Skip to content

My $500K SDRs

by David Brock on April 7th, 2019

The SDR role is a critical role for many, if not most, organizations. SDRs have the responsibility of generating high quality, hopefully, highly qualified pipeline. When the SDR finds an opportunity, it is usually passed to a sales person to manage through closure.

It’s an important job, not just because these people generate a lot of new opportunities, but because they are, often, the very first human contacts our prospects have with us. It’s critical to create a great impression from the very first conversation. We want, in these first calls, to engage the prospect in a credible, high impact conversation. The better the quality of this first conversation, the higher the probability of generating interest with the prospect (assuming we are calling within our ICP and targeting customers that are likely to have the problem we are trying to solve.)

When we look at the SDR role, as implemented in most organizations, it’s an entry level sales role. Typically, it’s the first sales job for highly enthusiastic, aspiring sales person. The career path is to be an SDR for a period of time, then move into a sales role—the people that take the opportunities that SDRs qualify, managing them to closure.

We take these brand new sales people, we train them, intensely, in their specialized function. We provide all sorts of tools and technologies to help them do their jobs; sophisticated software, AI tools to prompt them, predictive dialers to enable them to make 1000’s of dials a day.

The model we have is a high volume/high velocity model. This SDRs are expected to have 1000’s of dials a day, hopefully for a few dozen conversations, that generate some number of meetings for AEs.

Due to the numbers/volume focus, these calls aren’t very long, or can’t be in great depth. If I assume, each SDR has an 8 hour work day, and they don’t eat lunch, take breaks, or pee, they can have 50 conversations at 9.6 minutes.

Every conversation I have with SDRs and their managers focus on the volume/velocity formula. Unfortunately, customers are becoming increasingly resistant to this, so the numbers keep scaling upwards. To produce the right number of pipeline opportunities, we have to scale our conversations, hence, scale the dials—-all perfectly predictable and instrumented.

In any of these conversations, we are challenging the SDR to incite the customer to change. Sometimes, they are calling people who already want to change, most of the time we are catching them cold–they hadn’t even been thinking of the issue. We may be asking them to change vendors, to consider a new approach, to change the way to do business, to address a problem or opportunity.

For many target customers and solutions, this works well. But for some, particularly complex problem/solutions, perhaps enterprise wide solutions, this approach may break down.

Or sometimes, we have to think of our target personas. If our targets are C-Level executives, we have to engage them with credible and impactful conversations. Usually, they ask some tough questions, we have to be prepared to answer them gaining their interest to say, “let’s talk more.”

Perhaps we train our people to “sell with insight,” we script great insights, call a top executive, and that individual says, “tell me more,” or “I’m not sure I agree, our situation is different, how would you approach that?”

It’s in these conversations, our SDRs are typically challenged. No scripting can prepare them to engage in the right conversation. They have to have a deeper level of knowledge/experience to respond and drive the conversation. Typically, the response is, “I can get someone to answer that question, can I arrange a meeting….”

But we’ve lost an opportunity, we’ve lost the momentum, we haven’t gotten the greatest leverage possible from that conversation.

What if we rethink these SDR roles? Ideally, we are trying to generate enough high quality, ideally qualified leads, to fill our pipelines. Could we rethink the types of people and the approach we use for these SDR roles.

A number of years ago, I ran an organization that faced that challenge. We had a very complex technology solution. It was transformative for our target customers (manufacturing, process, technology, telecom). The target companies were “Fortune 500,” the target personas were top C level execs in these companies–typically manufacturing, operations, engineering, and sometimes the CEO or CFO.

The initial conversation was usually to challenge them to think differently about their companies and businesses. We were really focused on getting them to think differently about how they designed and manufactured their products. The business impact was profound, but also provided some interesting strategic and change management challenges to the organization. The typical deal was $10’s of millions, sometimes over $100m, with CLV often going into billions.

It turned out, the very first conversations were the toughest. Once we could get the customer interested or curious, we could move forward pretty easily, but everything depended on capturing the imagination of top executives in transforming their businesses.

We created a small “SDR” team to generate pipeline for our sales people. I hired 4 people. Each was deeply experienced in either engineering, manufacturing, operations. Some had managed very large organizations. Some had reputations for their expertise in these areas. None had been sales people–but we trained them (not very differently than how we train SDRs today).

Because of their deep knowledge and experience, they “knew” who to target. They knew the types of organizations that would be highly interested in the solutions. They were viciously focused on those companies. Often, through their networking, they knew many of the executives they were trying to reach, or could have a very warm introduction to them. But many of their calls were “cold.” But even with those, each call was highly researched, so these SDRs knew the potential problems and magnitude of the problems the target customers had (most were public companies).

They used a combination of emails and telephone calls to reach and engage the target customers. Because of the nature of their approach, the insight they could provide, and their experience, they had very high hit rates for first conversations. Well over 50% of the people they called were interested in a conversation.

Those conversations were often very involved, sometimes lasting over an hour. But a huge amount was accomplished in those conversations, mostly generating much deeper interest and “qualifying,” majority of those that wanted follow up meetings, assigning key executives to work with us in the next steps. Sometimes, those initial calls extended to a second call and sometimes those were in person. (I remember one that I participated in with the CEO and his top management team– a Fortune 10 manufacturing company). My SDRs handled those calls, turning only highly qualified opportunities over to the account teams. But they were rarely engaged in more than 2 conversations with the customer.

The productivity of these people was stunning. Over 50% of the people they contacted were interested in the conversation. Over 80% of those converted into qualified opportunities. Each opportunity represented $10’s to $100’s of millions potential revenue. And our close rate was over 50%.

This team was amazingly effective. They didn’t make 1000s of dials a day–we didn’t have that technology, plus there weren’t 1000s of people we were trying to reach. But because of their ability to engage and connect with the right people, they didn’t need to make 1000s of dials a day.

Those outreaches they had, had very high response rates. They might have 1-2 conversations a day. They, also, leveraged their time in different ways. Several were asked to speak at conferences, in each of those, they would come back with very high numbers of qualified opportunities. It wasn’t unusual for them to spend a few days at a conference, identifying and qualifying over 10 new opportunities!

In just over a year this team generated well over $1B in highly qualified opportunities! They were the right opportunities, enabling out sales people to close well over 50% of them.

These SDRs were the very best people I could get to generate pipeline for our organization. Each cost me about $500K in total comp. But their productivity, impact, effectiveness, and the quality of the resulting pipeline, were phenomenal Their “cost” ended up being a fraction of a percent of the revenue generated as a result of their work.

Now think if I had invested that same money in our classic entry level SDRs? I probably could have hired about 20 people, but the issues are:

  • Could they have generated those leads and conducted those high quality conversations with our target customers?
  • Could they have had the level of and depth of conversation needed to generate the interest with our target customers?
  • Could they have generated the quality of qualified opportunities?

In this case, the answer is a resounding “No!” Had we used the classic SDR model, we would have set them, our customers, and ourselves up for failure. It is unfair to them, it’s bad business and dull thinking on our parts.

This isn’t an extreme example, though the $500K comp does catch one’s attention. We’ve implemented variants of this in dozens of organizations (perhaps not at the $500K level). We see other organizations doing similar things. Think of those people in “evangelist” roles in many organizations. They are typically very experienced, very well known, highly paid—and their primary job is generating pipeline.

We need to rethink our assumptions about SDRs and how we engage customers in these very first conversations. The job of the SDR is to generate pipeline, ideally, highly qualified pipeline.

Instead of thinking as SDRs as entry level sales positions requiring high volumes of highly scripted calls, what if we started thinking:

  • Who is are target customer/persona?
  • What is the type and level of conversation we want to have to have the highest impact and create the best impression?
  • What is the type and level of conversation and engagement needed to provoke interest, drive higher quality, qualified opportunity identification?
  • Does our strategy produce higher levels of engagement/response, reducing the need for volumes?
  • What are the skills, experiences, and competencies critical to engaging these target customers in high impact conversations?
  • What are the tools, content, support we need to support those SDRs in being successful?

We may find our traditional model of the SDR as an entry level position is not appropriate. We may find our very best, most experienced sales people are the best to fill this role. We may find it best to recruit a small number of very experience, well known experts.

We may find our traditional “picture” of SDR work and metrics may be completely wrong. We may find our focus on volume and velocity becomes less important. This alternative model focuses on driving far greater results and progress from each outreach. If we engage more of the right customers in the right conversations, converting a higher percentage of them, we no longer need to make as many calls—more on this in another post.

The point of this is not $500K SDRs, though I’ve had a lot of SDRs cheering me on. The point is that we should rethink our strategies for those first conversations we want to have with our customers, the results we want to produce, and the skills/experience necessary to produce those.

To often, our current models are the wrong models to achieve what we need to achieve. We may be better served by reimagining them.

Book CoverFor a free peek at Sales Manager Survival Guide, click the picture or link.  You’ll get the Table of Contents, Foreword, and 2 free Chapters.  Free Sample
Be Sociable, Share!
7 Comments
  1. This is a terrific blog. I just shared it with a client who is struggling to hire the right team. Problem? Taking experienced people and forcing them to make useless dials. If you are selling a low-priced commodity it may be that outbound calling won’t work due to the economics. If you are selling a complex solution into a complex buying process you don’t want to lose a target based on a bad first call. The cost per lead for a low volume approach is going to be higher than a commodity approach. So what? If you start with the end in mind (how much revenue needs to be produced) and work backwards, you will find that fewer calls, fewer, more qualified leads, more expensive cost per lead and lower close rates are going to win over the opposite approach. And, Dave did not mention nurturing – but knowing when to have a conversation and when to nurture is tough to teach to a low-level SDR. This is loaded. Great thoughts!

    • Thanks for the great comment Dan. I may have misunderstood or you may have misstated something, I think you meant (or at least I did in the post): Fewer calls, more qualified leads, higher close rates—that’s what we focused on. Ultimately, the cost per lead was not a meaningful number in this situation. The cost per order dollar was a key metric. Our $500K SDRs produced a multibillion pipeline and multibillion revenue. Had we chosen the “entry level SDR,” spending the same money, their results would have been far lower because of their inability to engage the prospect at the level required (Not many entry level SDRs can have an hour business conversation with the President of Boeing Commercial Aircraft. They would have generated far fewer leads at a much higher cost per lead than my $500K SDRs, and they would not have driven the pipeline/revenue.

      I think that’s what you were saying.

  2. Great discussion!
    This means forget about SDR and just have the AE running the whole sales cycle. Well, we had this debate in late 90s early 00s when the concept of BDR/ SDRs was invented. The question was: shouldn’t the AE keep doing the whole process from the first call through closing. And the Industry ruled: It’s more productive to have more junior profile SDRs even if they miss some opportunities rather than wasting 99% of the senior 500k guy’s time. That’s the general consensus.
    Of course there are exceptions and there are products/companies where the high profile AE does the whole job.
    @ MEDDIC Academy we notice more and more SDRs being trained by companies just like AEs. They are now almost always included in the same high end training classes ( https://meddic.academy ) and that’s an excellent thing, showing a trend confirming your viewpoint.

    • Thanks for the comment. Actually, that’s not what I’m saying at all. We have countless successful examples of splitting responsibility to a “SDR” role and an AE role. As executives, we have to put in place the right structure, roles, etc. to most effectively achieve our goals at the lowest possible cost. The issue we see is too many managers aren’t doing the right job of analyzing what is most effective (then are we doing it as efficiently as possible). In this post, for example, no number or spending on entry level SDRs to reach and engage our target audience. The “SDRs” we deployed were actually higher paid and more skillful than the AEs needed to manage the sale after the qualification.

      Unfortunately, most leaders are doing what they have always done, and not producing the results needed. There are plenty with wrong approaches to AEs, there are plenty with wrong approaches to SDRs. It is insanity.

      • Interesting!
        “The “SDRs” we deployed were actually higher paid and more skillful than the AEs”… see your point.
        Reminds me of a celebrity networking club selling top $ annual subscriptions to VIPs where the SDR was the celebrity themselves.I can imagine situations like this.

        • To expand further, in this example, and there are lots of others, the SDR had to engage top sales executives in inciting them to change. For example, the President of Boeing Commercial Aircraft, the Chief Engineer at GM, the Chief Design Engineer at Daimler, the CEO at Valeo, etc. Once qualified, the AE’s would work with lower level people in managing the evaluation and buying process.

          The point is, Who is our best first contact in prospecting these opportunities and are we aligning the skills and capabilities of our people to successfully engage those individuals. thanks for drilling into this. It is clarifying to everyone.

  3. Joel Lyles permalink

    | We created a small “SDR” team to generate pipeline for our sales people. | I hired 4 people. Each was deeply experienced in either engineering,
    | manufacturing, operations. Some had managed very large organizations. | Some had reputations for their expertise in these areas. None had been
    | sales people–but we trained them (not very differently than how we train
    | SDRs today).

    Dave, this is exactly the kind of thing I wanted. It wasn’t so much the money that caused the career shift (I went from six figures to 40k/year) but I wanted the thrill of being an industry expert, the kind of guy people would take phone calls from and spend an hour speaking in depth about business transformations.

    I have to admit, I’ve been kind of disenchanted with sales the past few months as one of those ‘high volume / high velocity’ sales rep. Even if it paid really well, I couldn’t see myself doing this for long. I’ve never failed to meet quota (and achieved 150% last quarter), but it seems like the best SDRs in my team are the ones who just pitch and dial straight down a list. Posts like these encourage me to keep building my business and technical acumen and keep looking for an opportunity to be the next Don Draper.

Leave a Reply

Note: XHTML is allowed. Your email address will never be published.

Subscribe to this comment feed via RSS