John Care is currently Managing Director of Mastering Technical Sales, having spent numerous years building world-class Sales Engineering organizations at companies such as Oracle, Sybase, Vantive, Clarify, HP, Business Objects and most recently Vice President and Area Manager of Pre-Sales at CA. MasteringTechnicalSales.com
“How Do I Justify Incremental SE Headcount?”
“What’s the ROI for an SE?”
“How Do I Calculate Presales Effectiveness?”
Have you ever heard one of those questions? Have you ever been put in the position of
having to justify your business impact (or that of an entire presales organization) to a
sales leader, sales operations, or to someone in finance or even HR?
It’s a topic I’ve wrestled with over the years, and with the help of Michael Lohr, Sean
Cullen and Jim Sargent from out there in the SE community we’ll look at the costs, the
benefits and a few ways to calculate the ROI of a presales engineer.
The Costs. So let’s look at the basic costs associated with an SE. These are all
approximations based on an average SE salary in the software business in the US. So your
mileage will vary depending upon location and industry – but the basic structure remains
Base Salary and Commissions $150,000 Average SE ; 5-7 years
Overhead/Burden $ 60,000 40% for Benefits and Overhead Expense
Training $ 14,000 External Training/Certifications etc
Travel $ 36,000 $3k/month
Approximate Overhead $250,000
So – figure that even a 40 person SE organization is going to cost you $10m if you get
them travelling. From a financial point of view, only 10-15% of that $10m budget is
variable – the rest is fixed no matter what happens to sales quota.
The Direct Benefits: The first obvious benefit is that the SE team drives a massive
proportion of new product revenue – where product is defined as what you are selling. If
your product is renewable in terms of being software, hardware or other goods that
require ongoing support – then there is an annual support or maintenance payment stream
as a result of the sale too. In most industries the sales force is credited for at least the
first year of such support. There may also, for example in the Telecommunications space,
be recurring annual revenues instead of an upfront-payment. Plus, your product may
require installation, setup, education or configuration services – which is also revenue
driven directly by the sale.
So, at least for a first approximation, you can count all this revenue as SE-driven
revenue. For accuracy you can factor out upgrades and increased customer use due to
natural growth and expansion (i.e “more seats”). This applies only to the current solution
set. For example if you are selling medical supplies/pharmaceuticals and a new indication
is approved which causes additional sales – someone still has to “push” that.
The Indirect Benefits: There are a number of these softer benefits so I’ll focus on
three common examples.
1. Post-implementation visits. A typical presales organization spends 5-8% of its time in
post-sales activity fixing something that is broken – either in support or services. Happy
customers buy more products and this is an area we can influence outside of the
traditional role. You can also include planned post-implementation visits such as
performing a "health check" with the goal of making some recommendations to improve
the product usage as well as explore other opportunities in accounts. This is very hard to
measure because these visits are not always attributed to another sale but I'm certain
they contribute to these deals.
2. Enhancement requests. In general, SEs are the foot soldiers who know what customers
want and where they want to go. Product Managers would be very blind to the market
without the SEs input. Hiring one more SE does not necessarily increase this feedback
but this information cannot be underestimated.
3. Collateral. As the typical organization of last resort – if a piece of collateral, training
or general infrastructure is required then presales will usually create the content when
no-one else does. This also extends to covering marketing events, partner training, trade
shows and so on.
The Extreme ROI. Having looked at the SE-driven revenue, it’s important to understand
that sales is primarily driven and rewarded for generating revenue. Just as it’s easy to
say that if there were no SE organization then revenue would plummet, the same could be
said for sales. An extreme and simple ROI would be – using our 40 person SE organization
and an overall sales quota of $100m. (So even though most SE’s do not have a personal
quota, for the purpose of the calculations Quota = (100m/40 = 2.5m per SE)
------- = ROI ----------- = 1,000%
Clearly not a credible calculation for many reasons.
Alternate Views. There are now two approaches to the ROI calculation. The first is the
overall ROI on the entire pre-sales organization. I personally find this is almost
impossible to calculate and is not a feasible business number anyway – what is more
important is the ROI of the next SE hired. So let’s look at that instead.
The New Hire. The annual costs for a new hire using our same example are still around
$250,000. Training and travel costs may be lower, balanced by a possible internal
referral fee, cost of laptop and other equipment etc. In terms of potential quota
contribution, industry guidelines are:
Years in Organization Qutota Contribution
1 40% (1,000,000)
2-4 100% (2,500,000)
5+ 120% (3,000,000)
This takes the conservative approach that the first six months are pure ramp-up time
spent in training and ride-alongs with other SE team members. The second six months the
SE is placed in lower-value and lower-risk situations – typically smaller deals, RFPs, trade
shows etc. thus freeing the more experienced members of the team to focus even more
of their time on the high-value revenue targets.
Given the typical ramp-up time for an SE, there is also a case to be made for building
bench strength for each of your major solution sets. Under no circumstances should
activity in a vital geography or product line be single-threaded because there is only one
SE who can cover the opportunities. Sometimes hiring needs to occur prior to a projected
increase in activity, regardless of current ROI.
An Introduction to ROPE “Return On Presales Effort”. The other assumption in the
calculations that will follow is that a new-hire is placed in the optimum position to benefit
the company. One way to assure this is by using an analysis of activity against revenue –
hence the ROPE acronym. In essence you are checking that (a) sufficient demand (and
pipeline) exists for an incremental head and (b) sufficient revenue is associated with that
demand. ROPE examines revenue, utilization, time and win-rate broken down by
geography, product line and activity. For example – by geography:
Geography Revenue(m) Heads Rev/hc Utilization (%) Win-Rate
North 15 8 1.88 82 36
South 18 6 3.00 66 42
East 24 8 3.00 65 42
West 22 9 2.44 58 44
Strategic 12 4 3.00 54 53
Federal/Gov 20 5 4.00 74 56
There is a lot of analysis and definitions of terms that we’ll skip over here, as you need to
examine all three dimensions (and that’s one of the things I consult upon), but looking
through the data it seems the Federal/Government group is producing the most revenue
per SE, has the highest win-rate and is heavily utilized. It is the logical place to add a
head as there is both demand to satisfy and revenue to gain. The criteria for each
parameter are highly dependent on each individual company, but in general the higher
When dealing with sales you can also factor in the size of pipeline. Usually 3.5 to 4x quota
in a pipeline is considered healthy enough to justify additional SE-power. Assuming the
pipeline is large enough then none of the other geographies satisfy the ROPE criteria.
There are two options – either hire a new SE directly into Federal or transfer from the
North or West into Federal and then backfill.
New Hire Direct Into Federal --4.00m x 40% = incremental revenue of 1.60m
Transfer North to Federal and backfill -- (4.00-1.88) = incremental 2.12m. Plus 1.88m x 40% = 0.75m -- Total incremental revenue of 2.87m
Based on this data you could incur the additional $250k cost of a new SE and recoup
anywhere from $1.6 to $2.87 million in return – both a payback in way less than a quarter.
It’s important to realize that these calculations are based on the marginal rates of
adding a small number of heads. Adding ten new SE’s to Federal wouldn’t return ten times
these results. That said, what financial controller could turn down these numbers?
Article By John Care
In another encouraging sign for hiring demand for Information Technology candidates, I have seen multiple examples of Sales Engineering managers loosening their requirements for new hires, and looking outside their traditional talent sources for exceptional candidates.
A number of recent searches have cropped up where companies hiring sales engineers have been asking for candidates outside of traditional pre-sales support roles, such as post-sales account manager, project managers, and product delivery/implementation types. Even technical trainers and some sales reps with the required technical depth. This openness means that hiring managers are exhausting the pool of available strong candidates, many of whom have simply withdrawn from interviewing for new jobs because they are making or exceeding their sales targets (and the accompanying commissions) and have a strong pipeline of sales prospects for quarter-end/year-end sales accelerators (where the scores can really change!) as well as for Q1 2012.
A window of opportunity has opened for external and internal candidates in highly-technical customer-facing roles to leverage the mix of technical depth and personal communication skills and land a lucrative Sales Engineering position, even from outside of a particular firm.
If you are looking to make a transition into Sales Engineering but don't know where to start, LOOK HERE. Our Telecommunications, Applications, Information Security and Systems Integrator customers are hiring aggressively, and I foresee this trend continuing.
Just make certain that you have a strong technical base in the product or services area that the hiring firm when you apply. Technical and market domain knowledge, as well as a strong personal presence, and communications skills (for product demos, webinar, presentations, RFPs, etc.) are the ingredients for successful Sales Engineer.
by Guest Blogger Kaitlyn Northrop
Frederick Koenig, the industrious German inventor, once mentioned that “happiness comes not from getting something we lack, but from the recognition and appreciation of what we do have.” When an employee does something exceptionally well, it’s rare that their boss will remember to show appreciation. But when that same employee makes a mistake, that boss won’t forget to point out critical errors. Constructive criticism is important, without it employees would not know what needs to be improved or what they are doing wrong but it is a two way street, employees need strong and skillful guidance. Praise is often forgotten leaving many employees to feel under appreciated. A recent survey by Adecco USA found 65 percent of employees would like to receive more "thanks" at their jobs. This survey points out that appreciated employees feel a sense of empowerment and happiness which leads to higher productivity and lower turnover.
Are you giving your employees enough positive encouragement? Generating team appreciation is easy. Here are some thoughtful ways to increase employee appreciation:
Praise – Be sincere with your language and identify that your employee has done something outstanding. Positive encouragement is about quality not quantity, praise specific events that are out of the ordinary and activities that are generating great results. Don’t overdo it, praise without merit becomes ineffective and comes off as unauthentic. Praising in public is an opportunity to foster goodwill and optimism throughout your workplace. Inspire your team with an employee’s achievement, give them positive feed back in team meetings, company newsletters or an email to the team.
Thank you!- Say “thank you” in person; the Adecco USA survey found 68 percent of respondents think an email "thank you" isn’t as genuine than being thanked in person. To make your message more meaningful consider hand writing a short thank you note on personalized stationary; it takes a little more time, but shows you made an effort to sit down and write out your appreciation.
Gifts- If the employee or team did something extraordinary, offer a gift. Christmas isn’t the only time to offer a bonus, why not present them with their bonus early for performing above expectations. Gift cards are always appreciated. Great reasons to give gifts could be when an employee reaches a goal, completes a challenging project, or stays with the company over the long haul. Give a gift they can share with their family or spouse, you are keeping them from some family time right? Make it something memorable. A gift can be as simple as movie ticket or restaurant gift card, or a little more expensive such as tickets to a sporting event or a play. Annual gifts for those who have worked for the company for 10+ years shows you appreciate their dedication to the company.
Keep it simple, be mindful how you interact with your employees and make little changes on how you communicate with your team. Ongoing, meaningful recognition is an effective and low cost way to increase morale and encourage higher levels of performance so don’t forget to implement appreciation into your day to day leadership.
Do you have some creative ways on how you express employee appreciation? Let’s hear them, please tell us.
Today's human resources professionals are busier than ever. With the job market shifting dramatically over the past few years, recruiting professionals are left with an unbelievably daunting task of finding the right person to fill the right jobs.
Since the advent of the world wide web, hr pros have the luxury of posting jobs so that 1000s of candidates can peruse them, only problem is... 1000s upon 1000s of people are all applying for the same job.
Graphics people are sending in graphically branded hipster cool resumes, but what about the rest of us? What can we do to stand out?
If you're applying for jobs and not getting the feedback, it could be the cookie cutter cover letter and resume you keep sending out. HR people have grown super savvy to the fact that most people just send the same thing to 100s of jobs, whether they are a right fit or not. The person sifting through 1000s of resumes from applicants interested in the same job is trying to catch lightening in a bottle.
So, how can you make that lightening strike? Here are a few suggestions on makign sure your resume gets the attention of the company you're trying to reach:
- Read the Job Description. Yes, READ IT! Many people apply for jobs that sort of look like they might be right for them. Chances are if you're just shooting out rounds of the same resume to every job that looks like it might suit you, you're adding to the noise this poor HR pro is trying to tune out. Read the fine print, see if the job is really the right fit for your skill set, expert level, experience and interest.
- Write a New Cover Letter. You've read the job description and decided that you are the right fit. Awesome. This is the job for you, GREAT! Now, write the HR pro and tell them. Yes, be straight up and point out all the great reasons why you'd be the right candidate for this job. Not any job, but their job. Note things they asked for in their job description and site how you're a match. In otherwords, make this easy for them because you're identifying you're the perfect match.
- Show, Don't Tell. Your resume is a blueprint of your career. Show this company that you really fit by making sure your resume matches the company's requirements. If the company wants to know if you've worked with big budgets, show them by highlighting where you've worked with big budgets in your resume. Include specifics. By highlighting the experience of what the job description asks for, you're making it easy for them to want to meet you.
- Trick Out Your LinkedIn Page. I can't tell you how many people don't take advantage of all the cool features LinkedIn offers. You can upload portfolios, graphics, job descriptions, and more. Get people to recommend you. Make sure all the detials are up to date and match your resume.
Take your time while you search for work. Think Quality, not quantity. By chosing not to fill the ether with mediocre matches, you are taking a strategic stance with your career search. Don't you deserve to find the right fit? We think so!
by guest blogger Colleen Moran
When searching for a job, you spend so much time preparing for interviews and trying to impress employers it is easy to overlook a simple question, “Do I actually want to work here?”
Being offered a job is exciting and you may be tempted to jump on the first opportunity that presents itself, but before you accept an offer many factors should be carefully considered to make sure this is the right place for you. If you are planning on working full time, that time is equivalent to one quarter of the hours in the week. You should be confident that this time you spend is going to satisfy you financially and is compatible with your skills, lifestyle, and career ambitions. Here are the top 4 factors you should carefully access before saying yes to any job offer.
Who wants to work in a place where they don’t fit in? Learning about the company’s Work Environment can help you determine whether a job is right for you. Consider the firm’s dress code, company size, company culture and values and if they are a family friendly workplace. If you are working in a comfortable environment where you feel happy, you will be more productive. The work environment also includes what type of job security you will have. Start-up companies are less stable than mature companies and if it is a mature company, research how well they have been performing and if they are well respected in your industry.
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Benefits can be worth up to 30% of your total compensation. Look beyond your salary figures to see what other financial perks come with the job. Familiarize yourself with the medical, dental and vision insurance that is offered and what kinds of plans they have. Also, does the company have a pension plan or 401(k) plan and do they match your contributions? Other financial benefits that you should consider are tuition reimbursement programs, signing bonuses, and relocation reimbursements. See if the job offers flexible hours or if telecommuting is an option as these are benefits that could cut down cost of commuting or work with your schedule.
The Location of the job is a serious factor to consider. Is relocation an option and is the cost of living in the new place different than where you currently reside? For any job, relocating or not, consider what your commute is going to be like. For car travelers, will you be able to get to work without sitting in stressful traffic? Fluctuating gas prices, road tolls, and parking fees are all costs associated with your commute. Don’t forget to investigate public transportation options or see if your company has a carpool. The commute to work 5 days a week can set the tone for how you feel stepping into the office first thing every morning.
The right job should both sharpen and improve your skills while utilizing your talents and challenging you. Ask yourself, “Will this job take me to where I want to be in my career? People change jobs an average of ten times during their career and with each job change you should feel you are moving up on the career ladder. However, make sure you are not applying for jobs that you are not qualified for. HR can blacklist you if you are applying for jobs that are not a fit for your capabilities.