Designing an SDR Team to Get the Biggest ROI from Specialization

4/25/2016
Be sure to check out our new Buyer Blog for the latest B2B blog articles & discussions!

Along with account-based marketing and selling, specialization is one of the biggest trends in SaaS sales right now. Many sales leaders at high-growth B2B tech companies are following the advice offered in the bestselling book Predictable Revenue by Aaron Ross & Marylou Tyler, also supported by research findings (touted by vendors like InsideSales.com): specialist models “achieve a 7-point improvement in close ratios over a generalist model.” 

Specialization means to break out responsibilities and disperse expertise, so that people focus on a particular piece of a larger operation. Much of the TOPO Sales Summit conference, which happened last week in San Francisco, was focused on how to specialize Sales organizations effectively—in terms of people, processes, and technology. Sales development is not the only area that can be specialized, but it seems to be the focus of conversation in the space right now. There were presentations from TOPO analysts and consultants on the topic, as well as from high-growth sales leaders who have been successful with specialized SDR teams.

At the conference, I interviewed sales development leaders about their experiences building and honing SDR teams. Across companies, these are some of the key steps to implementing an SDR team:

  • Map SDRs onto the sales process/greater sales organization.
  • Onboard SDRs quickly and provide them with content they can use to open doors.
  • Motivate SDRs and encourage best practices.
  • Measure SDR performance.

Not all companies accomplish these things in the same way, nor should they. The practitioners I interviewed don’t agree on the best approach to organizing with specialization—but they do agree that the most effective shape for your SDR team, along with the most effective style of managing SDRs, depends on your product, business model, and company culture. They each weighed in with their own opinions and stories of how the SDR function works in the context of their business. These peer insights can help you think more about designing your own SDR team to get the most out of specialization.

Practitioner Insights on SDR Team Design & Management

Sales leaders have to think carefully about when and where specialization makes sense, and design their own approaches accordingly. I talked with Andrea Hansen (Gainsight), Julie Drimel (NetSuite), and Charles Lawson (Egnyte), among other conference attendees, about their business use cases for SDRs. They each shared their perspective on the basic principles of designing an SDR team, along with advice for fellow practitioners about how to make specialization effective. Here are their answers to some common questions about how and why their SDR team is set up, and what decisions they think contribute to getting a high ROI on sales specialization. 

1. What kind of accounts will reps handle? To what degree will they specialize, and what will you call them? 

Egnyte, a cloud file storage provider, has SDRs call into large accounts where it makes sense to have reps establish multiple POCs. Because Egnyte’s business model is to price by the seat, companies between 200 to 1,000 employees have a much higher potential value than companies at the smaller end of their target market.

“We have an SDR team—we call it SDR, not BDR. The SDRs focus on companies on the SME side. They could effectively sell to companies under 50 employees, but the floor we allow them to work to is 200 employees. That’s because of the value of the deal. Ours is a named user license model. Every person within the company is potentially an Egnyte user. So we don’t want our SDRs calling into a 50 person company because the effort is not worthwhile financially—we know the uppermost value of that deal, and it doesn’t make sense to have multiple people touching that account.”

- Charles Lawson, VP of Sales at Egnyte

Lawson explained that historically, Egnyte started off with an SMB play, catering to companies that don’t have IT organizations to manage file servers and security. However, as Egnyte has moved upmarket, SDRs have helped break into larger new business deals by selling the value horizontally to multiple stakeholders within the account.

Julie Drimel is the Director of Global Business Development at NetSuite, an ERP and CRM software provider. Drimel uses a different title—BDR, which stands for Business Development Representative—to describe a similar set of roles. Although NetSuite’s BDRs do work on leads in the smaller “emerging market” segments, they also work on mid-market, corporate, and enterprise accounts. Although in previous iterations of the BDR program reps worked only on leads with lower scores, hunting for “diamonds in the rough,” Drimel’s program now handles all inbound leads as well as all outbound prospecting. Drimel sees the BDR function as a key piece of the funnel that connects Marketing to Sales at NetSuite:

“I run our Insides Sales program. Our BDRs are divided into both inbound and outbound teams. Inbound BDRs work all of the Marketing-generated leads that come from demand gen, and then our outbound BDRs are all focused on outbound cold-call prospecting. They feed MQLs to the Sales organization, which runs our full-cycle deals.”

- Julie Drimel, Director of Global Business Development at Netsuite

The divide between the SDR and BDR terminology remains rather mysterious. Andrea Hansen, who spent the last few months rapidly re-designing and implementing Gainsight’s new sales development team, provided some additional clarity. (Gainsight is a customer success management platform.) Hansen “grew up as an SDR at Salesforce,” one of the high-growth B2B SaaS companies responsible for popularizing sales specialization. According to Hansen, there is a potential distinction in terms of responsibilities as well as prestige:

“I’ll always fall back on my Salesforce lingo. The progression there was SDR (inbound) to BDR (outbound) to AE. At Gainsight we’re still building out our program, so I haven’t quite decided yet. For now our team are all called SDRs, and they’re doing both inbound and outbound. But I think it’s kind of nice to have a bump in title, with a new challenge. We have sort of a hybrid right now, but as we scale I think it will make sense to break that out.”

- Andrea Hansen, Sales Development Manager at Gainsight

2. How are SDRs/BDRs mapped to the rest of the Sales organization, and what is their relationship like?

Practitioners align sales development reps in different ways, such as to certain Account Executives, certain teams, industries, regions, etc. They said that no matter how you choose to map SDRs to the rest of your sales org, it’s important to be specific about their responsibilities and strategic about who they report to—this will affect the dynamic between SDRs and how well they are able to contribute to overall business goals.

“SDRs are aligned to specific reps. It’s a 1:2 ratio right now. One SDR works with 2 sales reps, and the sales reps each have geographically-based territories.”

- Charles Lawson, VP of Sales at Egnyte

“Our sales teams are divided into verticals, first and foremost. From there, we’re divided into market segments: emerging, mid-market, corporate, and then a large enterprise team. Our BDR organization reflects these divisions in our sales org. All of our BDRs are specialized into the core verticals. In outbound prospecting, they’re even specialized by business size and all the way down to geography. But this is after many iterations of the program. First we tried aligning BDRs to certain sales managers—they could do whatever prospecting they wanted for that team. But we found the sales managers treating the BDRs a little bit too much like admins, dictating things they wanted a BDR to do that weren’t revenue-generating, such as data entry. So we decided to go deeper on specialization. By having BDRs focus on “California software” or “Chicago retail,” for example, they had more accountability to the territory, rather than to the sales manger. As we’ve expanded the outbound program and hired more BDRs, we’ve specialized all the way down to that rep/territory level. Some verticals have 3 reps to every 1 BDR, and some have 10 reps to every BDR.”

- Julie Drimel, Director of Global Business Development at NetSuite

3. What are the KPIs for SDRs—do they have revenue quotas or different goals? How do these KPIs play into incentives and compensation?

SDR evaluation and performance management are important to think about, because the most obvious approach may not be the most strategic and effective. Standard policies for managing AE performance often do not make sense to use for SDRs, who move at a higher velocity and spend less time on each deal—especially with very long sales cycles. Another factor to consider is that SDRs are typically less experienced than other sales roles, and ‘Sales Development Representative’ is frequently considered to be a short-tenure ‘training’ position that feeds into other sales roles. Practitioners recommend building skill development into KPI tracking, so that SDRs are accountable for best practices in a quantifiable way. Regardless of which metrics you choose to track, this data needs to be collected in one application that can be used for reporting (usually the CRM, although some gamification and sales activity management apps do this as well).

“We track quotas and determine compensation based on lead source in our CRM. Comp for outbound prospect conversion is triple the comp on inbound lead conversion. Besides lead source, the metrics that I follow are a little different than the ones that most people follow around SDRs. I track discovery calls, qualification calls, connects, new contacts, meetings set up at conferences, etc. I don’t really care about how many calls per day; I care more about quality metrics. I’m more interested in 20 or 30 great conversations than in 150 dials a day.”

- Andrea Hansen, Sales Development Manager at Gainsight

“Our BDRs do not have quotas. They have lead gen goals, to promote a certain number of meetings to sales reps, but they do not have a revenue goal. The reason is that in ERP, our sales cycle is longer than if we were just selling a widget. Because of that, it would be really hard to compensate BDRs based on revenue, which could happen 12 months later—it just wouldn’t be the right incentive. In addition to number of meetings, we also pay BDRs based on all of the soft skills we believe are necessary to get to that number. We call this MBO (Management by Objective). Their lead gen target might be 25 meetings for the quarter, worth 50% of their bonus. But the rest of their bonus is based on prospecting skills—for every inbound lead received from Marketing, they have to prospect at least 3 contacts 5 times. Our BDRs log their calls, send their emails, and paste all in-mail messages into our CRM on the customer records, and we can pull searches on any of it. We track how many dials they’ve made, emails, inmails, connects, etc. and report on it on a regular basis. Skill and talent development is one of the core goals of our program.”

- Julie Drimel, Director of Global Business Development at NetSuite

4. How do you manage data entry?

Data entry is a pain point for sales managers and reps at all levels, including SDRs. Having clean and robust data is necessary not only to close deals, prepare for meetings, and understand pipeline trends, but also to get credit for doing so. Many practitioners said they were able to motivate SDRs by sticking to CRM data as the bottom line for evaluation/compensation. They said that SDRs are more impressionable and easier to train around good data habits, and that once they are trained they go on to use CRM better in other roles as well.

“We don’t give them a choice about entering data. I think CRM adoption is one of the hardest things for any sales manager to enforce, and many AEs today don’t do it. But if you have a BDR alumni on your AE team, they’re great about data. We hire BDRs right out of college and train them from the start on how our CRM is going to make them a better employee and save them time. Our managers also audit. For example, the manager might say, ‘Hey, you didn’t fill out these fields that our competitive intelligence team needs so that they can present you with the material you need for your calls around competitive plays.’ There’s also a little bit of shaming that happens. For example, we point out when a channel partner steps into a deal because the BDR didn’t fill out the lead properly and work it in the system. Our #1 motto in the BDR program is, if it’s not in NetSuite then it doesn’t exist. So you can’t get credit for any lead that I can’t see in the record. We’re very strict about it, and it’s created the right culture around process.”

- Julie Drimel, Director of Global Business Development at NetSuite

“Since I grew up in Salesforce, I still drink so much Kool-Aid—if it didn’t happen in Salesforce, then it doesn’t exist. We’re actually working from the SDR level up to make sure everyone at the organization gets better at Salesforce, from Account Executives to Sales Leaders. It’s really starting with the SDRs. My guys are going to go after everything. If you don’t have your touch marked on this account, it’s fair game. This is upping the activity on everybody, which is going to give us better data overall. Plus, since we compensate based on lead source, we audit each other to determine whether a lead was legitimately fed in through Marketing, or if it was a pure outbound, or a referral, or if the account was an inbound/outbound combined strategy.”

- Andrea Hansen, Sales Development Manager at Gainsight

5. Should reps mention their prior (failed) attempts to connect?

One of the most contentious issues around best practices for managing SDRs is whether or not their messages should reference their previous messages—in most cases, attempts that failed to get a response. Most of the practitioners I interviewed said, “Absolutely not!,” and couched this as a cardinal sin for SDRs. However, this advice was in direct conflict with a powerful presentation from Lars Nilsson about Cloudera’s ABSD methodology, which includes an email sequence with a final “Hail Mary” attempt to connect. Nilsson’s SDRs have seen strong reply rates from this message, which is short, sweet, and to the point, a sort of last-ditch effort referencing previous emails with an ask for a meeting. (You can read more about Cloudera’s ABSD methodology in section 2 of this article.)

“The anatomy of our three-email drip sequence is: 1) a message with a subject line that is very relevant to their role; 2) a message with more specific use case information; and 3) a Hail Mary ask for a meeting. We send them two and a half to three and a half days apart. But we’re constantly fine-tuning. For example, we A/B test time of day and day of week. We’ve never gotten less than a 25% open rate and never less than a 10% reply rate with our ABSD strategy. This is far better engagement than a regular campaign, which would get 5-8%.”

- Lars Nilsson, VP Global Inside Sales at Cloudera 

In this case, it seems the devil is in the account-based details. Generally, practitioners agreed that referencing previous emails does help establish the SDR as a coherent, continuous individual (which is not always true of marketing email threads, for example), but that this is an appropriate strategy only if the messages are highly personalized and valuable, and the SDR is confident that the recipient is the right person to talk to. Basically, mentioning prior attempts works only if your communications are highly targeted and you can be pretty sure the person you’re contacting got value from your message, even if they didn’t respond. However, this can be tricky to determine, especially when moving at high velocity. Andrea Hansen summed up the “fine line” at the center of this issue, and gave some advice on how SDRs can avoid being annoying in their emails:

“I like to teach my team: there are a lot of bad emails out there that say ‘Hey, just reaching out again…’ and ‘Hey, it’s me…’ and receiving a bunch of those messages just gets overwhelming. Many of those bad emails reference their previous failed attempts. The number one thing that I can say is, never just reference a failed attempt without adding something new. We need to bring value into each and every conversation. I think it’s an interesting fine line. You can reference prior attempts, if you’re also adding value. I really believe in a 'why, why you you now' approach—our SDRs come up with five different value propositions for different times that they might connect with a prospect. Above all, I don’t want my SDRs to sound desperate, because it prevents them from making connections and breaking into new accounts, which is the whole reason we developed this specialized model in the first place.”

- Andrea Hansen, Sales Development Manager at Gainsight

Specialization, Scale & Technology

Creating and enabling teams of sales development representatives is a main initiative for businesses striving to scale this year. It is also a major driver of new offerings in the sales software landscape.

“Specialization is a huge driver of sales technology. An example of specialization is the SDR function. By isolating the SDR function, sales development leaders can wrap their heads around the activities reps need to do on a daily basis (e.g. write highly personalized emails and make phone calls at scale)—and then figure out which areas are slowing them down. When reps’ pain points are isolated like that, sales tech vendors can better develop solutions and ultimately sales leaders can make smarter investments in the technology.”

- Craig Rosenberg, Co-founder and Chief Analyst at TOPO, excerpted from TrustRadius report "How to Navigate the Sales Technology Landscape"

The sales tech space has seen so many new vendors and products over the last couple of years partly due to the demand/interest in task and role specialization. At the same time, sales organizations are upping their investments in sales tech in 2016, partly because leaders are designing high-velocity SDR teams who need—and can gain lots of value from—sales technology.

“Without a doubt, SDRs are uniquely positioned to take advantage of automation and other benefits of sales technology, due to their high velocity and focus on specific tasks.”

- Lars Nilsson, VP of Global Inside Sales at Cloudera

For more information about sales email tools, sales dialers, sales intelligence, and other software used in SDR programs, check out the infographics on p7-8 of the report on How to Navigate the Sales Technology Landscape. Its role and process-based view includes a section focused on Inside Sales. The report’s glossary of terms and discussion of market trends explore the relationship between specialization and sales technology in further detail. 


TrustRadius Report on How to Navigate the Sales Technology Landscape

Emily Sue Tomac is Research Analyst at TrustRadius, where she studies the business software landscape, trends, and user feedback. She writes objective, user-focused reports that help buyers navigate crowded markets. She thinks of herself as a translator: she can help you understand marketing-speak, technical jargon, and crowd-sourced opinion, in plain English. Emily Sue is the author of the 2016 Buyer’s Guide to Marketing Automation Software, which you can download here for free. She has also covered the Sales technology landscape, eCommerce, Help Desk, SMMS, and Project Management software. Prior to joining TrustRadius, Emily Sue worked on research in linguistics and the digital humanities.