Revenue Recap 2022

6 months ago   •   5 min read

By Bravado Staff

Overview

The tech sector saw a sharp decline in sales due to the fastest interest rate hikes in US history. Only 23% of sales reps hit quota in Q4 2022, compared to 53% in Q4 2021. Despite the challenges, sales in tech remains a lucrative and exciting industry with a renewed focus on profitability, value to customers and optimism for economic recovery. 2023 is the time for sales professionals to step up and deliver.
The game is set to Hard mode, are you ready?




Tech Companies Face Massive
Headwinds on Revenue Growth




Sales teams struggle to hit quotas

For all sales teams, headwinds were felt across the buyer journey. Both new and experienced sales professionals had to adapt their selling practices to counter emerging challenges brought about by the pandemic and the new economic climate.

Toughest Challenges Across the Buyer Journey Funnel

Prospecting
  • Gaining access to the right stakeholder
  • Creating a targeted prospecting strategy
Opportunity
  • Driving consensus among stakeholders
  • Resolving objections
Negotiation
  • Protecting prices and maintaining profitability
  • Negotiating over text or email
Account Growth
  • Expanding footprint into current customers
  • Finding means to add relevant value
Buyers
  • Managing constantly changing priorities
  • Dealing with uncertainty due to the pandemic
Sales professionals report a 40% decline in Prospecting efficiency as budget for new vendors has dried up

30% of companies lowered 2022 target, nearly 100% lowered 2023 target

Facing the economic downturn at the end of 2022, approximately 30% of sales teams lowered their quotas as a precautionary measure. With companies missing their current targets, most have responded by adjusting down future guidance.

Sales Quota Adjustments (average value)

Company Size
  • 31% — SMB
  • 29% — Mid Market
  • 25% — Enterprise
Tech VS Non-Tech
  • 29% — Non-Tech Company
  • 25% — Tech Company

Average company lowered revenue target by 20%

To keep in line with the decline in revenue, companies reduced their revenue guidance by 20% to meet targets in 2022.

However, given the current worsening economic climate, expect companies to continue looking for ways to reduce burn to meet future revenue goals.

Average company only hit 75% of 2022 target

To keep in line with the decline in revenue, companies reduced their revenue guidance by 20% to meet targets in 2022.

However, given the current worsening economic climate, expect companies to continue looking for ways to reduce burn to meet future revenue goals.

WE PREDICT: Companies are not optimistic about a 2023 bounceback

2023 will see companies adopt cost-cutting strategies such as conducting more layoffs, slowing down hiring processes, and substituting costly labor with automation tools such as ChatGPT.

Sales teams are lowering guidance for 2023 revenue targets by 25%+




Tech Layoffs & Severance




Missed revenue targets led to 40% of companies conducting layoffs

In 2022, approximately 40% of teams experienced layoffs, with a higher proportion of tech companies affected compared to non-tech companies. In comparison, the rate of layoffs among non-tech firms was less than 30%.

Mass layoffs sweeping the US

A “mass layoff” is defined when either of the following conditions are met:

  • More than 50 Employees are laid off within a 30-day period (> 1/3 of workforce size)
  • More than 500 Employees are laid off within a 30-day period (regardless of workforce size)

A U-turn In the Technological Boom of the Pandemic Era

  • 154,843 Employees were laid off in 2022
  • 1,030 Technology companies cut their employees

Were severance packages enough?

The most common severance package was 4 weeks. Some sales professionals laid off from large companies received 11 weeks of severance, almost 3x as much as the average while others at smaller companies received just 2 weeks.

Advice for founders and sales leaders

If you're a sales leader:

Be extremely conservative with revenue projections to avoid setting unrealistic goals that lead to low morale and high turnover.

If you're a founder:

Companies who did <10% RIFs often ended up doing multiple rounds of layoffs. This creates extreme uncertainty at the organization.




Sales Compensation Declines




Sales compensation lowered as companies cut costs

New Bravado members reported salaries have increased in 2022. However, compared to 2021, where salaries increased by 40%, this year salaries barely increased.

New Bravado members reported salaries have increased in 2022

Surprisingly, 2022 now holds the highest record year for the lowest average wage Americans would be willing to accept for a new job - $73,667 USD. In line with rising levels of inflation, money is the top "deciding factor for" mover of employee retention.

$73,667: Lowest average wage Americans would be willing to accept for a new job

WE PREDICT: In 2023, sales compensation will decline for the first time

Sales compensation had increased in H1'22, but all gains were given back by H2'22. With increasing layoffs, sales comp will move to negative territory in 2023.




Stay Ahead in 2023




Fed’s policy makers predict that in 2023:

Economy: The US economy will experience slow growth

Inflation: The battle against soaring inflation will continue

Unemployment

Unemployment rate will increase by 25% before the year ends

Layoffs

Layoffs will continue and will mostly be concentrated in tech

Number of sales professionals will decrease in 2023

Top 25-30% of sales professionals
Will continue to deliver 80%+of the revenue. Will see increase in compensation

Next 25-30% of sales professionals
Might find greater success in a CSM, AM or Operations role. Trying to get new business with be tough

Bottom 30-40% of sales professionals
Will be very difficult to keep/land a role in sales

Expect further cuts in sales teams in 2023

Companies traded at over 100x ARR in 2021-2022, but in 2023 they are projected to trade just over 10x ARR. With low future multiples, future funding will be difficult. Companies face a 70% drop in valuation and will have to reduce burn rate to make current funds last longer.

Focus on customer success over customer support
Set the foundation through educating customers about your product’s value proposition and how it can help them achieve their long term business success.

Use AI to make selling more conversational
Partner up with AI like ChatGPT to instantly answer the vast majority of customer questions without a human being.

Cultivate a personal brand to build trust
In an era of social selling, invest in building your personal brand that makes customers feel connected to you which will position you well to mobilize your following in the future.

Let your product lead your growth
Enable customers to try products for free before pushing them to sign long term contracts

WE PREDICT : 90% of companies plan to slash spending on new products will put further downward pressure on sales teams who are already struggling to hit targets in this economy.




2023: The Year of Sales Freelancers




Companies are finding new ways to grow revenue efficiently. From Fractional CROs, 100% commission sales reps, and short-term consulting projects, discover a whole new way to increase revenue without increasing burn.

Scaling sales doesn't have to mean scaling spend

Spread the word

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