*Editors note: Anand Kulkarni is the CEO of LeadGenius. They use a combination of automation, human intelligence, and smart data to provide companies with their own on-demand prospecting team to accelerate sales. This was first published on the MobileWorks blog and is republished with permission.
Building a sales development team from scratch is a difficult and costly process. Because the ability to fill your pipeline with leads is crucial to your business’ health, it should not be taken lightly. While it makes sense for some larger companies like Adroll to build in-house teams, not all companies are at a point where they can afford the turnover of Sales Development Representatives (SDRs). Before you decide to build your company’s sales development team in-house and hire SDRs you should first consider these 7 risks.
1. Your Opportunity Cost:
Using SDRs to prospect takes their valuable time away from closing. Outbound prospecting is a long and tedious task that distracts your sales team from executing higher-level work that directly drives revenue. When you target prospects with more than 100 employees it takes 2-4 weeks or longer to develop a new qualified opportunity. Your account executives will close fewer deals if they are busy prospecting. By using sales ineffectively, you will need to hire more salespeople to close the same number of deals as a focused account executive.
Paying SDRs isn’t cheap, so it’s important to utilize their time wisely. According to Glassdoor, the average base salary SDRs in the United States is around $58,000. It takes about 1-3 months for inside account executives to be fully trained and ramped up, and up to 6-18 months for enterprise account executives. With base pay around $58,000/year for SDRs, your company is spending between $5000-$14,000 on getting each SDR up to speed, not to mention other resources you spend on training them. The national median for enterprise account executive base salary is around $170,000, so you can similarly assume your company spends between $85,000 to $255,000 on an employee ramping up with enterprise sales. Unfortunately sales reps have high turnover in B2B sales. Many B2B salespeople stay in the same position 2 years or less, so it’s difficult to recoup the cost of training and ramp up time, and that’s assuming your hire works out.
2. Juggling Makes You Sloppy:
Having your salespeople juggle too many types of tasks makes them less effective. Aaron Ross, author of Predictable Revenue, suggests that lumping sales functions together makes metrics like conversion rates and customer success rates murkier. Aaron suggests that your account executives should prospect as little as possible and should never spend more than 20% of their time on prospecting.
If your reps’ goals are unclear and excessive it’s unlikely that they will meet their targets. When this happens regularly it’s difficult to maintain accountability. This also makes it harder to resolve problems because the root cause cannot be easily discerned because there are too many variables.
3. You’re Tarnishing Your Company’s Image:
You want new prospects to see your company as knowledgeable and experienced, but using new SDRs may give the opposite impression. Having untrained sales reps be your company’s first point of contact can result in embarrassment.
There are a hundred ways for reps to turn a potential customer off of your company: long and rambling emails, inept conversations, lack of industry knowledge, and a weak understanding of your product’s benefits. Without proper training and support for prospecting, new reps can make lots of mistakes that will make your prospects think your company is inexperienced.
4. You’re Missing Out on the Bigger Market:
Few experienced sales reps love prospecting. They find it tedious, and usually do a terrible job at it, missing out on much of the market. According to Aaron Ross, reps often don’t go deep enough, hitting 100 accounts only once when they should be contacting 10 prospects 10 times each in order to increase success rates. Giving up too easily on prospects loses clients that could have been won by “pleasant persistence.”
If your business is still somewhat small, your human capital constraints will prevent your in-house prospecting team from scaling quickly, leaving you with a smaller market share. Unless you can afford an army of in-house sales reps to rapidly scale, you should consider more affordable alternatives to capture quality leads. Getting hundreds of hand-picked leads of decision makers verified by humans in your target industries is invaluable for scaling. Doing just that, a growing HR SaaS company saw more leads and got more customers than ever before, with a 1300% increase in leads in only 12 months.
5. You’re Wasting Time with Bad Data:
If you’re buying lead lists, most of the data you’re getting is outdated or low quality. More than 34% of those contacts you purchased may be unusable, and much of the list is often poorly targeted. By using inaccurate data from the start, you waste your sales team’s time by contacting the wrong people and hitting communication dead ends. Instead of reaching the decision maker, your reps are calling or emailing someone who hasn’t worked at that company in over a year.
6. You Have So Much to Learn in So Little Time:
Building a prospecting team from scratch is a time consuming process, and scaling up takes even more work to systemize your processes. Hiring and training your prospectors requires sales leadership and extensive planning to develop consistency. You cannot build a scalable process while using the “sink or swim” approach to train your new hires.
It’s easy to miss important subtleties when you’re new to prospecting like knowing:
- How to write effective email copy
- How to know the best time to send emails
- How to create drip email campaigns
- How to write emails that are short enough but not too short
- How often to follow up with prospects
- How to use the right tone/attitude as to avoid seeming too pushy, threatening or “salesy”
- How to pick the right person to contact
- How to find out why prospects aren’t interested in your product or service
- How to not give up too easily
- How to always set up a next step with every point of contact
Missing the mark in these areas will lose you leads if you don’t devote enough time to learning sales best practices. It’s much easier to use people who already have experience with outbound funnels to manage the process for you instead of starting from scratch.
7. You’re Losing Out on Deals!
You could have already gotten more deals through your sales pipeline if you hadn’t wasted so much time figuring out how to build your prospecting team. Start outsourcing your prospecting now, and stop missing out on deals!
Although building in-house prospecting teams can be a practical solution for large companies, chances are you don’t have the budget to withstand the turnover of SDRs if you’re a smaller company. Smaller companies can reduce the risk and cost of build a prospecting team by relying on outsourced prospecting solutions instead.