September 27, 2019
September 27, 2019
Explore best practices for designing, building and optimizing a sales development team.
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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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.
To understand how much effort, it takes to reach a prospect by phone, look at these numbers provided by demand generation firm Vorsight:
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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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.
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.
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.
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.
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.
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.
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.
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.
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:
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:
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.
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.
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.
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:
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.
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:
Once you have a hiring profile, you will need a defined recruiting process:
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.
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:
Strategic metrics: Will help you understand the effectiveness of the overall SDR organization:
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.
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