Sales Development Metrics: Assessing Low Conversion Rates

The original version of this article, authored by Kristina McMillan, was published by TOPO, now Gartner. 

The ultimate measure for sales development success is closed business. If sales development representatives (SDRs) are not contributing opportunities to the pipeline that result in closed business, it’s hard to justify the effort. 

Furthermore, looking at other key conversion steps in the overall sales and marketing process can highlight needed improvements to sales development process and execution.

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There are three primary conversion rates that we assess for sales development organizations:

• Marketing qualified lead (MQL) to sales qualified lead (SQL): the rate at which SDRs turn raw or scored leads into qualified leads based on the organization’s qualification criteria
• SQL to opportunity: the rate at which qualified leads actually become sales pipeline
• Opportunity to close: the rate at which SDR-generated opportunities become closed business

Evaluating sales development effectiveness starts with the MQL-to-SQL conversion rate, or sales development’s ability to engage and qualify leads. Organizations that have below-average MQL-to-SQL conversion, are often facing the following challenges:

• Poor scoring of leads: SDRs can’t tell which leads are most valuable to prioritize
• Inaccurate lead routing: SDRs waste time reassigning leads they shouldn't work
• Inconsistent follow up: SDRs complete too few touches per lead

The SQL-to-opportunity conversion rate points to the effectiveness of the organization to turn sales development SQLs into a meaningful pipeline. On average, top-performing SDR teams convert 59% of SQLs to opportunities. Organizations that fall below that figure typically do so because of the following challenges:

• Poorly defined qualified lead: different sales reps accept qualified leads based on different criteria
• Poorly defined handoff process: sales and SDRs are unclear on who owns next steps after a handoff call is complete
• Lack of adherence to service-level agreements: sales is not accepting and taking ownership of qualified leads in a timely manner

The more rigor applied to the sales development process, the more impact sales development will have on creating a meaningful pipeline. Top-performing sales development teams are constantly realigning their resources and efforts to focus on the highest-value activities, contributing to higher conversion rates. 

The bottom line is that SDRs should be producing a quality pipeline that has a 20% or better close rate — for every five sales development opportunities created, one should close. For organizations below that, tackle the challenges above before pointing the finger at sales or marketing.