Startup Management Best Practices #3 : How to Structure a Sales and Marketing Team

A key component in a startup’s formula for success is educating customers about the product and driving sales. The sales and marketing teams of a startup are responsible for this. There are many ways to structure sales and marketing teams.

The diagram above outlines a sales and marketing team structure that I’ve observed across many startups. It is consistent with the organizational design Salesforce used to drive revenue from $0 to $100M, described Aaron Ross’s book, Predictable Revenue. Jon Miller, CMO of Marketo, has also written an important blog post on the subject, The Definitive Guide to Sales Development.

The chart above shows three roles: Marketing, SDR/ADR (Sales Development Rep/Account Development Rep), AE (Account Executive). Marketing teams generate Marketing Qualified Leads through content marketing and lifecycle marketing. Inbound ADR/SDRs evaluate inbound leads (from marketing and product and customer upsells).

Outbound ADR/SDRs gin up their own leads through cold calling and qualify them. The typical SDR should be able to qualify on the order of 60 to 100 leads per day and generate 250 to 400 high-quality leads per month, depending on the number of calls required to qualify a customer, which is contigent on product complexity.

These three roles (marketing, inbound & outbound SDRs) comprise the marketing function, which is contained in the blue rectangle in this diagram. Both Marketing and SDRs should be measured on leads generated. SDRs generally earn $50-70k depending on performance. Because each of their performance metrics are leads, it’s logical to place SDRs within the marketing organization, but some companies embed SDRs in Sales to align the lead quality incentives.

The Account Executives, in the red Sales rectangle, receive qualified leads from SDRs and should aim to close a high fraction of them. In Jon Miller’s posts, he reports a 7% qualified lead rate by SDRs and an 80% AE close rate. These figures can vary due to many factors: the workload of AEs, the product maturity, the SDR productivity, product/market fit and so on. The more important figure of the wo is the AE close rate. AEs must receive highly qualified prospectt consistently so trust can be built between the AEs and SDRs. The Account Executives are measured on a new bookings figure and given a quota.

There are many ways of structuring sales and marketing teams. Different markets, market segments and products will demand new and novel ways of pursuing the market, but this framework can serve as a roadmap and guide to the basic structure, integration points, and key metrics for each team.

Third in a Series on Startup Managment. The first post is Situational Management. The second post is Startup Team Sizes.

Published 2013-12-03 in startups  sales  SaaS  Marketing  Culture  Best-Practices 


I am partner at Redpoint. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 20,000 others receiving these blog posts by email.

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