16 min read
Full-cycle sales and the SDR/AE model
Gartner1 research suggests that "over the next five years, an exponential rise in digital interactions between buyers and suppliers will break traditional sales models"
In recent times, there has been a lot of chatter around the potential of AI and ChatGPT to revolutionise industries and enhance productivity. One particular area that stands out as a prime target for disruption is the go-to-market strategy and execution, along with the role of Sales Development Representatives (SDRs).
Why is it important to look closely at the SDR Role? Well, the inception of the SDR role took place approximately two decades ago, and at the time, it made perfect sense. Gathering prospect data and contact information was a daunting task, so having a dedicated role to construct databases, reach out to potential buyers, and screen/qualify them alleviated the burden on Account Executives (AEs). This approach enabled AEs to focus on qualified meetings, leading to a higher number of closed deals. Back then, email overflow was not a concern, people actually picked up their phones, and the internet did not hold the same level of dominance as it does today in the purchasing process. AEs were regarded as sales experts, and collaborating with SDRs to increase meeting quantities proved to be advantageous.
The business landscape is very different today, with most buyers frustrated with the SDR/AE experience and most SDRs struggling to get consistent results. This naturally leads to the old SDR/AE model becoming obsolete. As organisations strive to streamline their tech stack and optimise their operations, previously deemed essential roles are now under scrutiny. Sales teams that experienced tremendous growth and success just a year ago are now confronted with new challenges.
There is a growing argument that relying on the least experienced, least resourced, and least supported members of the sales team to handle the responsibility of opening deals may not be the most effective approach. As costs rise and returns diminish, along with a less-than-optimal customer experience, the drawbacks of the SDR role often outweigh its advantages.
Current base and OTE earnings for an SDR: Source Repvue
The headline news is buyers are smarter and harder to reach. One of the most remarkable changes in recent years is the astounding level of buyer education. Nowadays, buyers almost always come prepared with a wealth of information, conducting thorough research on products and services even before engaging with a sales representative.
This shift has raised the expectations for sales representatives, with buyers now demanding a depth of knowledge that goes beyond mere product specifications. While being an expert in the product is still crucial, it is now considered the bare minimum. Buyers desire salespeople who possess industry knowledge, understand their business challenges, and can demonstrate how their products and services solve similar challenges for other companies.
Conversion rates for traditional outbound methods, such as emails and calls, have witnessed a decline across various industries. Buyers have become accustomed to receiving a deluge of generic communications, rendering them immune to these conventional approaches. Consequently, SDRs are encountering difficulties in securing the same number of high-quality meetings. This decline not only affects revenue but also has a negative impact on customer acquisition costs (CAC) payback. Let's delve into the underlying reasons behind this trend in more detail.
Productivity: The new working norms include remote and hybrid working a move away from a traditional office environment to remote work which is also having a significant impact on the productivity of SDRs. While it's true that the conversion rates for phone outreach have decreased, there is also a decrease in overall productivity when you're no longer surrounded by colleagues who can provide guidance and motivation.
In the past, SDRs were primarily concerned with meeting activity metrics and reaching out to a specific number of accounts or buyers based on general ICP data collected over time. Due to the manual nature of pulling results, the most effective way to manage this was through a combination of targeting and activity. However, with the advancements in technology, we now have the ability to score and prioritise accounts/leads, which means our focus should shift towards generating high-quality opportunities instead of simply engaging in activity. This shift in focus is better suited for AEs who can leverage their expertise to convert these opportunities effectively.
Demand Generation and Lead Generation Channels: The effectiveness of cold outreach through email and phone has seen a decline in conversion rates, but the approach of warm outreach, which is based on buyer intent, has proven to be successful. In today's market, buyers prefer to conduct thorough research, test products or services, and engage when they feel ready to make a decision.
With the wider accessibility of AI, the SDR role and the overall go-to-market team are set to undergo a fundamental transformation. The current tools can now be enhanced to accurately prioritise and recommend accounts based on existing customers, enabling personalised outreach by gathering relevant data and context.
These advancements allow for the conversion of these interactions into qualified meetings, eliminating the necessity for an AE to rely on an SDR. Instead, they can rely on an intelligent assistant that identifies and contacts the most suitable buyers at the optimal time, continuously improving its capabilities with each interaction.
Source: HubSpot Consumer Trends Report May 2023
We can expect to see continued high adoption rates of sales and marketing automation technology, like HubSpot, Trueleads and Dokio, as well as ever-increasing use of AI, predominately for research and data analysis. Of course, SDRs will need to adapt to be successful.
With a more competitive environment, smarter buyers and hard to reach prospects, there is no doubt it will be tough going. These challenges might explain the high churn rate of SDRs. Or, maybe it's tensions related to goaling or maybe friction between SDRs and AE players or perhaps the challenges with being successful in an SDR role. All of these factors play their part.
Having SDR teams offers a significant advantage by providing the opportunity to foster and develop a pool of exceptional Account Executive (AE) talent. However, due to the increasing churn rates, this advantage is gradually diminishing.
Considering the shift towards full cycle salespeople who are focused on generating high-quality opportunities with the support of AI technology, it begs the question: what will happen to the SDR role? Will the SDR role become a thing of the past or morph into something else more valuable?
If you have a top-performing SDR, make them an AE and give them the necessary training and support to be successful as they move into a full cycles sales role. Delivering a more rewarding career for salespeople and an improved buyer experience, this new model is likely to be the way forward for many sales teams.
Without a doubt, full-cycle sales is poised for a big comeback.
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