Evolution of Sales Salaries: A Decade of Change in SaaS

With over a decade of experience in SaaS sales, the landscape has undergone significant changes. In the past 10 years, salary structures have seen a marked increase across the board, particularly in Tier 1 tech markets. As a result, professionals like Sales Development Representatives (SDRs) and Account Executives (AEs) have experienced substantial salary hikes, leading to a new era in sales compensation.

Salary Hikes Across the Industry

The past decade has witnessed a significant increase in sales salaries across the board. For example, SDRs who were initially earning a base salary of $40,000 and an Overall Targeted Earnings (OTE) of $60,000 are now seeing a base salary increase to $60,000 and an OTE of $90,000. Similarly, AEs who would have previously commanded an OTE of $160,000 at a 50/50 split now start out asking for a base salary of $125,000.

Impact on Cost and Efficiency

This increase in salaries has not come without consequences. Over the past 36 months, outbound sales efficiency has significantly decreased, leading to a challenging environment for companies relying on outbound sales models. This competitiveness has forced companies to re-evaluate their customer acquisition costs (CAC) calculations, potentially blowing them to smithereens in the process.

Future Trends in Sales Compensation

Looking ahead, it is likely that these inflated salaries will become a permanent fixture in the industry. Tech companies are likely to shift towards a lean sales model, with a strong emphasis on landing initial deals with key accounts. The primary focus will be on product marketing and customer success (CS) investments to drive scalable product-led-growth (PLG).

The Decline of Massive Outbound SDR Forces

The days of relying on large outbound SDR teams are coming to an end. As outbound efficiency wanes, companies will need to adapt by shifting their focus to a more direct sales approach. This means that AEs will have to take on more of the cold calling and sales outreach responsibilities that were previously handled by SDRs.

Preparing for the Future

As the shift towards lean sales and direct sales models accelerates, AEs and sales professionals should prepare for more hands-on engagement with clients. They will need to develop skills in cold calling, client outreach, and relationship building to succeed in this new landscape. Additionally, companies should anticipate significant changes in their recruitment and hiring processes as they move toward a leaner, more focused sales model.

Overall, the evolution of sales salaries in the SaaS industry is a reflection of a broader shift in sales strategies. As companies adapt to changes in market dynamics, we can expect to see a continued focus on product-led growth and direct sales engagement to drive meaningful revenue.