The original version of this article, authored by Craig Rosenberg, was published by TOPO, now Gartner.
Sales development is one of the most important processes an organization can build to deliver a seamless, efficient revenue machine.
The phone-based team identifies, connects with and qualifies leads, which they then hand them to a salesperson, who takes over for the rest of the sales process.
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The case for sales development
There are a number of best practices for designing, building and optimizing a sales development team.
To start, we need to understand why sales development is critical to the health of your revenue machine.
1. Connecting with prospects requires time and resources
To understand how much effort, it takes to reach a prospect by phone, look at these numbers provided by demand generation firm Vorsight:
- Dials to connects: It takes 12.73 dials to connect when calling a list of prospects with direct phone numbers, and 18.83 when calling switchboard numbers.
- Dials to conversation: 22.5 dials to meaningful conversation is the industry average, but if you’re calling highly solicited divisions, such as IT, marketing or very senior executives, the number is closer to 30 dials to one conversation.
- Conversation to appointment: Three meaningful conversations are required to get one appointment.
So it can take 60 — 90 dials to get an appointment with a prospect, which is not an efficient use of a quota-carrying salesperson’s time.
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2. A fast, standardized lead follow-up process is the key to conversion
It generally takes more than 12 touches to reach an individual prospect. Furthermore, sales benchmark index research finds that 70% of buyers prefer to work digitally.
In other words, a salesperson will not only have to make a lot of dials, but will also need to incorporate email and potentially social touches. In fact, combining digital touches with the phone generates higher touch-to-connect conversion rates. Quota-carrying sales reps do not have the bandwidth to manage the multichannel campaign necessary to reach leads.
Another factor to consider is lead response time. The following chart from Velocify (formerly Leads360) highlights the challenge and opportunity presented by response rates. The faster you respond to an inbound lead, the higher the conversion.
At the end of day, a quota-carrying salesperson who is responsible for the other 70% of a sales cycle for multiple deals cannot possibly meet the required follow-up rates.
3. Converting a lead to an opportunity requires its own playbook, training and coaching
Sales development is fundamentally different than the rest of the sales cycle. The science of connecting with someone is hard enough, but when you connect, you have just a few seconds to generate interest and a couple minutes to handle objections and close for a meeting. Effective sales development requires full-time management, specific training and constant coaching.
4. Sales development means a higher conversion rate
Converting a lead takes time and effort. The best revenue machines have a sales development group to reach leads, overcome objections, make sure they are a fit and connect them to sales teams.
We have observed organizations with sales development teams convert leads to opportunities at an exponentially higher rate than those that did not. For example, two technology clients sold competitive solutions to the same type of buyer.
- The company with an optimized sales development converted these leads at 40%.
- The other organization passed leads directly to quota-carrying sales reps and converted leads at less than 5%.
5. Marketing and contact data is vastly improved with sales development
Marketing can only optimize programs if they have the data they need to be successful. Sales reps are notoriously bad at maintaining good data, and sales leadership cares about sales forecast data (with good reason).
On the other hand, well managed sales development teams are remarkably good at providing data. They spend all day in the CRM application and are incentivized to get good data to marketing to make their lives easier.
6. Sales and marketing alignment
The biggest grievance from marketing is that sales doesn’t follow up on their leads. Meanwhile the single biggest complaint from sales is that marketing leads are terrible.
Sales development teams help bridge the gap between sales and marketing. A very good conversion rate is 30% from lead-to-opportunity, which means 70% of leads contacted won’t turn into anything.
Quota-carrying sales reps don’t have the time to reach these leads only to find that 70% will turn into nothing. Sales development solves this problem by only sending qualified leads ready to talk to the sales team.
7. Increased productivity and efficiency from quota-carrying sales reps leads to more revenue
Sales reps are expensive resources that are paid to close business. Companies have to free up their time to focus on the effort needed to achieve their goals.
A great quota-carrying salesperson is spending the majority of the day working the rest of the sales cycle: pitching, proposing, negotiating, trying to get buyers back on the phone, meeting with internal stakeholders, etc.
We increase the odds of closing more business by allowing sales to begin their sales process with qualified leads who are ready to speak to sales.
8. Your buyer wants you to follow up
We often find buyers who filled out forms on vendor websites and then complain about lack of follow up. When we look at the data, the vendor actually had followed up. The problem was the sales rep sent one unremarkable email and never reached back out.
Well messaged, persistent follow up is part of a great buying experience. Buyers are extremely busy and aren’t always ignoring your phone calls due to lack of interest. Proper qualification is actually an important point in the buying experience.
Designing the sales development organization
The next step is to build your sales development representative (SDR) function. This involves specifying your qualified definition, organizational design, compensation guidelines, training and enablement, metrics and technology.
The importance of the qualified lead definition
Once you define a qualified lead, you can build the team, processes and methodology to deliver on a quota for qualified leads. The definition outlines the point at which marketing is ready to hand a lead to sales and then sales must sign off and agree to follow up. The important factors for a qualified lead definition include:
Demographic qualifiers must be very specific and can include:
- Company variables — such as company size, industry and geography.
- The contact’s role — emphasize what the person does, as opposed to their title.
Behavioral qualifiers depend on your target market. In some companies with a large volume of leads, SDRs act as gatekeepers to send the very best ones to sales. For organizations with a smaller lead flow, sales might accept anyone who fits the demographic qualifiers and is willing to take a meeting with sales. Here are some examples of common behavioral qualifiers:
- Willing to meet with sales: This is a mandatory requirement and the definition should state that the meeting between the prospect and sales must take place.
- Pain and need: Does the prospect have a problem your product or service can solve?
- Timing: Is there enough urgency that the buyer is willing to work on this right now?
- Budget: Most sales development processes have moved away from asking about budget on the first call and instead qualify leads on demographic qualifiers, need, timing and a willingness to meet.
Depending on your company’s target market, you may want to create two lead definitions. For example, sales development groups generating demand from a constrained list of companies such as the Fortune 1000 or specific industries may want to pass leads to sales based on parameters such as right company, right role and willingness to meet with sales.
Whatever definition is right for your business, the qualified lead definition is the first step to success and the No. 1 factor in sales and marketing alignment.
Sales development organizational design
There are several critical factors to consider when designing the sales development organization.
The number of SDRs: Decide on your ratio of SDRs to sales reps. The optimal number we recommend is 1 SDR to 3 sales reps but the range can vary. Also determine the number of raw leads an SDR can handle in a month and still be able to perform the required number of touches.
Lead assignment: There are a number of models to consider when segmenting the SDR team.
- Random assignment. Leads are randomly assigned to SDRs.
- First-come/first serve. Leads will be assigned to a queue where SDRs can select them.
- Sales rep alignment . SDRs are teamed with quota-carrying sales reps and only work on leads in their territory, which can be geographic or industry-specific depending on your sales process.
- Inbound versus outbound. In this scenario, the team is split between SDRs who qualify only inbound leads and those responsible for outbound prospecting.
- Buyer persona type. SDRs might be assigned to leads by company size such as SMB, mid-market or enterprise.
When you decide on your lead assignment rules, make sure you have the proper time zone coverage. For example, if your sales development team is based on the West coast, you will want to have SDRs on the phones at 6:00 a.m. PT.
Management: Experienced, dedicated sales development management is absolutely essential to the success of the team. While you may require a manager/contributor in the early days of the group, there must be a dedicated manager in place once there are three or more SDRs.
Ownership: We recommend that marketing own sales development so it remains responsible for delivering the highest-quality leads possible. Some organizations, however, prefer to have sales development report to sales. Either way, the most important factor is that the sales development team is well managed, supported and focused on identifying and qualifying leads.
Insourcing versus outsourcing: Many companies don’t want to deal with the hiring, headcount, management and training challenges of an internal group, so prefer outsourced sales development. The most important factors are that a sales development function exists and there is an internal owner who owns the success of the program.
We typically recommend a 50/50 or 60/40 split between base and compensation. Compensation should be based on the number of qualified leads generated per month (not quarterly or annually). Performance accelerators should be monthly.
Compensation for SDRs should not rely on the effectiveness of the sales team. A good middle ground is to offer a bonus on closed deals.
Training, onboarding and coaching
SDR training is often the missing link for the success of an SDR team. While product training is important, there are some key training components critical to an SDR’s success:
- The buyer and the buying experience. Every SDR needs to be trained on their target buyer and how they buy. They also need training on how to identify where the buyer is in the buying experience so they can determine whether the prospect is ready to be passed to sales.
- Situational plays. Train the team on a sequential set of plays that inside sales reps should execute based on what the buyer says on the phone call.
- Objection handling. The objections faced by a quota-carrying sales rep are not the same as those an SDR deals with. Sales typically deals with feature, price and other sales cycle objections. SDRs are trying to convince a buyer to agree to time with a quota-carrying sales rep.
- Messaging sound bites. Sales development has two to five minutes to generate interest and turn the prospect into a qualified lead. They need compelling, concise sound bites for the value proposition (they should be able to describe your company and why you are different in under 30 seconds) and for your solutions and products.
- Communications training for voicemail, email, live calls. Train SDRs on what to say and when to say it. They can customize the messages so they feel comfortable, but they should have a guide based on proven best practices and fundamentals necessary to be successful.
- Automation and tools. SDRs should be trained on how and when to use automation and tools. This process includes providing one-on-one tutoring.
- Closing techniques and scenarios. Closing is not just for revenue-generating sales reps, but also for SDRs. The difference is SDRs need to be trained to close a prospect on an appointment or meeting.
Training should end with an easy-to-read playbook that SDRs can reference later.
Coaching is ongoing instruction provided to SDRs in both group sessions and one-on-ones. We recommend five to six hours per month of coaching per SDR. Call monitoring is one of the best ways to coach SDRs.
Sales development hiring
The first step in hiring is to identify your ideal hiring profile. When initially building the team, these characteristics will be speculative. Once the team is launched, you should model your future hires on the characteristics of successful reps. Here are some factors to consider when determining your hiring profile:
- The target buyer. Experienced SDRs are a better fit for outbound calling to executives while less experienced SDRs might be a better fit for lower-level prospects.
- The solution. The complexity of the solution will also determine your target hiring profile. For example, one company has an open-source solution that is typically part of complex projects. They use less experienced SDRs but their hiring profile specifies that the SDRs must have the intellectual aptitude to understand the technology and their buyer’s environment.
- Inbound versus outbound. Inbound lead follow up can be handled by less experienced SDRs.
Once you have a hiring profile, you will need a defined recruiting process:
- Hold a series of interviews where candidates meet with managers and current inside sales reps.
- Provide your interviewers with a scoresheet to evaluate candidates for fit to the hiring profile.
- Have candidates complete an exercise related to the position. For example, some firms have candidates present corporate presentations to managers. Others have candidates conduct calling exercises such as doing a cold call with a hiring manager.
- Evaluate multiple candidates before making the decision.
- Always check two or three references.
The right hiring profile is critical for scale. When you understand the type of SDR you need to be successful, you can grow the team in a predictable, scalable manner.
Sales development metrics
There are two categories of metrics you should track when running an SDR team: operational and strategic.
Operational metrics: Provide data to the manager and optimize the day-to-day tactics of the SDR. The first set of recommended metrics should follow the steps of your lead follow-up process. For example, you can divide calls/connects to determine the conversion rate.
Other operational conversion rates to track include:
- Email open rates and response rates
- Voicemail response rates
- Lead source effectiveness to determine which lead sources are working or not
- Qualified leads/sales accepted leads
Strategic metrics: Will help you understand the effectiveness of the overall SDR organization:
- Total pipeline sourced by SDRs
- Percentage of pipeline sourced by SDR
- Closed business from qualified leads
- Number of qualified leads passed per month
Sales development technology
One of the common characteristics of successful sales development teams is their use of technology and automation to be more effective. Here are some top categories your sales development team will need.
- CRM applications
- Sales intelligence and data
- Dialing technology
- Sales email applications