Think of Demandgen Like Any Other Sales Support Resource

Why is it that when we want to add an account executive (AE) to the plan, we always think about some ratios but not others? For example, most people think: Boom! Then we're going to need:

• 2/3rds of an sales consultant (SC)
• 1/3rd of a sales development rep (SDR)
• 1/6th of a sales manager

With the chosen ratios varying as a function of your sales model. If we're good, we might even include:

• 1/8th of an alliances manager
• 1/10th of a salesops person
• 1/12th of a sales enablement person

If we're really good, and we have a large organization, we'll also get the next layers of sales, SC, and SDR management.

But what's the one thing that almost never comes up in these support ratio discussions? Demand generation (aka demandgen). Money for marketing to build pipeline for the incremental AE.

When we don't treat demandgen as a ratio-driven, support resource, we get what I call the baby robin problem.

We throw our model out of whack by hiring more sellers than planned and thus everyone ends up with insufficient pipeline. The sellers turn into baby robins, mouths extended upwards, waiting for someone -- e.g., SDRs, marketing, alliances -- to drop opportunities in.

How can we avoid the baby robin problem? By treating demandgen budget as you would any other sales support resource. We instinctively think about SDRs and SCs (even if we don't always go hire them). But we don't do the same for demandgen. So part of this is self-discipline. The other part is math.

Let's assume steady state, so we can ignore timing and ramping:

• If our AE has a quota of $300K/quarter
• And we want 3x pipeline coverage
• Then we need to generate $900K of pipeline each quarter
• If our pipe/spend ratio is a healthy 15:1
• Then we need $60K/quarter in demandgen spend per AE

That's $240K/year. A lot more than 1/3rd of an SDR and 1/6th of a manager. Yet, we routinely model these lesser costs and forget the demandgen.

Why? Silos.

It's a different budget. Oh, that's marketing. But it's sales that's asking for incremental money to hire the seller. The marketing budget is someone else's problem. Until you repeat this 5-10 times and now every seller is starving for pipeline. Then it's everyone's problem.

So how can you avoid this? I'll say it a few different ways, so you can take your pick:

• Work together. Hiring incremental sellers is a go-to-market (GTM) problem, not a sales problem.
• Plan holistically.
• Treat demandgen like any other sales support resource.