Sales organizations should regularly analyze key metrics to ensure they are optimizing performance. These include: - Checking ARR against plan and prior years to assess growth and identify opportunities. - Monitoring CAC payback to ensure efficient spending on customer acquisition. - Tracking demo rates and ramp times for new reps to properly size the sales team. - Comparing quota capacity to forecasts to validate the team can achieve sales targets.

1. www.sorensoncapital.com
THE BEST BOD DECKS
Chapter 4: Sales Best Practices
July 2023

2. Proprietary and Confidential 2
Early-Stage (<$5M ARR) Mid-Stage ($5-30M ARR) Later-Stage (>$30M ARR)
Marketing
• Develop initial spend allocation strategy
• Establish metrics / methods to measure the efficiency of
marketing organization
• Content creation / customer education strategy
• Understand ideal customer profile
• Develop lead qualification method / criteria
• Build data infrastructure to measure ROI on marketing
spend
‒ E.g., $1 of marketing spend today results in $X of
sales-qualified opportunities in X months
• Budget for ample pipeline coverage to support sales
• Refine messaging v. competitors
• Develop and refine predictable lead gen motion
• Build attribution model (multi-touch, last touch, etc.)
• Enhance efficiency on spend
• Improve benchmarking for IPO/exit
Sales
• Hire initial sales team; replace CEO-led motion
• Determine and shape sales strategy (inbound / outbound
/ channel)
• Define pricing and packaging and ideal customer profile
• Build programmatic motion (predictable quota attainment,
limited CEO-led deals)
• Optimize sales compensation model
• Formalize lead conversion & handoff processes
• Measure and enhance sales efficiency by rep
• Build customer success team to manage renewals and
upsells
• Refine pricing and packaging and ideal customer profile
• Budget next fiscal year and hiring plan
• Manage to quota capacity v. plan
• Refine training / sales enablement infrastructure to
optimize productivity by rep
• Manage internal promotions and build career paths
• Manage total addressable market and potential market
penetration
Product &
Engineering
• Build initial product (core modules / features)
• Validate product-market fit
• Build scalable long-term infrastructure
• Embed scalable processes
• Build add-on products (supplemental modules / features)
• Optimize onboarding experience
• Measure resource allocation by workstream (new product
builds, remediation of bugs)
• Balance customer product requests v. internal product
roadmap initiatives
• Manage multi-team structure
• Build for greater product and data security, particularly for
global operations
• Identify ancillary areas for product expansion (new
industries)
• Breakout of product team by product or initiative
(maintenance, new product build, verticalization)
G&A
• Build hiring capabilities; focus on finding core contributors
in the earlier days
• Implement basic operations processes and systems
(finance, legal, HR, etc.)
• Build out formal HR practice and expand talent
development team
• Establish firm culture and formalize employee handbooks
• Improve operations processes to be scalable as
organization grows
• Cultivate onboarding and customer support model
• Build intentional culture
• Review M&A opportunities for product additions,
acquihires, or customer synergies
• Develop compliance standards and practices
• Build teams and systems in place for global hiring
• Evaluate management changes / adjustments for IPO
Illustrative Topics by Department and Stage of Business

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Playbook for Building an Effective Sales Organization
Are we hiring ahead of bookings plan? Are
we hiring the ‘right’ AEs?
• Hiring Ahead – Analyze quota capacity
needed to support growth in forward periods
and hire according to ensure reps have
sufficient time to ramp in order to hit desired
quota
• Rep Quality – Evaluate behavior and
performance of unsuccessful reps to
determine if cause of poor performance
(e.g., mis-hire, lack of experience, poor
training, etc.)
Do we have the right systems, trainings, and
procedures in place to ensure a short ramp
period and high success rate of new AEs?
• Systems – Assemble optimal combination of
software to support ideal ramp time and
reduce friction
• Trainings – Implementing the right training
programs and mentorship / coaching can
dramatically help improve AE success rate
• Procedures – Provide teams the materials
and processes needed to successfully close
deals (e.g., playbooks)
Do we have the right systems and
procedures in place to empower AEs to
predictably achieve quota? Are we properly
feeding AEs with qualified leads? Are we
appropriately incentivizing AEs?
• Lead Creation and Distribution –
Determine what form of lead distribution is
the most fair and efficient (e.g., territory,
customer type, etc.) to disincentivize “cherry
picking” low hanging fruit
• Compensation Structure – Benchmark
compensation vs. competition to determine if
we are well-positioned to win top-tier sales
talent or is at risk to losing top AEs due to
underpaying
• Sales Enablement – Frequently assess and
refresh the resources, tools, content, tribal
knowledge, etc. of the sales team so AEs
are equipped to sell more efficiently
Hire Ramp Enable

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● Sales efficiency
 ARR v. plan v. prior year
 CAC payback / LTV:CAC / other sales efficiency
metrics
 Demo Rates
● Win / loss report
 Win / loss rate by competitor over time
 Reasons for lost opportunities (e.g., product
gaps, budget, etc.)?
● Quota coverage & hiring plan
 Sales rep quota attainment over time (aggregate
and by rep); identify outlier contributors in sales
force
 Quota coverage v. new and upsell ARR plan
 Hiring plan
 AE ramp analysis
Sales Analyses Checklist

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ARR v. Plan
Key Questions and Considerations
Performance vs. Plan
0%
5%
10%
15%
20%
25%
30%
–
$10
$20
$30
$40
$50
$60
%
Growth
YoY
Ending
ARR
($M)
Actual ARR Budget ARR % Growth YoY
Actual Actual Actual Actual Actual
(US$ in millions) Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
Beginning ARR $27.5 $27.7 $29.1 $31.8 $35.9
New ARR $1.3 $3.1 $3.6 $4.1 $5.1
Expansion ARR $1.8 $0.3 $0.8 $1.6 $2.6
Contraction ARR ($2.0) ($1.4) ($0.7) ($1.2) ($1.4)
Churned ARR ($0.8) ($0.6) ($1.0) ($0.5) ($0.6)
Ending ARR $27.7 $29.1 $31.8 $35.9 $41.5
Note: all metrics and commentary are illustrative examples; included in previous blog post
● Did we beat or miss plan this past quarter?
○ What happened that drove this outcome?
● Any near-term opportunities that would change our quarter?
○ Any bookings that slipped or came in early? How would
these deals impact future quarter outcomes?
● Was there any contraction/churn that we could have foreseen or
prevented?

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CAC Payback
Key Questions and Considerations
● CAC Payback =
New Bookings in Period ∗ Gross Margin %
Sales and Marketing Expense
○ If possible, for S&M expense focus on costs directly
related to customer acquisition
○ If account executives are responsible for expansion
bookings, you may want to include these bookings in the
numerator of your calculation
● Has our efficiency improved or declined over time?
○ What is driving this change in performance?
● Should we be investing more in new customer acquisition?
CAC Payback Over Time
–
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
Months
LTM CAC Payback (Months) Quarterly CAC Payback (Months)
Note: all metrics and commentary are illustrative examples

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Demo Rates
Key Questions and Considerations
● How many demos are we holding?
● Are we setting ourselves up with enough ‘top of funnel’ meetings
to drive forward bookings?
● Is our demo rate directly indicative of expected bookings
performance?
● Is our capacity to hold demos becoming a bottleneck in the sales
process?
Demos Held Over Time
0
50
100
150
200
250
300
Demos Held
Note: all metrics and commentary are illustrative examples

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AE Ramp History
Key Questions and Considerations
● How long does it take a sales rep to ramp?
● Are we under-investing in AE training?
● Are specific reps ramping much more quickly than others?
● What are the commonalities amongst reps who ramped most
quickly?
○ Any AE level changes (new hire types, focusing on more
green v. more tenured, etc.) that should change this?
● Are AE expectations appropriate?
○ Do onboarding process or quota targets need to change?
● Have past hires been the right hires?
● Are assumptions around ramp (and therefore future quota
capacity) accurate?
○ If not, what steps must we take to bridge this gap?
○ Must we also adjust our future hiring plan based on our
refined view of rep ramp times?
Historical Ramp Times
–
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
200.0%
–
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
200.0%
1 2 3 4 5 6 7 8 9 10 11 12
%
Quota
Attainment
Months Since Hire
Average Target
Note: all metrics and commentary are illustrative examples

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Quota Capacity
Key Questions and Considerations
● Do we have the team available and ramped to meet forecasts?
● Has capacity been significantly above or below historical net ARR
added?
● Do we have the team in place to execute on future growth plans?
● How has historical AE capacity related to net new ARR?
Current Capacity v. Achievement
–
$100
$200
$300
$400
$500
$600
$700
$800
Net New ARR Forecasted Net New ARR Weighted Quota Capacity
Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022
Net New Plan $2,420 $2,640 $3,000 $3,360 $3,600
Quarterly ARR Quota $2,250 $3,125 $4,375 $5,125 $5,875
Quota Coverage 0.9x 1.2x 1.5x 1.5x 1.6x
Note: all metrics and commentary are illustrative examples

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OTE Return
Key Questions and Considerations
OTE Return (Monthly Annualized Bookings)
–
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22
OTE
Returns
Months Since Hire
Average Target
Note: all metrics and commentary are illustrative examples
● Is our rep compensation package sustainable?
● Are sales quotas appropriate to hit target OTE return?
● Are we over/under-compensating sales reps relative to the market
expectations?
● Are sales reps sufficiently incentivized to generate new bookings?

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Win Loss Analyses
Key Questions and Considerations
● Who are we losing to in the market?
● Are any competitors gaining significant traction on us in terms of
win rates?
● What product features differentiate the competitors that are
consistently beating us?
○ Should the learnings from this help define our pitch?
● Any commonalities amongst the customers we are regularly losing
RFPs for?
○ How can we cater our sales pitch to address the concerns
of these types of logos?
Win Rates by Competitor
–
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Win
Rate
Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5
Note: all metrics and commentary are illustrative examples

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Hiring Plan
Key Questions and Considerations
● Is current team in position to execute on plans?
● Are any sub-sections of GTM team understaffed?
● Any upcoming strategic shifts that will change team breakdowns?
● Any particularly successful areas of org we are understaffed in?
○ Channel partner, inside sales, etc.
● Is GTM team size the bottleneck in growth?
● What does GTM team look like today?
● Is the hiring plan rational and does it tie to expected growth plans?
● Are we over-indexed in a strategy (enterprise v. SME v. channel)
that is not working as efficiently?
Current GTM Team and NTM Hiring Plan
Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
Enterprise GTM
VP of Sales 0 1 0 0 0
Account Executives 3 4 6 7 8
Inside sales reps 1 0 1 1 2
Channel partner manager 0 2 1 1 0
Total Enterprise Hires 4 7 8 9 10
SME GTM
VP of SME Sales 1 0 0 0 1
Regional Head, Aus 0 1 0 0 0
Regional Head, EU 0 1 0 0 1
Account Executives 2 2 4 4 8
Channel Partner Managers 0 0 0 0 0
SDR 1 2 3 5 9
Total SME Hires 4 6 7 9 19
Total GTM Hires 8 13 15 18 29
Ending GTM Headcount 38 51 66 84 113
Note: all metrics and commentary are illustrative examples

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Insights: Ideal GTM Team
Key Questions and Considerations
● Is our ratio of quota-bearing to other headcount appropriate?
● Are we too ‘top-heavy’ and need to revisit our manager:junior team
ratios?
● Is the AE:BDR ratio in line with what we expected?
○ Tangentially, is our BDR count sufficient to generate the
lead count we need to meet future bookings?
Target Team Structure
CRO
Dir/VP’s
Team leads
AE’s
BDR
Solution
engineers
Note: all metrics and commentary are illustrative examples

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Sales Execution: Bookings by Rep
Example Sorenson Notes
Overall look into Bookings Performance per Rep
• Determine the ‘risk’ of your
sales org and overall exposure
to the performance of top
sales reps
• Evaluate commonalities
amongst the best performing
reps (target industry,
geography, background, etc.)
and work to replicate these
hires
• Manage resource allocation
effectively: if tenured reps are
spending too much time on
expansions/existing logos,
new bookings growth may
suffer
Note: all metrics and commentary are illustrative examples

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Sales Execution: Rep Success Rates
Example Sorenson Notes
Aggregate view of rep success by attainment
• If a significant portion of sales
reps are not meeting quota,
you must identify the
bottleneck (or issue in the
process). Potential sources:
• Quota too high
• Not enough leads
• Over-incentivized on
expansion bookings
• Insufficient training
• New hires not
experienced enough
• Upon dissecting rep success
rates, use this information to
drive future hiring decisions
Note: all metrics and commentary are illustrative examples