Term sheets can be intimidating as a first time founder. As it is likely the first time you’ve seen a term sheet, the intricacies of the deal can be difficult to…
How to Set up a System for SDR Success
Measuring productivity and finding the right number of hires is a key to succeed Last week, I touched on the paradox that exists in a SaaS world largely celebratory of the role SDRs play in…
Measuring productivity and finding the right number of hires is a key to succeed
Last week, I touched on the paradox that exists in a SaaS world largely celebratory of the role SDRs play in a growing sales team: many boast of the value, few invest in the execution. But the mere addition of a SDR team can increase lead conversion by 35 percent and free up account executives (AEs) to focus on closing deals. That’s an unavoidably big advantage if you’ve created a process that avoids unnecessary pitfalls. This week, I want to drill down to the actual SDR work that’s needed to determine how teams can succeed and how many SDRs are needed to hit goals.
There’s little doubt that a SDR team helps AEs focus on hitting quotas. Whether your SDRs are qualifying leads, setting meetings or doing both, they organize a necessary process that’s harder to tie to hitting specific deal quotas and revenue goals. So how do we know you’re using their expertise correctly?
SDR work is a grind. Certainly, there’s an art to learning the right things to say that gets a prospect to pick up that phone after a voicemail has been left. And there’s no doubt SDRs learn to finesse phone calls over time to get prospects to commit. But in between the opportunities to actually speak with potential clients comes a litany of unanswered dials. And the necessity of putting in the calls can’t be overlooked.
If your SDRs are responsible for setting meetings, logging the number of calls and emails is an excellent way to introduce some method into the madness. Let’s look at the incredible effort it takes to land just one prospect alone, based off Craig Rosenberg’s very helpful breakdown:
On average, 12.73 dials are needed to connect with a prospect when you have their direct phone number
On average, 18.83 calls are needed to connect with a prospect when you have to be routed through a switchboard
On average, between 22.5 to 30 calls are needed to have just one solid conversation with a prospect
Finally, if we consider that it will likely take three calls to set a demo meeting, that leaves each SDR with a 60-90 call range just to land one session. Getting their reps in on the phones is essential, even if it’s tedious.
It’s okay to cheat a little…
Now if we consider that each AE needs about 50-100 qualified leads each month to hit their goal (if that goal falls between 8-12 deals), 60-90 calls per prospect can teeter on being unsustainable. It’s necessary to find ways to increase efficiency and improve the movement through your pipeline.
This is where an account based strategy across your sales and marketing teams really shines. Setting up email sends to hit prospects’ inboxes 24-72 hours before a SDR calls can wildly increase the success rate of getting a connection earlier. Additionally, following and engaging on social media with the target company and the individual you’re trying to reach even further warms up the conversation. This keeps your company top-of-mind, provides enough reason for a prospect to do some research and hopefully entices them to pick up that phone and say hello.
Big takeaway: Make sure your SDRs are putting in the necessary calls and helping to coordinate with sales and marketing to increase efficiency.
Finding the right number of SDRs
You never want to hire just a single rep, but just how many SDRs do you need? It depends on the organization. As David Skok writes “There is wide variation, much of which can be attributed to company size. Smaller SaaS companies in particular, deploy higher SDR to AE ratios, meaning one SDR supports fewer AEs.”
But normally, the number of SDRs to AEs will fall somewhere between a 1:1 to 1:3 ratio. Your need for lead volume and lead qualification rates also play a role in how many SDRs you hire as you’ll need your team to be able to create sufficient opportunities to make their roles succeed.
To determine the right number, consider the deal range you need each month to hit your goal. Then you need to be able to determine the average number of leads needed to close one deal. Do you actually have enough SDRs to create that many leads?
In smaller organizations, this is less likely to be an exact science. However, attempting to identify these metrics adds discipline to the process and helps you better execute a hiring plan and protects you against the wasted time and money of an inefficient SDR team. That’s a system that succeeds.