My $500K SDRs

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.