Back in 2011, Aaron Ross released his bestselling book Predictable Revenue: Turn Your Business Into a Sales Machine with the $100 Million Best Practices of Salesforce.com. Since that time, B2B companies all around the world have built BDR/SDR teams using this model, setting new meetings and generating opportunities for their outbound sales funnel.
If you've never heard of Ross' book, or the system he created, that's totally fine. This blog post is intended - not only for those who've never read that book - but for any business owner/leader who has never built a BDR/SDR team before. Even if you've never heard of those terms (BDR/SDR), you've come to the right place.
In this blog, we'll cover the following four areas:
- What is a BDR/SDR?
- Pros and Cons of building a BDR/SDR team internally
- What does outsourcing a BDR/SDR team mean?
- Pros and Cons of outsourcing a BDR/SDR team
What is a BDR/SDR?
When B2B companies start out, it's usually the founder or co-founders doing all the prospecting (setting new business meetings). Over time, the company hires a VP of Sales to lead these efforts. This VP of Sales then sets new meetings, closes business, all while trying to hire more sales professionals. Then, once these new sales professionals are on board, they become the ones doing both the prospecting and closing of new deals.
This setup stretches everybody pretty thin. And, as Aaron Ross points out, it's not a wise financial strategy.
"Making the field salespeople do cold calls means having your highest-cost (per hour) sales resource perform the lowest-value (per hour) activity."
Once you have a few closers on your team, Ross recommends hiring people whose sole job is to set new meetings for your closers. This is what's called a Business Development Representative (BDR) or Sales Development Representative (SDR). You might also see the title Inside Sales Representative (ISR).
*Generally speaking, the title "Sales Development Representative (SDR)" is a more experienced "Business Development Representative (BDR)".
Cold Calling: Is it Just a Big Numbers Game?
Question: If we're hiring sales professionals whose sole responsibility is to prospect for new meetings, should we just hire 10 commission-only people, have them make 400 dials a week, and make it one big high volume play?
Our short answer: No
Landing new meetings is becoming far more strategic and nuanced than ever before. Especially since the start of COVID, more and more people are working remotely, which means phone numbers are often harder to find. Pair that with increased caller ID filters and it's far more challenging than ever before to get your prospects on the phone.
The role still requires high activity, hustle, and skill on the phone, but great BDR/SDRs today reach out via multiple channels - Email. LinkedIn. Even physical mail. When building your team, you'll want problem solvers in this role; people who can identify what messaging is working, which industries to go after, and are always striving to set more meetings per week.
Turning to Aaron Ross again, here's how he believes companies should think about their BDR/SDR role:
"The Sales Development role is often treated within a sales organization as a low-level job. If you treat it that way, you'll get low-level results. It's a challenging and often thankless role. [Instead] treat the team as, and expect them to be, experts. Don't skimp on training, equipping or developing them. Set high expectations of their ongoing skills development."
We believe your BDR/SDRs are the future of your sales organization. This team is like the Farm System for developing future sales All-Stars. They also represent your company over the phone, email, and on LinkedIn. No one in your organization will talk to more prospects than a BDR. The experience and knowledge they're gaining is invaluable.
It's also a very competitive job market for this role. From our experience, we see the following numbers hold true for average BDR/SDR salary/hiring costs:
- Salary between $45-60k
- Cost of hiring and training is estimated around $10k
- Healthcare benefits, 401k, payroll tax is around $7,500
- Hiring of sales manager to manage the team/process - $100,000
So, in total, hiring a new BDR/SDR costs an organization around $62,500 - $77,500 (plus factor in the salary/salaries for sales management). All in all, this is a VERY important short and long-term investment for growing your sales team.
Pros and Cons of Building a BDR/SDR Team In-house
Most B2B companies will at least start out by building their BDR/SDR team internally. Here are some of the positives of this approach:
Quality Control
Having a recruiter at your company who finds the candidate, does the phone screen. Then a VP of Sales who runs the interview. Maybe a couple more sales professionals on the team who interview the candidate as well. There's a nice cohesiveness, ease of communication, and sense of quality control in having that all happen in-house.
Coaching
We've seen many instances where the BDR/SDR sits right next to the VP of Sales (sometimes right by the CEO!) This makes it easy to deliver coaching and feedback right in the moment. (Although making cold calls right next to your VP of Sales or CEO can be just a tad intimidating...)
Camaraderie
As the team grows, having 3-5+ BDR/SDRs sitting next to each other, encouraging each other, going out for lunch as a team, this creates a great team culture and leads to increased results.
Bond with other departments
The BDR/SDRs make friends and interact with the whole company.
Downsides of Building a BDR/SDR Team In-House
But this approach doesn't come without its own set of challenges:
Time to Hire
On average, it takes two months to hire a BDR/SDR. Building a team of 5-10 people can take the whole year. Plus what about the VP of Sales and other members of the team taking time away from the job to hop in interviews?
Time to Ramp up
Takes 30 days to get up to speed and 90 days to reach top performance. And this is when you have a sales playbook and strategy in place. Without these pieces of the puzzle, ramp up time takes even longer and turnover increases from reps who grow frustrated and look elsewhere for a new job.
Remote Work
In 2020 and 2021, teams have been largely separated from each other, at least physically. The camaraderie advantage of having everyone together in the same office has taken a hit and remains uncertain in the new hybrid/remote work landscape.
Cost
We highlighted this above, but just to reiterate, you're looking at somewhere between $62,000 - $77,000 per rep in salary, benefits, and hiring costs. And that's not to mention hiring a team manager(s).
What Does Outsourcing a BDR/SDR Team Mean?
We want to quickly define the difference between using an external recruiting firm to hire BDR/SDRs vs. outsourcing a BDR/SDR team.
External Recruiting Firm
Like other open roles at your organization, the recruiting firm sources candidates, brings them in, but the hiring, training, and managing still falls on your plate.
Outsourcing a BDR/SDR Team
Starts out like a recruiting firm (sourcing candidates), but once you've picked the candidate, this new hire signs on with the Outsourcing Company.
Using us (Sales Empowerment Group) as an example:
- Sales Empowerment Group sources and recruits for the open BDR/SDR role
- Your company interviews/approves the candidate
- The BDR/SDR signs on with Sales Empowerment Group (signs onto our payroll, our benefits)
- The BDR/SDR gets an email address for your company, adds your company name to their LinkedIn, Slack channel, Microsoft Teams, etc.
Sales Empowerment Group handles the training, coaching, and managing - whether that's for 1 BDR/SDR or 20 BDR/SDRs. After some period of time - sometimes 2 months, sometimes 18 months - your organization hires away the reps who are hitting their targets. At this point, they'd leave SEG's payroll/benefits and become your employees.
Pros and Cons of Outsourcing a BDR/SDR Team
This approach doesn't come without its own set of pros and cons. But before diving into those differences, we first want to clear up a few myths. Since we can't speak on behalf of other companies in this space, we will provide answers given our model here at Sales Empowerment Group.
FAQ/Myths about outsourcing
Question: Will the people making cold calls be overseas?
Answer: No. At Sales Empowerment Group, we hire in the U.S. and our employees all work out of our offices in Chicago, Milwaukee, Kansas City, and Mount Pleasant (Michigan). Since COVID, our reps have worked hybrid and remote models, but are still connected virtually to their managers in one of our four offices.
Question: Will we have any direct contact with our reps?
Answer: Yes. Our clients add their Sales Empowerment Group BDR/SDRs onto their Slack, Microsoft Teams, or other internal communications channels. These BDR/SDRs join meetings. Work directly with your Account Executives. And, pre-COVID, we even had days where the BDR/SDRs would go to the client's office. Staying in contact with the BDR/SDRs, or their managers, is always an open channel.
Question: Will the BDR/SDRs be working for multiple companies? Splitting up their time like a freelancer?
Answer: No. Our model at Sales Empowerment Group is one-to-one. The ultimate goal is for the BDR/SDRs to learn your company, your product, and work their way up to be a full-time employee at your organization. We're not really sure how someone could be a BDR/SDR for multiple companies at once. Don't know how that would work very well for anyone involved.
Downside of Outsourcing
Now that we've addressed some of the myths and FAQs about outsourcing, let's look at a few of the challenges that come with this approach.
Taking a Risk / Losing Control over the Process
Any time you're working with an outside partner, consultant, or vendor, there's always a certain level of risk in the beginning. After all, you're trying something new and not sure how it's going to work out.
One way to alleviate this stress is to be clear on who your ideal candidate will be and what information you'd like them to learn. The more info the better. Such as:
- Do you want them right out of college or with 1-2 years of experience?
- Should they be familiar with your industry?
- What should they know about your company? Your product?
- What are some case studies and client testimonials they should know?
Being extra involved in the hiring process and creation of the sales playbook will relieve some of those feelings of risk and losing control over the process.
Feeling of Limbo - The BDR/SDRs are on the team... but not really
If you work with an outsourcing firm who doesn't have strong lines of communication in place, this can definitely become a problem. Poor communication leads to a feeling of, "Well, we have our sales team here and then this group of freelancers over there." The two teams don't become integrated.
Communication is key. We highly recommend giving your BDR/SDRs company emails, adding the company name to their LinkedIn, joining internal communications channels, and having them work directly with your closers. In the ideal situation, by the time you bring them on board (to your payroll and benefits) it should hardly be a transition at all.
Hire away costs
Similar to working with a recruiting firm or temp agency, there is usually a "hire away" fee when moving the BDR/SDR from the outsourced company to your staff. It's worth evaluating this cost against what your payroll, benefits, payroll tax would be + the time it takes to build a team via the outsourced model vs. doing this all in-house.
Pros of Outsourcing
When outsourcing a BDR/SDR team is done right, it can become the best of both worlds. You get the pros of the in-house model (quality control, coaching, camaraderie) along with additional "speed-to-game" aspects that are difficult to achieve in-house.
Quality Control
A good outsourcing partner is like adding a recruiter to your staff. They work with you to find the ideal candidate, and because they're always recruiting for BDR/SDRs, they have an extensive network to tap into.
Coaching
The BDR/SDRs might not be sitting next to your VP of Sales or CEO, but they do have a manager who provides training and coaching to help them improve in the role.
Camaraderie
This is an underrated aspect. For example, at Sales Empowerment Group, we have around 100 BDR/SDRs. Having that many peers going through the same ups and downs of the role, helping each other out is a huge lift.
Speed to Game
The biggest differentiator between the two models is how fast you can get the team up and running with the outsourced model vs. in-house. And by "up and running" we mean people hired AND consistently hitting their targets.
Our client Jason Torgler (Chief Revenue Officer at A-Lign) put it this way during a recent webinar:
"Looking back on it right now, what I would say is how quickly it [the outsourced model] can dial up is beyond anything we could've executed on internally," Torgler said. "[Compare that to] getting a manager hired. Getting BDRs hired. Getting them onboarded. The speed to results was way faster. I think that's the key thing that I see."
True "Farm System" Model
The BDR/SDR team is already like a Farm System for your sales organization. People start in this role and move on to be Account Executives, Account Managers, and other sales leadership roles. Sometimes they end up in marketing, customer support, all types of different departments.
With an outsourced partner, it truly functions like the Minor Leagues for your organization. The reps start out in our "Triple A Farm System", prove themselves in the role, and then you call them up to the big leagues.
Here's how a few of our clients view the "Farm System" aspect when it comes to their BDR/SDR team. Let's start with Josh Fosburg (VP of Enterprise Sales at WordPress VIP)
"It's so great to hire a BDR and then promote that person into another sales role," Josh Fosburg explained, "mainly because when you have that person who starts as a BDR, she learns something about the people you're selling to, the type of messaging that works, the reasons why your product is a right fit or not a right fit and then it's a natural progression into selling for your company/organization."
Jason Torgler over at Align feels more confident promoting someone from the BDR/SDR ranks to the next role vs. hiring someone completely new.
"I love known entities, right. Our quota carrying reps carry somewhere between a $2.5 and $3.5 million annual quota, so I don't like to take chances," Torgler said about the closers at his organization. "Two of my top three reps right now came from the BDRs. We like seeing how they come up through the ranks. To me it's a great farm system model - which is BDRs who are hungry, go-getters that are looking to start their sales career. They understand that the SDR, BDR function is a starting point."
For Jason, Sales Empowerment Group (SEG) delivered the winning formula for finding these future All-Stars.
"SEG does a really incredible job in the recruiting process focusing in on early-stage candidates who are hungry for a sales career, are passionate about the different industries that SEG services, and are also intellectual, smart individuals. Organized. SEG finds a nice mix."
Just like Aaron Ross of Salesforce.com fame, we too are firm believers that building a BDR/SDR team is the best thing you can do to increase your outbound sales funnel. This strategic, focused effort on setting new meetings increases the number of opportunities in the pipeline, giving your closers more at bats to bring in new business. It's a big undertaking, especially if this is the first time you're building a BDR/SDR team, but we're here to help you with tip and tricks whether you decide to build in-house or use an outsourced partner.
And if that outsourced partner is Sales Empowerment Group, well hey, when should we get started?