Part
I: How to accelerate Revenue Generation, shorten the Sales Cycle
and lower the Cost of Sales through telephone-based Prospecting
This is the first part of a three-part series on architecting a
highly effective Sales Development function.
Building a robust pipeline of qualified sales opportunities is
challenging even in the best of times. With corporations continuing
to downsize and curb spending, companies large and small are struggling
to meet revenue targets. Finding a way to initiate new sales opportunities
while driving down the cost of sales and shortening the sales cycle
is essential.
What are companies doing to cost-effectively boost their sales
pipeline? Many are integrating telephone-based prospecting teams
(Sales Development) into their lead generation mix to generate qualified
opportunities for their inside, direct and channel sales organizations.
Sales Development is an outbound sales activity that involves performing
company research, navigating to key decision-makers, probing for
need, generating interest, qualifying and closing on an appointment
or demo. Unlike inbound-based roles such as customer service, order-taking,
or telemarketing, sales development requires proactive, quota-carrying
reps who are motivated to initiate the sales process.
Incorporating Sales Development into your organization will help
you:
Accelerate revenue: Sales is a numbers game. The more highly qualified
opportunities in the funnel, the more will close. Sales Development
Reps (SDRs) can reach many more decision makers per day than field
reps making in-person calls. SDRs are experts at researching companies
and making targeted cold calls…something field reps tend to
avoid if possible.
Lower cost of sales: The total target compensation (TTC) of SDRs
is typically ½ - ¾ that of a field sales rep. Using
less-expensive resources to initiate opportunities and more expensive
field reps to manage campaigns and close deals increases productivity
and drives down the cost of sales.
Shorten the sales cycle: SDRs diligently qualify new sales opportunities,
passing on to the field only those with a high probability of closing.
They are also effective at expanding contacts to find technical,
financial and business users that influence the purchase decision.
Improve marketing effectiveness: By combining telephone follow-up
with direct mail or email campaigns, marketers can increase response
rates by 2 to 15% over direct marketing alone. SDRs can also quickly
test new messages and offers for marketing prior to rolling them
out to the field and channel organizations.
Go Vertical: Unlike reps assigned to geographic territories, SDRs
can focus on specific vertical markets and become experts in the
needs, terminology and competitors in that industry segment.
Overall, integrating a Sales Development function into the sales
process provides benefits that will positively impact your bottom
line.
Outsourcing: When and what?
Once you're convinced that a Sales Development team is right for
your company you'll want to determine whether to outsource the function
or build it internally.
Outsourcing is best for tactical projects that don't require critical
thinking skills on behalf of the callers. Examples are list cleansing,
seminar registrations and market research. These activities can
be tightly scripted, require little rep training, and can be activated
quickly.
Initiating new sales opportunities, however, requires reps to have
in-depth knowledge of your company and products and the ability
to carry on intelligent conversations with your prospects. SDRs
need to have the sales skills to probe for need, present benefits,
handle objections and close on the next steps in the sales process.
It is very difficult to outsource this type of activity effectively.
Another key advantage of building the function internally is that
you have the ability to quickly modify your sales strategy and tactics.
With a service bureau there are fees for change requests and time
delays associated with revising scripts and re-training reps. An
in-house team also serves as your farm team for promotion into inside
or field sales positions.
Building an in-house Sales Development Team
How do you go about building an in-house Sales Development team?
How many people will you need? Who should they report to? Here are
several tips for setting up a successful Sales Development operation:
1. Modify your Sales Model
There are many sales models you can adopt when incorporating Sales
Development into your sales mix. The model most commonly found in
today's early stage businesses is shown in Figure 1. Here, Sales
Development generates qualified leads, turns them over to the field
and then backs off completely. Another approach is to have Sales
Development team up with their inside or field rep throughout the
entire sales campaign. In the teaming approach, SDRs can be used
to expand contacts, initiate opportunities in other divisions or
assist with demos and sales proposals.
Sales Development is typically used to augment the prospecting
done by inside and field reps, not replace it completely. Make sure
everyone understands this and set appropriate expectations for the
number of qualified leads each rep should receive. It is vital to
establish clear roles and responsibilities and communicate them
across the organization.
2. Determine where the Function will report
Ideally, Sales Development should report into sales since the SDRs
carry quota for new qualified opportunities and may receive bonuses
when their leads convert to revenue. However, the most important
key to success with any SD group is a dedicated, hands-on manager.
Sales Development teams need constant monitoring, coaching and training
for optimal performance. Left on its own, the function will flounder.
If the sales manager or VP is constantly traveling, then have the
function report into marketing.
3. Determine how many SD Reps to hire
Many companies will hire one SDR at first to prove the value of
the function. An ideal ratio is 1 SDR for every 3 field or inside
sales reps. Plan on SDRs spending 30-50% of their time on administrative
tasks such as company research, pre-call planning, updating the
SFA system, and follow-up activities. In an average day, most SDRs
will make 30-50 call attempts and reach 6-10 decision-maker contacts.
4. Establish Metrics and Compensation Plans
Set individual and team goals for the number of Sales Development
qualified leads and appointments. Build compensation plans that
motivate SDRs to only pass on highly qualified opportunities and
encourage teamwork. You can do this by setting up specific qualifying
criteria and by paying SDRs bonuses when their leads convert to
revenue. It's okay to double pay on leads that convert. Typically,
SDRs will receive a flat fee on each closed deal versus a percentage
of revenue generated.
5. Set up Systems and Processes
A SFA or CRM system is critical for any sales rep, especially a
SDR. SDRs will "live" in the SFA application, entering
notes, creating tickler files, and adding contacts. This will be
the primary way leads are passed from marketing to Sales Development
to the field. You'll also want to establish a step-by-step sales
process and call guide so that best practices can be replicated
across the entire sales organization.
Building an in-house Sales Development team can greatly improve
your pipeline and bottom line. The key is to set clear goals for
the organization and to have a dedicated manager.
Mary Gospe (maryg@kickstartall.com)
is one of the founding members of the KickStart Alliance. The KickStart
Alliance (www.kickstartall.com)
is a team of senior marketing and sales leaders who assist startups
and emerging companies develop and execute a variety of marketing
and sales goals and objectives.
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