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Apr 7 19

My $500K SDRs

by David Brock

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.

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Apr 5 19

What Pisses Me Off About Gartner’s “Spaghetti Chart”

by David Brock

My friends at Gartner published a really important chart a couple of years ago. It looked at the real buying journey and the difficulty customers have in buying. In some circles, it’s become known as the “spaghetti chart.” (Actually it gives spaghetti a bad rap). For those of you that don’t know about it, it’s pictured below.

The Gartner research shows, vividly, that the customer buying journey is not linear. They don’t move in a disciplined fashion from problem identification to solution exploration to requirements building to supplier selection. Instead the wander, start and stop, change their minds, go backwards, start and stop some more, eventually reaching a buying decision.

I still stare at that chart. The more I look at it, the more I get pissed off! Not at the chart and the insight it provides us, but on the tremendous wasted efforts and resources both on the customer side and on our side in trying to respond to this buying journey. Think of the person hours wasted in this chaotic buying process! Think of how much opportunity the customers lose by taking so much time with this!

The real issue, it doesn’t have to be this way!

This journey is not what customers want, ideally, they want a fast, linear process. But this is what happens in complex organizations, complex problem solving, and the dynamics of aligning differing agendas and priorities.

We in sales, contribute to this, some would say we even are partially the cause of this (I’m not sure). Rather than guiding the customer through their buying process, we respond and react. So they wander, waste time, and we waste time.

Our customers are desperate to simplify things, to get greater clarity in their buying journey. But they don’t know how to–nor should they.

This is where great sales people help their customers. They help the customer understand how to buy, they help them navigate their buying process, reducing the complexity, helping make sense of things and what they want to achieve.

The buying process will never be “simple.” It will always wander a little, but great sales people provide great leadership in helping customers more effectively and efficiently navigate this process–creating huge value in that interaction.

So the number one thing that pisses me off is that it doesn’t have to be this way! But there’s something bigger, much more tragic, that outrages me! It offends me as a business person and a sales professional!

The biggest thing that bothers me is that over 50% of the customers that embark on this chaotic buying journey never reach the end, they never buy!

This is a tragic loss of opportunity–both for our customers, and ourselves!

Think about it!

First there are the thousands of person hours wasted by customers and sales people in trying to buy and achieving nothing.

More importantly there are the billions of dollars in lost opportunity for the customers by not solving their problem. Just because they can’t make a buying decision, doesn’t mean the problem has disappeared. In fact, the reality is that it is probably getting bigger. This is a huge impact, measured in $10’s and $100’s of billions of dollars. Our customers are struggling to grow, to become better, but their inability to buy stops them from achieving their goals and dreams!

Now, the clincher, if the customer part isn’t compelling enough. This represents $10’s and $100’s of billions in lost opportunity for us!

Over 50% of the customers that want to buy and intend to spend money on us, don’t! They don’t simply because they don’t know how to buy!

All our clients are looking to grow, they are looking to sell more, to find customers that want to buy. But the answer is slapping us right in the face. We have the potential to drive tremendous sales growth, simply by helping our customers learn how to buy! Imagine if we could reduce the number that want to buy but don’t by 50%. Effectively, it can grow our sales by that much (actually more for those that provide that leadership).

Perhaps the answer is not finding more opportunity, but really helping customers with those opportunities that are already in front of us!

Are you as pissed off as I am? There is so much waste built into this process. So much lost opportunity from a customer point of view and from our point of view. Yet the answer is so simple. All we have to do is help our customer become much more effective and efficient in their buying processes. All we have to do is help them simplify and more effectively navigate that process. All we have to do is provide clarity and help make sense of what they face and are trying to achieve.

It’s staring at us, there is so much opportunity!

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Apr 3 19

Leadership Is Not About “Monitoring”

by David Brock

Too often when I speak to sales managers, they focus on “monitoring” their sales people. They constantly focus on:

  • Where they are on MTD, QTD, YTD numbers?
  • Do their pipelines have the right volume/velocity of opportunities?
  • Are the sales people hitting their goals on prospecting calls, customer meetings, and so forth?
  • Are they keeping CRM and other systems updated?
  • …….and on and on.

When they see someone not hitting those goals or not “complying” with the standards, they take corrective action, which usually is manifested by:

  • You aren’t hitting your numbers, you need to get going!
  • You need more deals in your pipeline!
  • You need to up your prospecting calls hitting our daily call goals!
  • You need to keep CRM updated! If it isn’t in CRM, it isn’t real!
  • …….and on and on.

Monitoring provides no value to anyone. Technology provides a better job of monitoring than most managers can. Tools can tell me that I’m behind on certain commitments, that I haven’t paid attention to certain opportunities for a while, that my pipeline velocity is slowing down, that I have a meeting in 30 minutes.

We don’t need managers wasting their time on monitoring and wasting sales people’s time on telling them what most tools are already telling them.

Monitoring, in this fashion, provides no value to anyone! Monitoring changes nothing! Yet too often, this is the behavior we see managers focusing on.

The manager’s job is to maximize the performance of every person on their team and of the team as a whole. It goes beyond monitoring to understanding what’s happening, why, what’s standing in the way of people achieving their goals. The job is to coach sales people, helping them understand how they are performing, helping them learn what, why and how they might change to improve performance.

Get our from behind your computer screens and reports. Talk to your people, understand where they need help, help them learn how to be better. Visit customers with them, understand barriers and roadblocks to their performance and remove them.

You are most impactful when you help them learn how to improve their performance and achieve their goals.

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Apr 3 19

“I won’t pay more than $X!”

by David Brock

We were doing a deal review. It was a big deal with a prestigious customer. Procurement was involved. As we discussed the deal, the sales person said:

“Procurement thinks this is a good solution, but they aren’t willing to pay more than $X and we are a whole lot more at Y.”

“Have you presented the business case to the procurement folks?” I asked.

“We’ve talked about how much this improves productivity and reduces costs, we’ve provided some industry data….” replied the sales person.

“But have you provided a specific business case to them?” I asked.

“No, they’re stuck on the huge price difference…..the deal is stalled!” the frustrated sales person replied.

Sound familiar? I hear the same thing in too many deal reviews. In this case it was procurement, but any customer will raise the price objection–and they should.

And it becomes the showstopper for the deal. Sales people come back pleading for a discount to match the customer expectations.

We will seldom win if we compete on price! (I know I sound like a broken record, but you can’t imagine the number of deals I review where this is the only basis of competing.

But what really matters is the business case…..

Back to the original example. We chatted about the customer’s situation, “Does the customer understand how this solution will increase reduce costs and increase productivity?”

“They understand the concepts and they’ve read the case studies,” replies the sales person, “They think they should achieve savings in the same range as our case studies.”

“Have you developed a specific business case for them? Are you using their numbers to show how much it will increase productivity and reduce costs?” I asked.

“Well, no, they understand the principles, but we still have the pricing problem,” the sales person replies, “beside, they should be able to look at the business case themselves.”

“Clearly, they haven’t, otherwise they wouldn’t be arguing about price!” I reply.

After doing a back of the envelope calculation, we found the net savings to be several million, productivity improvements would add another couple of million.

The sales person says, “I get this, but they don’t like our price!”

“Can they get these savings from any other solution?” I ask.

“No, we are in a good position, we are the only solution that can give them these savings….” replies the sales person.

“So you are telling me this customer will walk away from millions in savings and productivity improvement, just because they don’t like our price?” I reply, getting a little impatient.

At this point, the sales person lapsed into silence.

We talked further, he defended himself, saying the customer understood the value proposition and what they would achieve. But he and they never translated this into a specific business case for the customer.

The customer doesn’t have to like our price! They can scream and shout about how unreasonable it is. As long as we have a business case that shows a superior return for them, price is absolutely irrelevant.

The customer would be insane not to select a solution that provides millions in improvement, regardless of the price of the solution.

I wish I made this up, but it is too common. We sell on price, we lose on price. We sell on business value, we sell on the fact the customer can’t get these outcomes unless the pay what we are charging, we focus on their business return, not the price of our products.

Thanks for indulging me, I’m off my soapbox, but can’t help getting impatient with the number of opportunities I see where the focus is on defending our price, rather than focusing on business outcomes!

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