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The Ratio Between Sales Development and Sales: The Secret to High Growth

March 16, 2021

The true value of a sales development team is that it enables sales reps to focus on what they do best: close business.

The original version of this article, authored by Bryan Gonzalez, was published by TOPO, now Gartner. 

The true value of a sales development team is to enable sales reps to focus on what they do best: close business.

Separating lead prospecting and qualification from later stages in the sales process enables the sales organization as a whole to become highly specialized and more effective.

Without the distraction of having to find and qualify their own leads, and with the assurance that their pipeline will be consistently filled with opportunities, sales reps can optimize their own process to increase conversions throughout the pipeline.

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Sales reps need to have as much in the pipeline as possible, and the best way to ensure consistent, high-quality opportunities is to have as many SDRs as possible passing qualified leads to sales.

Half of organizations with sales under $25 million have at least one SDR per sales rep. 

SDRs to sales ratios for companies under $25 million in revenue

High-growth organizations try to keep these close ratios for as long as they can sustain them. But as a company grows, the increased size of the sales organization cannot sustain a one-to-one relationship with the sales development organization.

SDRs to sales ratios for companies over $25 million in revenue

 

After $25 million, the average ratio grows to one SDR for every four or five sales reps. Larger enterprises that are able to sustain a high level of growth year over year still invest heavily in the sales development function to drive that growth.

We suggest that the optimal ratio above $25 million is one SDR for every three sales reps. Ratios above that prevent SDRs from getting significant traction for the sales reps they support and often lead to poor relationships with the neglected reps.

Determining the right ratio for your organization

While data offers key insights, you can determine the precise ratio of SDRs to sales reps that makes sense for your organization with these formulas.

1. Revenue target ÷ average deal size = number of deals needed

Work backward from your revenue target to determine the number of opportunities sales needs to close. By dividing your overall revenue target by the average selling price of your product, you can calculate the number of closed/won opportunities you need to achieve that goal.

2. Number of deals needed × conversion rate of sales qualified leads (SQLs) to closed deals = number of SQLs needed

An SQL is a lead the SDR considers a viable opportunity to hand off to a rep. Accounting for conversion rates throughout the funnel, work backward from the number of closed/won opportunities needed to determine the number of SQLs the SDR team will be responsible for generating.

3. Total SQLs needed ÷ individual SDR quota = number of SDRs required

Divide the number of SQLs required by the organization by the quota you have for the SDRs, to determine how many SDRs are necessary to provide the required number of SQLs. Ensure there are enough sales reps to effectively work the opportunities coming from the sales development organization, and you should have a finely tuned sales engine to drive high growth in your organization.

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