“Sales Development” is a description composed of two words, the discrete meaning of which is clear but in combination the definition of the phrase can be ambiguous. For example, it can used to mean sales training, as in “developing” the sales force. Even within the context of generating sales the term can apply to Marketing or your overall GTM strategy.
For the purpose of this discussion, and the most common meaning in the B2B world, we will define Sales Development as the process by which unqualified leads are managed and converted into sales qualified leads. According to a recent RainToday report, less than 25% of new leads are sales-ready! It does not matter that qualification of those leads can be performed by a Sales Development team in a call center environment or by an Enterprise Account Executive in the field. Sales Development describes the process, not necessarily the title of the person performing the job.
So what exactly is the Sales Development process? It is comprised of steps that are a subset of your end-to-end funnel management methodology but before the formal pipeline stages as discussed earlier in my blog here. For the purpose of this article it is three small but critical tasks:
- Contacting an unqualified lead,
- Conversing with that lead to determine readiness to make a purchase,
- Classifying the lead for various activities from immediate sales action to unqualified.
The integration of a Sales Development specialist’s activity into the lead classification or scoring process can have one of several possible outcomes. The ideal outcome is that the lead is ready to buy and should be immediately contacted by a selling resource. For those leads not ready to become instant customers there may be several possible different classifications depending on the shared sales and marketing methodology for ranking leads. Many lead scores result in some level of lead nurturing but this topic is beyond the scope of this commentary. Suffice it to say the best lead scoring systems use demographic and firmographic attributes, such as company size, industry, and job title; as well as behavioral scoring such as clicks, keywords, and web visits to measure what Eloqua labels their “digital body language”. An excellent resource for more information on leads nurturing and scoring may be found here on the Marketo web site.
In markets where potential leads are willing to accurately self-identify, Sales Development may also be conducted using electronically collected criteria and automatically placed appropriately in the funnel by virtue of the classification. In some other instances the Sales Development process can be outsourced to a third party (e.g. Annuity, Wheelhouse, Mercury Leads, Launch Leads, and others) whose sole responsibility is to fill the sales funnel with sales-ready leads as defined by your qualification criteria.
In any case the concept of Sales Development isn’t new. Competent organizations have always included some permutation of this as part of their overall sales methodology. In the past it may have been under Marketing and called Outbound Tele-Marketing. The more recent trend seems to place this responsibility under Sales as part of the inside sales, corporate sales and/or as a dedicated Sales Development team.
The movement towards a dedicated team of people responsible for Sales Development is an effort to optimize the use of your various resources. Let’s examine the basic economics of this trend.
Assume it requires the same amount of time for a Sales Development Representative (SDR) to classify a lead as it does for an Account Executive (AE) and an SDR’s OTE is less than half that of an AE, then sales-ready leads generated by an SDR are less than half the cost of an AE generated sales-ready lead.
The next issue to be addressed under this structure is one of balance. You need just enough sales-ready leads to keep the rest of the organization busy with discovery, demonstrations, trials, etc. The ratio of SDRs to field sales representatives could vary depending on the length of your sales cycle for your products and market. Perhaps the best way to determine the proper role ratio is to analyze the time required per sales-ready lead, your pipeline conversion ratios, average deal size and then calculate the required quantity of unqualified leads you need at the top of the funnel. Depending on the quality of your metrics you may need to adjust the ratio based on experience.
Speaking of quality, the more subjective dimension to this endeavor is that SDRs will generate leads of higher quality than your field resources for three reasons; focus, skill set and practice. If one’s sole responsibility is to generate sales-ready leads without the distractions of the other steps required to close business then both measurable productivity as well as quality should result. Additionally, the repetitive and transactional nature of Sales Development requires an entirely different skill set than those conducting a complex sales methodology. Finally, practice makes perfect or more precisely, perfect practice makes perfect, so the properly guided, repetitive task of contacting many prospects will build stronger qualification skills. On the other side of the same coin, your field resources will only focus on sales calls with qualified prospects which will similarly result in a shorter sales cycle and higher productivity.
The net effect is that specialization within your sales organization should serve to generate a more predictable pipeline with a higher, accelerated conversion rate. While specialization is considered by some a “best practice” among leading B2B sales organizations it is not the necessarily the best model for you. In some cases (e.g. very narrow or emerging markets) a hybrid role could be created combining limited outbound cold calling to targeted lists with Sales Development. In other cases of high volume, short sales cycle transactions, the person responsible for Sales Development may also bear the responsiblility for closing the sale. This later telesales model sub-optimizes the economic gains cited earlier but, none the less, may be appropriate in smaller organizations.
As always, I am interested in your input on this subject. Are you using an SDR team now, and if so, how is it helping your overall productivity? What is your ratio of SDRs to field resources and why? What types of customers, products/services, or sales processes are best served by this approach? What challenges have you had in integrating your SDR team in the Marketing/Sales ecosystem?
I encourage you to post your comments and experiences with Sales Development in the space below.