. Track metrics like follow-up adherence and CRM hygiene. For enterprise deals: fewer reps handle larger, longer cycles. For transactional: higher capacity per rep. Use data to validate assumptions, not gut feel.
What is a typical ROI for a BDR team?
Joel recommends aiming for a 3:1 to 5:1 ROI (revenue per BDR salary), though it varies by deal size and enterprise complexity. Small transactional deals may yield higher deal counts but lower per-deal value. Large enterprise deals have longer close cycles, delaying attribution. Focus on whether hiring another BDR beats spending on marketing—compare ROI across channels, not just chase a benchmark number.
How do you identify which salespeople to keep during a downturn?
Look beyond quota: evaluate win rates, average deal size, process adherence, and execution quality. Territory balance and lead volume matter—a low performer in a weak territory may improve with better leads. When cuts are necessary, retain top performers, remove chronic low performers, and avoid cutting by tenure or seniority alone. Pair cuts with rebalancing (moving people to BDR roles) rather than pure headcount reduction.
What's the difference between how to evaluate marketing channels and sales channels?
Both use ROI: cost-to-acquire (channel spend or rep salary) vs. expected bookings value. Track lead source and use consistent attribution (e.g., last touch). Calculate ROI by channel and campaign. For new tactics, allow ramp time before judging. Reallocate budget from low-ROI channels to high-ROI ones. Compare BDRs, marketing, and AE prospecting as competing lead sources, not siloed activities.
Why is 'hire more salespeople' a flawed growth strategy?
Adding salespeople without sufficient lead flow forces reps to cold-call all day, wasting expensive talent on sourcing instead of closing. It also masks bad capacity planning. The real lever is matching lead volume to rep capacity, improving lead quality, and enabling reps to focus on high-value work—not just adding headcount.
What long-term benefits come from rebalancing during a downturn?
You build visibility into bottlenecks, clear ROI frameworks, and predictive capacity models. When the market recovers, you can hire fast and accurately (knowing exact ratios: leads needed per AE, BDRs per AE, ROI per channel). Competitors who cut blindly will still be figuring it out. You'll scale efficiently while they scramble, capturing extra market share and revenue.
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Joel Arnold, VP of Revenue Operations, reveals how capacity models and strategic cost-cuts tripled sales efficiency during the 2020 downturn. A RevOps playbook for sustainable growth.
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Read the full transcript · 52 KB
EDDIE REYNOLDSWelcome to RevOps Corner, where we talk about how B2B SaaS companies scale through revenue operations by interviewing amazing guests and sharing what we see in the trenches every day here at Union Square Consulting. Welcome to RevOps Live number 22, how we tripled sales efficiency in a downturn, or really how Joel did it in his previous company. Today, Joel's going to share his story on how he tripled production per rep in his last job, and we're going to add in some general best practices that apply that might be useful to your organizations as we try to weather
EDDIE REYNOLDSthis downturn in 2023. Joel, tell me more about this event. Why should people listen today?
JOEL ARNOLDYeah, so the financial news is pretty rocky these days, and I think it's really important to think
JOEL ARNOLDabout how we can provide value as a RevOps organization or as RevOps leaders in difficult
JOEL ARNOLDtimes as well as in good. And we've got a case study today to talk about that exact thing when we look back on the last downturn that we had, which in this case was March of 2020. And so since you're in belt tightening mode, we're potentially coming up against some belt tightening mode in low growth environments in the near future. We just want to kind of share some ways that you guys can take advantage of that opportunity and turn it into a positive. Awesome. So before we get started, if anybody's
SPEAKER_02not familiar with us, we are a revenue operations consulting firm. I'm the founder and CEO, Eddie
EDDIE REYNOLDSReynolds, and Joel Arnold is our VP of revenue operations strategy. We do an event like this every single Wednesday at 12 noon Eastern. We publish this to our podcast, which you can access on our website. And we also publish a newsletter every Friday, often on the same topic, where it's just more distilled and concentrated down. You can find all this on our website. And the links are also in the chat here in zoom. Joel and I are going to talk through this topic. I'm going to ask him some questions. If you guys in the audience want to pop in with questions, you can publicly jump on video and ask your question, or if you would rather, you can send the message and say that you want us to ask it. So it's private, whatever you prefer, but without further ado, let's dive in. Joel, would you like to take us off?
SPEAKER_02Sure. So the topic, as we kind of already previewed today is about how we took the last downturn and
JOEL ARNOLDturned it into an opportunity to provide a lot of value as a rep ops person to an organization. In this
JOEL ARNOLDcase, we were able to find a way to get everything from being, I would say like out of balance at a prior
JOEL ARNOLDcompany, put it back in balance and in having a huge increase in the amount that each rep was booking and a large increase in how much the overall company was booking thereafter. So I'm going to start off with just the recognition that we are now in more difficult times than we had been a year ago. And some folks might be finding themselves in a situation where potentially layoffs are happening or the business is challenged to hit their goals for the year and what to do about that. And so I'd like to
JOEL ARNOLDjust start off with the first point of don't let a good crisis go to waste. I think that should be our sort of rallying cry and rep ops in situations like this, because downturns can be an opportunity for learning or growth, for change in the positive sense, an opportunity to overcome sort of old school thought that may have gotten past its prime and the opportunity to provide tremendous value. So, you know, we might see where we're sitting right now is risky or more risky than it was, let's say a year ago. You didn't have that collapses and financial crises potentially and downturns and all that stuff.
JOEL ARNOLDSo I would say with anything regarding risk, I think, I think in Mandarin, I believe risk is translated as
JOEL ARNOLDdanger opportunity. So it's a two character word. And I think that's the perfect example of how people should look at it, because it may be dangerous, but there's always an opportunity and all danger. And so I want to seize that opportunity and sort of carpe diem, as it were, and, and build a better revenue organization coming out of a downturn and bounce back quickly.
EDDIE REYNOLDSThat's a perfect segue, Joel, into something I wanted to share. So there's this famous Harvard Business Review case study that I always reference, where they talk about how companies weather the 2008 financial crisis. They did a really deep study into what companies did to weather that crisis and what happened in the aftermath. And what I think is really interesting is they broke them down into three categories, basically companies that continue to spend through that downturn. So they kind of just had like their rose tinted glasses on and said, we'll just get through this. You had another category of folks that cut costs really, really deep, just kind of cut cross across the board. And then you had another group where they cut costs really carefully.
EDDIE REYNOLDSThey use sort of like a rev ops mentality, but we're talking across the entire company. And they looked really carefully at their data. They looked really carefully at where they were spending money. And they cut costs on inefficient initiatives and reallocated things to, to where it would be more efficient in the organization. And it sounds so obvious in hindsight, but the third category of companies are the ones that did the best in the downturn. And it's because they're able to take advantage of the opportunity that was the crisis. And what's interesting and surprising about this study is, is the why. So what they found out is, is that the companies that continue to spend foolishly through the downturn, they went out of business for the most part, right? They ran out of cash and went under. That's obvious. Okay. The companies that did the natural thing to just cut cross across the board and try to survive. They made it through the downturn. They survived. They were still viable businesses at the end of the financial crisis, but they had done serious damage to their brand and their business. Their competitors that were working on building a better mousetrap, building a better go-to-market process, really refining their revenue engine and the engine of the entire company. And they were able to capture a lot more market share and also build a better mousetrap during this time. And so when the crisis, you know, subdued and the economy started to come back, they were able to slingshot past their competition. Now they had more market share. And as the market rebounded, they captured much, much more revenue. They had a more efficient business. They were able to double down on things that were working even more and just skyrocket ahead of their competition, who was left behind because of the damage they had done to their business by not seeing that crisis as an opportunity.
JOEL ARNOLDYeah, absolutely. And what we're talking about, what I, what I'd like to share is how do you set yourself to be that slingshot? So understanding right now, it may not be a lot of growth out there potentially, but like, how do you retool so that you come back stronger next time? I've done it. I can, I'm trying to show people how to do that today. And so we'll get a little bit tactical about it, but just know that this difficult times are not necessarily a bad thing. There is always an opportunity to kind of tee yourself up for the next thing. And if you're growing faster than your market, you're winning in the long run.
JOEL ARNOLDSo even if you're not growing very fast, you need to judge yourself fairly against the market and the opportunities that are around you and go from there.
SPEAKER_02So let's get into some of the tactics. So let's start by talking about leadership.
EDDIE REYNOLDSCan you talk through how you engage leadership and how that may have evolved from the beginning to end of this journey?
SPEAKER_04Yeah. Yeah. So beginning with, I would say I noticed that we had a, our revenue engine, a little bit out of balance prior to the downturn.
JOEL ARNOLDI had made case after case for a while about, you know, in our situation, we didn't have enough lead flow or lead generation or lead capture to justify hiring more salespeople. And yet I lived in this world where 2019 is not that long ago, but it feels like it is, but back then it was very old school thinking. And it very much was grow at all costs. If you hire more salespeople, you will sell more things. And that correlation that does exist sometimes was causation. And I just, I just didn't buy it. The numbers weren't backing that up. So one, my, my leadership wasn't really receptive prior to the crisis with how to reorganize things or that they should reorganize things. But what we did is that changed as times became a little bit more difficult and to sort of use this, no, don't let a good crisis go to waste mentality to sort of repitch my case and craft it in the way of like, here's potentially how we can get more efficient and save money, cut costs, stop burning so much cash, as opposed to, here's a different way to grow faster. And in the, in the face of that old school mentality, that framing and that context did wonders to get things unstuck.
EDDIE REYNOLDSSo tell me a little bit more about how they changed their views over time. It sounds like they were kind of resistant to some of your ideas in the beginning, but they started to open their mind up a little bit. Could you share any more tangible examples of that? Sure. So one of the things that was very, very clear was that, um, the, the boss, the head guy, he was very much in the, um, hire more salespeople equals more sales mentality.
JOEL ARNOLDAnd so I am, I'm not of that, of that persuasion, let's say. So I, I try to go in and say, this is a machine that we're, that we're crafting here and the things need to be in balance and it needs to have, we need to do an assessment for where the bottlenecks are, what capacity, each stage in the funnel is, et cetera, et cetera. And so I had this very like engineering mathematical approach, um, that it wasn't, we were getting a lot of purchase with that. So basically what I needed to do is make sure that my boss, who was the CRO, uh, understood the mechanics of this and try to like, in, I guess, more of a one-on-one kind of a setting, convince him of the validity of it. And then I got a couple other stakeholders at the table and kind of went through that process and convinced them of it. And so when the, when the pressure of cutting costs came where the deal flow dried up, we certainly found ourselves in a position where we had to make changes and as opposed to just cutting blindly or cutting, you know, one person from every team or whatever, and doing a round of layoffs. What I pitched to them was, here's how we can save a certain number of people's jobs at the same time, we cut costs at the same time, protect our, our revenue. And just by stop being so mechanical with it, I, I sort of allowed myself to change in the way that I was presenting the information. And I think the context of going from, we need to grow, we need to grow, we need to grow, you know, damn the torpedoes, we need to grow. It, it became more of a nuanced conversation with, okay, well, we need to, we need to save money. We need to become more efficient and that I was available. I had already done the legwork and my ducks in a row to be able to present a solution to that particular problem.
JOEL ARNOLDAnd it was the meeting of those two things that allowed us to get our program underway.
EDDIE REYNOLDSThat makes sense. I know your next point on our sheet that we're sharing talks about metrics and capacity models. My question was, where did you start?
EDDIE REYNOLDSIs that where you started or was that a secondary step?
JOEL ARNOLDSo I always feel like as a rev ops leader, you need to have a capacity understanding of your world. So if we understand how much the funnel is currently producing at all the various stages, and we know how much a salesperson can execute against, let's say just in terms of a simple number of deals, then we should be able to say when we've reached the capacity of a salesperson or our sales team, excuse me, and when you should have the next step.
JOEL ARNOLDAnd you should be able to get ahead of that by looking and seeing what's happening with your lead generation portions of the business. So be it marketing, be it the BDR team, be it prospecting by the reps themselves, like when are we filling up the funnel to a degree that the sales team can't execute against those properly? You should always have that mapped out. I would very much suggest that if you don't have that right now, you spend some time thinking about it. You interview the managers of the sales team and just get a sense for what they think, like how much a rep can handle. And then you kind of map your or judge your capacity planning or your hiring planning and org designs somewhat based on that. Because if you don't have enough salespeople to prosecute all the leads that you've got coming in, wow, it's a wonderful problem, but you should probably add a salesperson. However, if you've got 20 salespeople and you've got one lead a month coming in, what are these people doing? Salespeople are incredibly expensive resources and valuable resources. You don't want to get over your skis on this stuff. You want to have that stuff in balance at all times. So my one suggestion is have a capacity model and have your ducks in a row. So when a situation like this comes up, you can sort of speak to where the bottlenecks are, where we need to add capacity, where we've got excess capacity. And speaking in those terms will give you more flexibility than just the idea of, oh, should we cut somebody or not? For example, one of the things that we did in this last downturn was we noticed that we had not enough lead volume to feed all the mouths that we had in the sales team.
JOEL ARNOLDBut we had a handful of people that had just made the step from the BDR team into the AE role where, I mean, we could have let them go because they were junior people and they were technically not performing very well at that time.
JOEL ARNOLDAnd it would have taken them a long time to ramp or we could say, hey, for the next little bit until we figure out what the long-term plan is, would you mind going back into the BDR role? And therefore, we have more lead gen capacity to balance against the fewer mouths to feed in the sales team. And that was one of the big keys without cutting a single headcount about getting this back into balance and getting everything right.
EDDIE REYNOLDSLet's dive into that. Can we talk a little bit more about the capacity playing and the math that went into that?
EDDIE REYNOLDSHow did you determine the required number of leads per account executive and then, by extension, the right number of account executives for your model at that point?
JOEL ARNOLDYeah. So you're trying to figure out the math of you're balancing what does it take to hit quota versus what can someone handle.
JOEL ARNOLDWhat can someone handle is going to be different from person to person, but you should generally have an idea based upon role. And the best way to do that is to just talk to the management of that team and see what the expectations are for that. You know, an enterprise level person who's working on million dollar deals in ARR probably cannot handle as many deals as someone who's doing transactional sales in a two-week sales cycle. So everything is a little bit different. You might have both of those roles within your company. So definitely do it by role. And the best thing I would say is just, like, start off by talking to the people that are managing them and setting the expectations within their own team. And then, let's say they say they can handle 20 deals at a time. Okay, fine. Basically, mark down 20 and then monitor, is anybody getting to 20? Or are people sort of, like, starting to not be able to do their follow-up appropriately and document their processes correctly and fill in the forms they need to do at 15? You know, just kind of keep tabs on it to see if 20 is really the right number. And as best you can, use data to validate or invalidate that, let's say, that 20 number. But if you need to start somewhere, you're very, like, brand new at this, just interview the management.
EDDIE REYNOLDSSo to be really specific, you're talking about the number of deals that a rep can handle in a given period of time. Are there other metrics you're looking for, such as, like, outbound activities, leads before they become opportunities, deal size, et cetera?
SPEAKER_10So, no, not really, actually. I know that sounds a little simple and a little counterintuitive, but I'm really not looking for that.
JOEL ARNOLDWhat I want to know is the max that someone can handle at a given moment. So things that affect that would be how long does the deal go before it's lost, right? So are they handling a lot of early-stage stuff that then kind of goes on and on and on, but they don't close things out?
JOEL ARNOLDSo things that you could do to correct that or increase capacity overall would be, you know, lose fast if you're going to lose, and don't just let things sort of rot on the vine. But there's this weird thing that happens with salespeople is, like, if they have a lot of leads, then they tend to not do as much prospecting.
JOEL ARNOLDCrazy. Yeah, their managers tend to be okay with that. So I think it's just a matter of, like, you will notice if you're monitoring this right, like, if you don't have enough lead flow for your sales team, your sales team is going to be spending a lot of time prospecting. Okay, that sounds good, but that's actually not, that's actually not necessarily great. You will, as they fill up, let's say the marketing engine starts rolling, the BDR team starting growing good leads at them, you'll start to notice they spend less and less time prospecting. There's a healthy balance, right, where we're okay with them doing more or less prospecting on their own, as long as the lead volume is there.
JOEL ARNOLDBut at a certain point, you've got them, you've got the most expensive resources potential in the organization, spending their days, you know, dialing for dollars. And that's not healthy, and that's the situation we're trying to avoid. If you just hire salespeople, absent any information around lead flow, you're going to get a bunch of people that are just, like, paid hundreds of thousands of dollars a year to cold call people. And that's absolutely not where you are going to be. So that's kind of the sense of, like, what's out of balance. Mathematically, you're really just looking for that peak capacity potential in each role, and you're just monitoring against that.
EDDIE REYNOLDSSo it sounds like what you're saying is that in your mind, the ideal account executive has their plate full with inbound leads, if I'm understanding you. And they're only really doing prospecting sort of as that ebbs and flows, but not on a regular basis, because they always have two or three hours in a day, because they don't have enough leads to fill that time.
SPEAKER_10The perfect scenario is you don't have salespeople, and the things close themselves.
JOEL ARNOLDSure. You know, our future AI overlords. But absent that, because I don't think we'll ever get there, I think there will always be need for salespeople for many reasons.
JOEL ARNOLDAbsent that you want, if somebody has come as far down the funnel as possible, so you've got high-quality leads, not just volume, but high-quality leads in a volume, that means that the salespeople don't have to do any prospecting. Yeah, that's the perfect scenario. I don't think it's realistic. I think that the skills that you need to maintain and the sort of diligence that, you know, everyday constant prospecting provides, you know, salespeople are going to do things a little bit differently and in many ways better than the BDR team and the marketing team can do. So I think there's always that relationship aspect, for example, that you're only going to get with an AE, and they're going to generate leads that other people couldn't, generate opportunities that other people couldn't. But hypothetically, yeah, if everybody had a full plate, like entirely full plate with top-notch leads every time, that's wonderful. And yeah, let's do more of that.
EDDIE REYNOLDSIt's so interesting to me because, like, I don't know if I completely agree with you on that, and that's okay.
EDDIE REYNOLDSBut my personal experience in sales, I've never, ever had that job where I just got fed leads.
EDDIE REYNOLDSAnd, you know, I have all day tomorrow locked off to do prospecting. So, yeah, it's just, it's funny to me.
EDDIE REYNOLDSBut at the same time, I do think that that oftentimes does depend on deal size and complexity. Not that SDRs can't do prospecting for enterprise deals. I worked at Salesforce, and we had, they would call them BDRs, who would do prospecting into enterprise accounts. And they would even have junior account executives that would do that as well. If you think about, like, going after General Electric, how they divide, like, a really big account like that with a very senior enterprise AE and more junior AE that might cover, like, smaller subsidiaries, et cetera. I think that as relationships become bigger and more complex, it can be really valuable to have an AE reaching out, especially for those, like, tier one named accounts. But also working with a BDR or an SDR, whereas you get way down the funnel into more transactional deals, $5,000, $10,000 ACV, it might make a lot more sense to have a lot more of those done by SDRs. And I don't think there's a perfect science to this. But I do think it is interesting when you interview account executives that just have absolutely zero capacity or willingness to do prospecting.
SPEAKER_10You don't want that. So there's a practicability out of it, question out of all this.
JOEL ARNOLDI'm not saying any of this is practical, you know, having everybody filled up with top-notch leads every time.
JOEL ARNOLDThat's never going to happen. So what we're really looking at, and this is probably the better or more scientific way of looking at it, is what is the ROI of leads? So, for example, you don't want to have one salesperson who's full up with high-quality leads, but it takes a mountain to get all those leads to them. You know, you've got 100 people in your BDR team that are pounding the phones every day just to get the leads for that one person. That's a bad use of your time, too. So it's not necessarily that the reps are full up with leads. It's about that balance that we're trying to strike. And one of the things we've suggested in the past is, like, monitoring the expected value of a lead at different stages in the funnel or an opportunity at different stages of this funnel.
JOEL ARNOLDLeads become opportunities, so it's kind of the same thing.
EDDIE REYNOLDSAnd so just to clarify for the audience, what you're talking about is you get a lead that comes in off of a white paper or a webinar registration versus somebody that goes and clicks, like, book a demo.
EDDIE REYNOLDSAnd those leads have different monetary value because of the expected conversion rate and average sales price that will ultimately result from a bucket of those respective leads. Yeah, it's estimated value basically.
JOEL ARNOLDSo if you've got one deal that's in the first stage of your funnel, it probably has a very low estimated value.
JOEL ARNOLDIt's got to go through a lot of process and a lot of hoops to get to a close one deal, whereas something that's currently in contracting has a high estimated value. So it could be the same lead, just at different stages in time, but also if that lead came from your BDR team versus, you know, an MQL that wasn't very qualified. You're going to have variance in those, obviously. So what you're trying to do is understand what the estimated value of that is in future bookings, but also carrying that against, like, how much did it cost me to get that thing? So here's some simple math. Imagine you've got a BDR team and a BDR makes an OT of 100K. If they come up with 100 leads a year, then that means that the cost of that was $1,000 per lead. Judge that against the expected bookings, and let's say it's $3,000 of expected bookings per lead, you've got a three-to-one return, right, in ARR. So a simple metric like that, you can apply to a lot of different things. Ideally, you understand how much you're spending on marketing for the different channels that you've got. Ideally, you understand how much time a rep is spending prospecting on their own, how many opportunities they're generating on their own, and what's the likelihood of those to close, and how big they are. And you can kind of just do, like, a simple, what's my return for dollar spent on each of these different channels, and you want to maximize the one that provides you the most return. So it's probably going to be, it should be hand raisers. That should be a very high return. It should be BDR. Otherwise, you could, if you could get more juice for the squeeze by spending more on marketing, you'd probably do that. And then you're, especially like the relationship-based ones coming from your AEs tend to be, tend to be pretty strong as well. So you're just going to kind of want to find a balance. What I'm trying to guard against, though, is not just assuming that prospecting is the primary aim of a sales team. And if you notice that they're spending all their time sourcing their own stuff, then we really got to kick marketing into gear or kick the BDR team into gear and get that balance back.
EDDIE REYNOLDSYeah, I want to be sensitive to time because we only have a half an hour left. We also have a question from the audience, but I want to make a quick comment before I call on Will.
EDDIE REYNOLDSSo I think where this leads into is there's this massive problem where we take all of like the inbound marketing leads and we just dump them into one big bucket. And we have our white paper downloads and we have our webinar registrations and we also have our hand raisers requesting a meeting. And then over here on this separate side, we've got BDRs making cold calls and we look at that completely separately. And what I really love about your concept about looking at lead value and breaking it down by channel is now you can understand what does it cost me to have a BDR making cold calls and how much lead value does that ultimately generate in looking at the conversion rates and the average sales price from those leads versus each of our marketing channels. And how do we compare them objectively against each other to say, should we hire one more BDR or should we spend another dollar on this particular marketing channel? And when you just lump everything together in one big bucket, it's impossible to see that. Yeah. That being said, I want to call on Will and then move on to the next piece of this. Will, do you want to hop on camera and ask your question?
SPEAKER_58How's it going, guys? Hey, Will. Great. Hey, just had a quick follow up, Joel, based off of what you just mentioned. I was curious, just from a benchmarking perspective, what is kind of the typical ROI you expect from a BDR, just the ultimate workflow that they're bringing in relative to their OTE?
JOEL ARNOLDI don't have a number off the top of my head. It needs to be pretty significant because I think you're going to get, I mean, say three to one, five to one, something like that. It depends a little bit on the business. I think the cost structure of a BDR is pretty much set by the market, right?
JOEL ARNOLDLike you can't hire a BDR if you don't pay competitive wages, but at the same time, your returns is going to be very different. So I'll give you an example. If you're doing transactions that are relatively small and quick, you might expect a large number of deals to come from them, but it's not going to pay off in huge ROI necessarily because the deal sizes tend to be too small. If you're in really large enterprise deals, you might have a million dollar deal at the end of the day, but the win rates and all the conversion stuff is going to be pretty small.
JOEL ARNOLDThe problem with measuring, and this is where this might be a challenge, the problem where this starts to be more difficult is you may not have that REC or that BDR in seat when you close that deal because the enterprise deal might take a year, year and a half to close.
JOEL ARNOLDAnd so you're asking about a benchmark number, unfortunately, I don't really have a benchmark number, but what I would say is it depends, and it depends a little bit on your business that you're in. I know that's not great. I would say three to one is probably something I'd be happy with, but I've seen it work at one and a half to three, and it's mostly about whether or not, let's say, you want to hire another BDR. It's all dependent on your internal mechanics and whether or not that ROI is higher than the thing next to it. So that's kind of the thing that balances everything out.
JOEL ARNOLDI will also say that there's a lot of reasons to have a BDR beyond just having lead volume, and so you need to take that into account as well.
JOEL ARNOLDSo I know that doesn't really answer your question, Will, and I know I've struggled with that one a little bit, but I can look around and try to get back to you if that's something you're interested in.
SPEAKER_62No, that explanation was super helpful. Appreciate it, Joel. Thank you.
SPEAKER_28Thanks for the question, Will. Anybody else has questions, feel free to throw them in the chat. But, Joel, let's get back on to your story.
EDDIE REYNOLDSSo thank you for going deep into sort of some of these specifics.
SPEAKER_65To recap, you figured out basically what the capacity is per account executive and how many account executives you needed.
EDDIE REYNOLDSYou found out that you had too many of them. You had some recently promoted BDRs and moved them back to the BDR role. Tell me more about this story, about how this evolved and how it ultimately resulted in tripling the production per AE.
SPEAKER_04Yeah, so we had a situation where we had too many salespeople, and because the market was timing up, there were certain segments of that market that were disappearing.
JOEL ARNOLDOr we just noticed early stages that the lead funnel was kind of coming to a halt there. So in addition to moving people from early days in the AE role back into the BDR role to try and shore up a little bit more of that lead gen, what we were looking to do really was get the ratios right. For our business, we noticed that what we needed was really one BDR for two salespeople, which is pretty heavy on the BDR side, given the market that we're in today. That's typically not pretty common. But for us, it really made a lot of sense from a capacity standpoint. We noticed there were certain channels in our marketing funnel that were performing still quite well, and we decided to double down on those. So it took some of the resources that we were spending in some areas and moved it there. But then, unfortunately, we were still overweight with salespeople, and there wasn't a lead volume coming in. So where we cut, and we did unfortunately have to cut headcount, what we tried to do is make sure that we understood the market was determining it, the capacity was determining it, and it wasn't just like we don't like a certain person or anything like that. So we only cut as few people as we could because, one, having more people in seats after the cuts is potentially one way that you can springboard yourself back into high performance once the market does thaw. But another thing that we wanted to do is make sure that if we were going to, let's say, cut lines of business or look at different areas that weren't performing as well, that we were trying to find a home for the people that were there. So, yes, we ended up having to cut a couple of people in headcount, but we added BDR resources and made the people that were remaining more effective. Low performers are obviously part of the group that was cut, so the people that are left over from a sales perspective were better at executing opportunities, and then we took some of the savings that we had from those reduction in force choices, and we reapplied it to the areas of marketing with the highest ROI. What this did is it got rid of bottlenecks, so we did have some bottlenecks in the lead flow portion of our business, those were removed entirely. We maximized the ROI and got just basically hiked for efficiency and how we were set up to move forward. And then as the market over the next three or four months progressed, we noticed a huge increase in win rates through better execution, higher quality leads, and basically you're resetting the floor. You're resetting the risk of your entire revenue organization by removing kind of the stuff at the bottom that wasn't quite working and getting people into the right balance. So that was the sort of the long story. The benefit of this is it does set you up in a couple of ways from long-term benefits, but we'll get into the long-term benefits in a bit. I know, Eddie, you had some questions that you wanted to ask about that efficiency portion.
EDDIE REYNOLDSYeah, keep me honest on time because there's a lot to unpack there. And as you know, I like ripping the stuff apart because it's interesting and I hope it's valuable for the audience.
EDDIE REYNOLDSSo you talked about, you know, identifying low performers when we're talking about account executives as well as marketing channels. You talked about, you know, letting some people go, unfortunately, but retaining enough people to weather the downturn and also have enough people when it recovered, which is really interesting, by the way, because a lot of people had a lot of trouble hiring after the economy rebounded from the beginnings of the COVID crisis.
SPEAKER_69As we all know, you talked about increasing win rate, which I assume is a function of retaining top performers and not having lower performers that would ultimately have probably lower close rates.
EDDIE REYNOLDSIs that part of it?
JOEL ARNOLDThat's the biggest part of it. Yeah, it's your high performers are high performers for a reason. It's usually because they're better at following the process and executing an opportunity.
JOEL ARNOLDSo you're going to have higher win rates from that. You're also going to have higher win rates by having higher quality leads. So a lot of the reason why you'll have a low ROI, let's say, on a marketing channel, because the marketing channel is maybe not finding or driving the right prospect that's a good fit for you. So what this inherently will force you into is tightening up your ICP and your personas and going after the right people.
EDDIE REYNOLDSYeah, so this goes a lot back into your lead value and something that we're preaching all the time. I think the biggest waste that I see in businesses is that they're spending marketing dollars generating leads that ultimately don't close. And they're also having their sales team just call people that aren't part of their ICP. You cast this really wide net. You don't hit your targets. You say we need to make even more calls. You cast the net even wider. It becomes this vicious cycle to the bottom instead of taking a step back and really focusing your energies. So tell me a little bit more about how you did this.
EDDIE REYNOLDSSo let's start with the top performing AEs. How did you identify them? What did you look at just beyond their ultimate sales production?
JOEL ARNOLDI think sales production is obviously one of the major metrics for determining who's a top performer in your sales team.
JOEL ARNOLDWin rates, average deal sizes, people that aren't following the methodology that you're preaching.
JOEL ARNOLDSo no matter what your methodology is, those are the people that stick to it. They're not going rogue or lose cannons. There's inevitably somebody in your team that kind of just like, I can do what I want as long as I sell stuff. You don't want that. You know, there's an opportunity to kind of rein that in a little bit.
JOEL ARNOLDSo, you know, you're looking at just basically the same things that a sales manager would look at when they were judging who's their best rep. Yeah. And kind of going from there.
EDDIE REYNOLDSAnd I might be asking the wrong person because like you've been in RevOps a long time and you get it. I just saw a post on LinkedIn today from, I can't remember his name, but you spoke to him recently that has this territory planning technology. And he talked about an article published in 1919 where there was a book or whatever talking about how you shouldn't just have sales territories that are just based on geography and how short-sighted this is, right? And yet he pointed out that we still see this today. So let's imagine I'm not talking to you, you know, your fourth time as a RevOps leader, but somebody further behind the curve, you might have this low performer that's a poor performer because they're just in a bad territory. And some ways that you can see this is, A, what is the lead volume that each rep is getting? In many organizations, it's radically different. And you will have, and I worked with people like this at Salesforce that are just getting flooded with inbound leads and they're able to crush quota without really working very hard. As an example, I worked with someone that would come in at 11 and leave at three and never make a single prospecting call and was at the top of the leaderboard. This person is a good salesperson, but they were just getting flooded with leads because they had inherited the best territory by nature of not being promoted and being the most senior person on the team at that time. And then being able to just absolutely crush quota with minimal effort. And that's not really fair to the organization. And so I want to look at how many leads people are getting. I want to look at their close rates. I want to look at their sales cycles. I want to look at what rigor they use to actually close those deals. And before I go and think about maybe letting somebody go, I want to think about what is the area that they need to improve. In this situation you described, it sounds like you didn't have the advantage of time there. But when I interviewed Kevin Dorsey on this podcast recently, he talked about like, okay, like you tell a salesperson, sell more, sell more, sell more, but how? What do they need to do better? Do they need to do more prospecting? Do they need to get better at discovery? Do they need to get better at closing? What part of their process is deficient? And when we're looking at salespeople, I really want to encourage management to be looking deeper than just the ultimate, you know, production number.
SPEAKER_04Yeah. Yeah. So to touch on, there's a lot there.
JOEL ARNOLDTo touch on a couple of points, we were lucky enough that we weren't geographically focused.
JOEL ARNOLDSo that does matter in some businesses, it really does. But for us, it did not. And so we had already did a lot of work to balance territories and we had rules for rules of engagement to make sure that those were as balanced as possible within the roles. So that was less of a concern lead volume was often route robin, just that made sense for us. And so everybody was typically getting similar amounts of leads. So we had tried to minimize the impact of those things because without them, you can't really get a gauge for who's your best salespeople just off of one metric. You do have to look at it broader. So I don't think we struggle with those things. And I would absolutely back you up that, you know, territories matter a ton in this situation. Lead volume matters a ton. It's not just about who's hitting quota in the sense that, like, maybe you should think about having higher quotas for better territories or something else to balance the game out to make sure things are fair. But we just didn't see that that as a problem in this particular instance.
JOEL ARNOLDBut I totally agree with what you're saying, Eddie.
SPEAKER_02Let's talk about identifying top performers in terms of marketing channels. How did you go about doing that?
SPEAKER_08Sure. We, it wasn't, we looked at both channels, but then also campaigns.
JOEL ARNOLDWe had a couple of different things that had been put into place that we were just really new to in marketing, as far as marketing tactics, that we hadn't seen a return on yet because we just hadn't given it enough time.
JOEL ARNOLDSo there were some things that just sort of stood outside of the ROI question that we felt like the early returns were strong. And we wanted to stick with, regardless of the fact that it's never resulted in a close one deal. So we stuck with some of those things, other things where the early returns were not good, we kind of cut. So just sort of set those things off to the side. For the stuff that had been in place for a long time, we had been able to, and our methodology for attribution or lead assignment was more closely aligned to like last touch, which again, there's not necessarily a perfect way of doing things. There's not necessarily a perfect way to just want to be consistent about it so for us that meant basically last touch was the source. And then we looked at kind of the campaigns that would be processed and figured out which campaigns attributed the most value to lead funnel through an attribution methodology that we had. So really, it's just like, it's a lot of the stuff that a lot of people are doing. If you don't have a way of like naming what channel something is from, that's a really important thing you should definitely do. But once you kind of have that in place, then it was just more about the ROI calculation and figuring out what channels had the highest ROI and what campaigns had the highest ROI.
EDDIE REYNOLDSSo from that, you see, we've got some salespeople that are not performing as well as others, we've got some marketing channels that are not performing as well as others, you're letting some sales folks go, you're shifting some sales folks into BDR roles, you're taking some money from certain marketing initiatives, and then reprioritizing the other marketing initiatives.
EDDIE REYNOLDSAnd then doing all of these things, you now have fewer account executives fielding all these inbound leads, inbound being from BDRs, or from marketing, higher quality leads that are then moving into the account executive, who then has a better ability than the average account executive prior to these changes to close these deals. And then this ultimately resulted in a 3x increase in production per rep.
JOEL ARNOLDYes, yeah, it did. And I have always argued, there's nothing wrong with a fully utilized sales executive. I don't know if a lot of our companies have fully utilized at all times sales executives, but the results are pretty amazing when they are. And you have to understand that is tripling per headcount in the sales team.
JOEL ARNOLDWe did not cut, you know, two thirds of the sales team or anything like that, it was far less than that. But just getting things into balance and providing the lead flow for them had wildly positive results. So that our results as an overall company, as far as bookings were concerned, went up, I think, 30 or 40% during the downturn versus before the downturn. So when times were good, we still outperformed that as well, and quite significantly. So after about, I would say, a two or three month freeze, where nobody was signing contracts in March and April of 2020, suddenly we started seeing some pretty amazing results after that. And then really, I think almost the biggest thing that we saw as a positive was just the mentality, having knowledge that, you know, these capacity models and this way of looking at the world is validated, and that we don't have to think about like, you know, more salespeople is correlated to more sales. And that's the be all end all, we really broke that mentality and we're able to kind of think about things in the machine, as a revenue machine going forward.
EDDIE REYNOLDSYeah, and so it sounds like you come off the other end of this, and you just have a much more efficient model, and one that's not set it and forget it, I would imagine. You got to continue to analyze all these marketing channels, you have to continue to measure these account executives and how they're performing, but as well as the ratio between AEs and SDRs and between AEs and inbound leads. And so now you've got this model to build on, and you're much more sure that when you hire the next account executive, that they're fitting into the right capacity, that they're going to get the right number of leads, and that if they are indeed good at selling, they're able to convert these leads and hit their target within a reasonable on rent period.
JOEL ARNOLDYeah, yeah, so other things that were going along at the same time is this, is we were rolling out training programs that had a big impact for the people that were that were involved. So enable me enablement and training to kind of coincide with a lot of these changes was really, really useful. And it would be nice, I don't know if it's still in place today, I'm no longer there, obviously, but to think that like, we would have some sort of triggering mechanism to tell us when a new salesperson is appropriate, and we would base it on what we're seeing in the lead funnels so that you can kind of get ahead of it and get somebody ramped up before necessarily there's a huge need for them to kind of be able to see around the corner and even get a head start on that ramping time, which I think would make everybody even more efficient on top of the efficiencies gained from this process.
EDDIE REYNOLDSYeah, that makes a lot of sense. Hmm, now I forgot what my next question was.
SPEAKER_02It's the constant pressure of doing these live events where I'm like, what's my next question? That's all good, man. All good.
EDDIE REYNOLDSYeah. I think you wanted to talk a bit about the long-term benefits here.
JOEL ARNOLDYeah, yeah. So I just figured out, I want to make sure that it's clear that this is not about just getting things right today, that when you talk about the Harvard study that you mentioned earlier in the call, Annie,
JOEL ARNOLDthat if you do this appropriately, you're going to tee yourself up for hypergrowth when you come out of this downturn. So let's just recap what we're saying is like getting things in balance not only makes you more efficient now, that's great, but it also gives you the mechanisms to be able to see what the future is going to look like and know when the next thing has to happen. Like how many times have you gotten the question of like, oh, if I have to make a hire or if I have to spend money, where should I spend it? Marketing, BDR headcount, a new salesperson, you know, a partnerships manager. You know, like there's a bunch of different options you can go with. This pulls back all the things that are blocking you, pulls back all the curtains, and it kind of gives you clear visibility to like, oh, we've got a bottleneck in pipeline generation at the stage of the funnel. We should do more things that increase conversion. Or we don't have enough people in the BDR team to be a two to one ratio with our AEs, so we need to hire a BDR. You can look at all the different channels. You can look at BDRs and AEs as channels on their own. What's the lowest ROI? What's the highest ROI? Oh, well, we're getting a huge ROI out of things that come through our live events. Let's do more live events. It becomes really, really easy to figure out where to spend a resource. It helps you identify where there are breakdowns, the bottlenecks, the problems are developing, so you can kind of rapidly diagnose and dive in and fix problems. And then it also gives you the ratios and the formula to grow faster. So you won't be spending as much money, which means that you'll have more money left over to hire, and it becomes this virtuous cycle that allows you to hire headcount in the right places, that allows you to spend more money on the right marketing tactics. And it just kind of becomes this snowballing effect of positivity that when things thaw and your competitor has chopped willy-nilly and there's no rhyme or reason, they just decided to cut people all over the place because they were in the same boat you are. If you've done this right, you'll be able to just jump ahead of them right away because they'll still not have this stuff figured out and they won't know where to spend the money.
JOEL ARNOLDAnd then, so when they spend the money, it's probably not going to be as value creative as you are going to be.
EDDIE REYNOLDSWhat's so interesting to me about this is that, to me, it just seems so basic. I mean, that's why I got into RevOps too. How would you run a revenue team without doing this yet? I know that so many folks do. And I get it, like, if you're a CRO or VP of sales or CMO, there's so much work just
EDDIE REYNOLDShiring the right people and, you know, getting them to crank out the calls or put out the content, run the campaigns, et cetera. But it's just hard for me to imagine pouring millions and millions of dollars into a revenue engine, sometimes tens of millions. And we're talking startups here, but if you're spending 40% of your revenue on the revenue engine, then you only need, wow, too tired to do the math, 25 million, something like that, in order to be spending $10 million a year on the revenue engine, 25 million in revenue. To pour that amount of money into the revenue engine and not understand, like, how the engine actually works and where that money is flowing through the different channels, it's hard for me to wrap my head around that. But you see it every day.
JOEL ARNOLDYeah, I mean, it's not rocket surgery, but what's good is that this stuff is the same stuff you should be doing anyway, to a very large degree.
JOEL ARNOLDLike, you should understand where to place bets anyway. You should figure out, you know, where am I getting the most bang for my buck from a lead generation standpoint? You should figure out what our marketing funnel looks like, how many headcount we should have. OK, let's say the board says I have to book $5 million this year in new sales. Use your capacity modeling and your win rates and your average deal sizes, et cetera, to figure out what's reasonable and how many people you need to have in your sales team. And then work back to like, OK, how many leads do I need to have? OK, so if you want us to do this, well, then we need this. And then kind of making that conversation whenever any of these sort of questions come up. It's just like it's part and parcel of doing revenue operations at a moderately high level. And so you should have the pieces in place. And then it's just a matter of like, use the opportunity to just make sure that you're being hyper-efficient with any situation and where people's jobs are in the line. And if you do that, then I think, unfortunately, these kind of situations come up where the market is down and maybe you've got too many people in a certain role and maybe there has to be a rift. But you could also just say, no, it's not now is an opportunity to rebalance things. And if you do so, you'll come back stronger. So, yeah, don't let a good crisis go to waste, as I always say. And fundamentals, common sense is not common practice. So get your fundamentals right and you'll be teed up to be that the advisor that you want to be when it comes to situations like this.
EDDIE REYNOLDSYeah, this makes a lot of sense. Well, I think this is a good place for us to wrap, even though we've got a few more minutes
EDDIE REYNOLDSleft, I'll just end up filling the time with gibberish. We're going to publish this, all of this in a newsletter on Friday. So if you guys are listening to here live or on the podcast, check it out. You can find it under the resources tab on our website. If you guys have any questions, feel free to reach out to Joel or myself on LinkedIn or via email. We're always happy to answer questions as you guys are trying to work through this. And we really hope that you enjoyed this session and got value from it. So thank you for attending the event or if you're listening on the podcast for checking out our podcast.
EDDIE REYNOLDSThanks.
