5 Questions You Need to Ask About Your SDR Program (Part 1 of n)
Having a robust outbound program is a huge asset for companies that want to grow quickly while controlling their own destiny. Unfortunately, critical inquiry about SDR team performance tends to get bogged down in benchmarking and metrics — What’s a good demo-to-close rate? How many dials to get a connect? — and consequently some of the qualitative details, the “are we really going about this the right way?” questions, can be absent from the conversation.
In this series of articles, I’ll be sharing various questions that can be used in probing and examining an outbound SDR program from this sort of qualitative, process-driven point of view. This is not an introduction to sales development (see here) or a guide to KPIs (and here). Instead, these are tools for helping you uncover weaknesses in an existing program… weaknesses that, if improved, can upgrade an outbound program from “decent enough" to “outstanding”.
Hopefully these questions can provide you with some ammunition for analyzing either your own company or another business you hope to understand better (i.e. a potential portfolio investment).
(1) How much time do your reps spend prospecting outside your #1 segment?
You have a universe of prospects, you’ve carved them up into various segments, and among them there is one ideal customer profile, your best segment — the one that closes the fastest, pays back the quickest, and churns the least. Are your reps doing anything but prospecting into that one best segment?
There are good reasons and bad reasons to prospect into non-core segments. Good reasons include:
Our #2 segment has 10x as many prospects as the #1 segment, so if we want to become a big company we need to sell into both
We just raised $100 million dollars and we’re in a winner-take-all environment, so resources are not constrained and efficiency is not a concern
We have extraordinarily good unit economics across all customers — segmentation isn’t a major part of our strategy
Bad reasons are generally some form of “Why would we turn anyone away? We need the traction, we'll sell to anyone who will pay”. In reality, taking on non-core customers is not without costs — every call an SDR makes outside your non-ideal segment has a significant opportunity cost (the call they could have made instead to someone better), especially in the early days when runway is finite and every percentage point of growth is critical.
Often a B2B company will make one of its biggest leaps forward on the day it convinces its reps to stop prospecting outside the company's best segment. This feels painful, like you’re leaving money on the table. But what actually happens is — if your market is big enough, your sales team has drive and the right incentives, and your team has the best lists — your AEs' calendars will soon fill up with the type of customers that your business serves best, and you end up growing faster, not slower.
(2) Can you segment even more creatively to produce better lists?
Many companies seem to lean on quantitative segmentations (200-500 employees, has raised >$10M in venture capital, etc.) yet are light on qualitative segmentations that might yield a much better lift in conversions. A few examples of this:
You might find that when your prospect’s buying executive or CEO is new in their role (<6 months), they are a lot more receptive to technology purchases.
You might find that when your prospect has an important complementary technology (ERP, CRM, electronic medical record, whatever) they are a much better fit for your solution (this is where technologies like Datanyze come into play).
You might find that companies that experience a key event (security breach, IPO, getting audited, etc) are very interested in solving a related problem.
You might find that certain customer attributes are proxies for important segmentations that you actually care about. Let’s say you sell HR software to SMBs, and your highest-converting clients all happen to run a certain SaaS payroll system. If you know that all Subway franchises (for whatever reason) use that payroll system, you don’t need to think about the payroll system anymore, all you need to do is start calling Subway franchises.
Could you find a way to feed your reps higher-converting lists that take these segmentations into account — even if it’s not something you could do forever?
(3) Is your SDR persona a good match for your prospect persona?
The SDR persona includes some of the following variables:
Personality type
Level of experience in the target industry
Level of experience in technology sales
Size of network in the industry
Natural approach (collaborative, clinical, chummy, etc)
How does this match up to the buyer persona? Are you sending extroverted reps into conversations with introverted buyers? Are the SDRs solution-selling to people who don’t want to hear about solutions (but their boss may)? How much knowledge or credibility is required to even engage?
Another way to frame this is “Given the product and customer persona, can somebody with zero work experience (i.e. fresh out of school) prospect effectively in our business?” In some situations (high customer homogeneity, value proposition that resonates, simple discovery & qualification process) an inexperienced rep can ramp quickly to a level where they are setting demos; in other situations the prospect will be guarded against listening to anyone who doesn’t have a particular level of expertise in their space. If you can get away with inexperienced reps positioning the product, you probably should — they are cheaper, easier to find, easier to train, and often arrive with less bad habits.
If your prospects will only engage with experienced SDRs, the next question is: What kind of experience? Generally there are two types of experience: Experience in the field of the target prospect, and experience selling to the target prospect. Let’s say you sell software to professional tax accounting firms — do you want to hire reps from KPMG (experience in their field)? Or do you want to hire reps from Intuit (experience selling to their field)? This is worth testing at your own organization, and I’m not sure if there are any universal rules here…. but in general, the Intuit reps (experience selling) seem to work out more often than the KPMG reps (experience being). Why? Two main reasons:
Prospects usually care about having their needs understood and satisfied instead of having them empathized with. Think about this in your own life: Say you’re a structural engineer who needs to hire an attorney in case one of your buildings collapses. Would you rather hire an attorney who worked as an engineer 5 years ago, or an attorney who has represented hundreds of engineers in the past 5 years?
SDRs with experience selling to your target prospect have direct experience doing the job you’re hiring them for. They also may come with a rolodex of potential prospects.
Even someone who has sold non-technology to your target prospect (supplies, hardware, etc) may be a better option than someone who hasn’t sold anything in your space before.
If you’re in a situation where you can’t consistently hire SDRs at any experience level who can perform the job, it might be time to rethink your sales program from first principles. Always start with the customer — what are they demanding from you? Maybe your customers don’t ever want to hear from an SDR; maybe your business demands that AEs self-source, or clients self-onboard, or that your prospects only convert when they first hear about you from one of their friends or business partners. Much venture capital has been spilled by companies who erected outbound programs that should have never existed in the first place.
(4) What expectations do your quotas convey to the reps?
Companies often spend a lot of time thinking through the financial implications of their particular quotas, but not enough about what that quota means in the actual day in the life of a rep. Let’s say you think a fair goal for an SDR is 10 demos set per month. There’s 4.3 weeks and 21.7 business days per month, so that quota corresponds to 2.3 demos set per week and 0.46 demos set per day. That means a rep “meeting expectations” at your company books a demo less than once every other day. Think about the energy level in an office where greater than half of everybody’s 8-hour workdays result in exclusively "no"s from potential clients (not to buy, just to take a demo). Not good.
Where the mean expectation for a given workday is a “win”, it produces a big boost of energy in the office, which leads to more results. If you’re sitting near that 10 “wins" per month threshold you might even want to consider slightly loosening the success criteria so that your reps accumulate more momentum and start propagating a culture of winning. For example, if you reset quota from 10 highly-qualified demos set per month to 17 medium-or-highly-qualified demos (nearly 1 per workday), you might find that your reps are suddenly producing 20-25 monthly demos and are inadvertently outperforming the prior quota. Or you might not, but at minimum you’ll learn something new by trying.
You could even take this analysis further, to the hourly level. The first great sales rep hire at Skupos made his qualifying calls in the late afternoon so that when he followed up in the early AM he would typically secure an appointment within the first hour of the day. Talk about momentum… a day where you put up a win before 8am also tends to be a day when you do the same thing 2 or 3 times before the close of business. Can your company build an SDR program where reps get to regularly claim victory on the day before they pour their first cup of coffee? What if something like this was the expectation you set, not just a trick employed by your highest-performer?
(5) How do the best ideas propagate through the sales organization?
A healthy sales culture has high competition (reps working hard to meet or exceed a high expectation) and high collaboration. Coaching can’t all come top-down from management — good ideas have to propagate horizontally from rep to rep. A good question is: If you have 20 reps and one of them figures out a new approach that gets them to a “yes” at twice the rate of the old approach, how long does it take before the other 19 reps know the technique enough to attempt implementing it? If the answer is “never”, that’s bad. If the answer is “at the weekly sales meeting”, that’s good. And if the answer is “the rep will immediately post it on the #sales Slack channel and everybody else will be testing it out within the hour”, that’s fantastic.
Often these improvements in technique — randomly discovered by rep experimentation and tinkering — can lead to shockingly large lifts in conversion rates. At one Toba portfolio company I witnessed a rep modify his opener from “I’d love to talk with you about…” to “I’m just checking to see if you’re a fit for…” and literally get 5x as many prospects positively engaging with him. You absolutely don’t want your best reps hoarding that kind of insight.
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Part 2 coming soon. If you have ideas for future questions/topics I should cover in this series, please don’t hesitate to let me know.
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