Many early-stage B2B startups start by acquiring customers from the relationships and network of the founder. To grow beyond these initial customers, it is important to build a repeatable and scalable process as the founder will eventually run out of personal network.
The most effective model for technology startups has proven to be the use of SDRs (Sales Development Representatives) combined with more experienced AEs (Account Executives) to generate leads, schedule demos and close sales.
To ensure the success of an SDR based team it is critical to begin with solid infrastructure and deep training. Even before hiring the team, it is important to set up sales quotas, sales strategy and to ensure that the process is repeatable and scalable. In addition, you will need a strong pipeline of SDRs because the turnover rate in this position has proven to be the highest among technology startups.
By putting the systems in place to train, measure and manage the team you will have a strong foundation which will ultimately lead to higher sales and a stronger growth rate.
1. The infrastructure
Before hiring a team, it is critical to have the infrastructure in place. This includes a method for lead generation, a list of qualified leads and the scripts for the team to follow when engaging a prospect. In addition, setting up a CRM with custom fields to accurately track customer interactions will ensure that no leads are lost. The two most popular CRMs in the market today are Hubspot and Salesforce. The cost of Salesforce can be prohibitive for many early-stage startups and so Hubspot is a great alternative as the CRM functionality is provided at no cost.
2. The Team
SDRs are the first point of contact with the customer. Their sole job is to get the prospect to agree to a demonstration. Being an SDR is one of the most difficult jobs in a startup. It involves reaching out to prospects through email and cold calls.
Account Executives are much more experienced salespeople who take over from the SDR and perform the demonstration and whose job it is to close the sale.
It is critical to have the proper training in place. Especially in the case of the more junior SDRs. While the main characteristic of an SDR is the ability to handle rejection, they must be trained on every aspect of the product in order to convince the prospect to agree to a demonstration. It is important that they articulate the product features well and are respectful when speaking with prospects. They should also be aware of the steps in the funnel and skillfully navigate the prospect down the pipeline.
4. Tech Stack
The use of technology is critical to the success of any outbound sales process. It begins with a CRM and lead list but also should include a mix of tools such as: email automation, auto-dialers and prospecting tools like Linkedin Sales Navigator. Some more advanced teams are using video to reach prospects. The fully loaded cost can add up very quickly and can be anywhere from $200 for a basic setup of a CRM and email automation to $1000 for the full suite of tools mentioned above.
According to the Bridge Group’s biennial survey on SDR teams, which studies hundreds of B2B tech companies, SDRs make an average of 45 dials per day. This is the one metric that the SDR has complete control over while the number of closed sales are not. Therefore the most effective way to judge the success of an SDR is by the number of dials per day made along with the number of demos per week that they are able to set up for the AEs.
6. Turn over
The average ramp time from hire to full productivity is 3.2 months according to the Bridge Group. In addition, they have found that average rep tenure is only 1.5 years and total attrition averages 39%.
The success of an outbound sales process depends on the SDRs ability to generate demos and the AEs success in closing the sale. As a result, it is important to fire fast if the SDR is unable to generate demos on a weekly basis and if the AE fails to close sales. As difficult as it may be, if the sales team members are not meeting the quotas by the three-month mark then they must be turned over. The combination of the high fully loaded cost of these team members along with the capital outlay for the monthly tech stack makes this a critical role that must be managed closely to avoid unnecessary burn and slower growth rates. In contrast, a high performance team that meets and exceeds quota will drive the growth rate and the ultimate valuation of the enterprise. Good hunting.