Let's take it back to basics. What is this thing called Sales Development, and is it right for your company?
Quite simply, Sales Development is the practice of creating sales pipeline for your company through proactive outreach to prospective customers and of following up on inbound leads created by your marketing efforts.
The practice of Sales Development has exploded since the economic downturn a few years ago, especially in software as a service (SaaS) technology companies.
As the economy crumbled during that downturn, companies realized the importance of having someone in the organization always laser focused on sales pipeline generation; whether through proactive outreach to target accounts, or ensuring proper follow-up on the high quality inbound leads created by marketing.
As documented in his groundbreaking book Predictable Revenue, Aaron Ross described how companies like Salesforce.com and others attributed their reliable, machine-like pipeline generation to a well-trained and organized Sales Development organization.
However, despite its documented success, Sales Development continues to be a head-scratcher for many companies and executives.
How does it work, where should it report, what are the metrics the unit should be producing?
Of note: “Sales Development” in this context is sometimes called “Business Development”, which is confusing because Business Development is also the specialty of forging strategic partnerships with complementary companies for integration and cross-selling purposes, something totally different than Sales Development. For this article I'm talking about Sales Development, as defined above. Sales Development Reps (SDRs) are alternatively called Business Development Reps, Lead Development Reps, Account Development Reps, Revenue Development Reps, or a plethora of other creative terms.
For most folks reading this, the first question which may come up is something like; “wait, isn't the role of sales pipeline generation the responsibility of Marketing?” Or, “isn't prospecting what Salespeople are supposed to do?”
Well yes, kind of.
Marketers create your brand image and generate leads coming into your company from various activities and channels. However once a lead comes into the company generally the marketing job ends. Marketing has created the interest, and now it's the job of Sales to take that and convert it into close revenue.
On the other side, you have the salespeople, who theoretically should take the leads created by Marketing, contact them and work with them until they close. They should also be cold calling new companies in order to forge new relationships.
However, in practice, these things rarely actually happen. Salespeople have a quota of closed sales that they need to hit each month or quarter. Therefore, they are naturally going to be focused on talking only the most interested parties and closing them so they hit their quota. Thus, unresponsive leads ignored, and cold calls go neglected.
And therein lies the gap covered by Sales Development.
Marketing creating brand image, community and leads, and then wondering what happened to all those leads they created. Most leads never get called, and Sales under extreme pressure to hit their quota and wondering when they're going to get some decent leads from the Marketing!
Meanwhile the leads being created are either been lightly touched if they're Red Hot and ready to buy, or ignored completely and put into a marketing drip campaign, which usually is a series of emails.
If by some miracle one of those marketing email drips causes the lead to re-engage and raise their hand, they are again sent to sales where the entire process starts over again. Hopefully, a sale is made, but usually it just recycles back into to the marketing database.
This is where Sales Development plays a critical role. The department can be broken down into two basic categories: Outbound account-based and Inbound lead qualification.
Outbound prospecting has been around for many years, basically since invention of the telephone. For example, in the movie Tin Men, the Sales Development team is seen briefly making calls from little glass boxes (noise cancellation!) on the office floor.
This group of people used to be (and is still sometimes) called “telemarketing” or “appointment setters”, and their job is to call the companies and attempt to set quality appointments for salespeople. The salespeople would then go out and meet with that potential clients to discuss the business issues.
With the advent of Sales and Marketing technology of the last 10 years, the telemarketer has been superseded by the professional Sales Development Representative (SDR), who has a whole plethora of tools at their disposal, such as email automation, call recording software, and contact databases to assist them in finding and contacting cold prospects and set appointments.
On the Inbound side, that same technology stack has developed over the past 10 years to assist in ensuring that when marketing creates a lead that it is contacted in order to determine interest as to whether the lead is qualified to take an appointment with the salesperson as quickly and seamlessly as possible.
This focus on both Outbound and Inbound Sales Development has helped companies such as Salesforce, LinkedIn and Oracle create astronomical growth, especially as it pertains to subscription as a service business.
Ensuring that greenfield opportunities are being covered and aggressively worked by the Sales Development Representative team was critical and landing accounts, and getting in front of the right people, whether proactively or reactively.
The technology has also enabled the Inbound lead process to become measurable and manageable and ensure that any interest that is shown in the company and expressed by potential clients is followed up on expeditiously by a human being, and not left to rot in a database.
Over the course of the last few years, most well funded start-up software as a service companies have attempted to replicate the model of those larger companies by hiring Sales Development teams and enabling them with the plethora of tools that are available today to make them successful.
This has created a situation where a potential prospects are inundated with phone calls emails, social touches and other outreach to the point where it seems that we've reached a saturation. As the explosion of these tools has taken place, prospects demand more sophistication from SDRs.
Moving forward, Sales Development Leaders and practitioners will need to become a lot more creative and resourceful in creating the type of ROI that their leadership is looking for from the investment in their programs.
Sales Development involves a tremendous investment in people, processes and technology. To make it pay off, it needs to be taken very seriously and set up correctly.
The good news is that Sales Development Leaders with with several years of experience in this field are beginning to emerge and create an executive class who up to now has not been seen in the Sales Development world.
I'm optimistic that this new generation of Sales Development Leaders will bring the energy, creativity and leadership that we need to push the practice forward.
Need help starting or turning around your Sales Development program? Contact Tenbound at tenbound.com
This article originally appeared on the SalesForLife blog Sept 25th, 2017 as "How 900 Companies build and execute successful Sales Development Teams" by Julia Manoukian
Sales development is one of the more misunderstood roles in sales.
Many people debate the definition of sales development while others argue which department it should report into or how much sales development reps should be compensated.
Either way, the sales development role is here to stay. In an effort to understand the sales development function and its role in the sales process, InsideSales.com Labs led a study in partnership with Tenbound, SalesForLife, BridgeGroup, Drift, Datanyze, and OneMob.
The study focused on 900+ companies and reviewed the structure, systems, people, and pipeline of their respective sales development organizations.
According to the research, inside sales professionals (reps who primarily sell remotely) represent 47.2% of the 5.7 million (2.7 million reps) and outside sales professionals (reps who primarily sell face-to-face) represent 52.8% (3.1 million reps).
Based on the survey responses, sales development reps are 25.1% of the 47.2% inside sales professionals making the ratio equal to one sales development rep for every three account executives. The total number of sales development reps is estimated to be 677,479.
Examining the data revealed that not every sales development rep is the same. The primary difference in sales development reps is the characteristic of inbound (reps who reach out to someone who knows your company) and the characteristic of outbound (reps who reach out to someone who doesn’t know your company). Of the 677,479, inbound sales development made up 17.1% (115,849 reps), outbound made up 28.8% (195,114 reps) and 54.1% (366,516 reps) were a blend of both.
Another difference in sales development reps is the go-to-market strategy of high-velocity versus account-based. 12.4% of companies reported they run a high-velocity model while 43.0% reported they run an account-based approach and 44.6% said they used both.
Because of the nature of the sales development role, it often lends itself to more automation than other roles in the sales department.
Examining the data revealed the overall estimated spend on sales development technology is $1.4 billion of the overall estimated 14.9 billion sales technology industry. Companies reported the average annual spend on sales technology was $3,894 per rep per year or $324.50 per month – which is 17.6% lower than the spend on sales technology for account executives.
The $3,894 covers an average of 5.8 tools per rep with the most popular tools being:
2. Social prospecting
3. Data/list services
4. Email engagement
6. Sales Cadence
The career path for sales development reps differs across companies and industries but one thing is for sure—not understanding and paying market rates for top talent will hurt companies in the long run.
study revealed the average base salary for sales development reps is $41,675 with an average on-target-earnings (OTE) of $80,774 – a 60/40 split.
On average, companies used 2.7 metrics to calculate variable compensation. The most common metrics used were closed revenue (65.3%) with an average quota of $95,682, number of opportunities accepted (42.1%) with an average quota of 15.5 opportunities, and number of appointments held (33.7%) with an average quota of 19.5 appointments.
Considering all quotas, companies report 63.5% attainment for SDRs. With these compensation structures in place, the average tenure of a sales development rep is 2.8 years which includes a 4.1 month average ramp time.
These activities led to an average of 14.1 meaningful conversations a day—14.9% conversation rate. The 14.1 conversations per day resulted in an average of 23.1 appointments set per month-- 5.5% appointment rate. 72.3% of appointments set become opportunities passed to account executives and the typical sales development rep had 12.5 opportunities accepted per month--74.9% opportunity acceptance rate. Of the opportunities accepted, 29.3% closed, which means that the average SDR is responsible for about 11 deals per quarter.
About the Author
Julia Manoukian is focused on creating, managing and producing everything content-related at Sales for Life. From product to content marketing, she is committed to constantly evolving the company's marketing strategy to exceed the demands of the ever-changing buyer.
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