Ilya Semin is the founder and CEO of Datanyze, the all-in-one sales intelligence platform.
Sales development teams have become a vital part of a B2B organization's overall sales force. Today, more than 40 percent of software companies rely on these specialized groups — which focus exclusively on the front end of the sales cycle — to set up qualified intro meetings and demos.
My software company Datanyze, which specializes in tools to help companies perfect their sales intelligence, is no exception. When deciding how to best structure my own sales team, I was inspired by Aaron Ross' book, “Predictable Revenue,” which outlines Salesforce’s dramatic sales growth through sales development representatives (SDRs). Today, sales development is a huge part of Datanyze's customer acquisition strategy. In fact, sales development currently accounts for just over half of our new business, and our sales development team has played a critical role in growing our revenue by 500 percent in the past 12 months.
A common practice within many organizations is to assess their sales development teams by "activity" metrics, since they are not directly involved in closing deals. But this is a mistake. Leaning on email or call metrics alone can be more harmful than helpful in boosting productivity and driving growth. When sales development representatives (SDRs) are forced to hit a certain number of dials or emails per day — and their performance is solely based on this — they will start focusing on ways to hit quotas regardless of lead value. For example, resourceful reps motivated by faulty metrics may start leaving voicemails on switchboards or emailing exhausted leads instead of finding new ones.
There are more meaningful ways to measure the quality of your SDR team's efforts, which can be analyzed alongside deal closers for a holistic view of your sales team's overall performance. Based on my experience in growing a sales team, here are the top four metrics to focus on:
Number of Qualified Opportunities
Don't get too hung up on channel-specific metrics when it comes to initial lead generation — they don’t mean much. At the end of the day, it doesn't matter how your SDR scores the intro call or demo, be it through social media, email, phone, etc. What matters is that the meeting is booked and that it's with a prospect that is qualified to purchase your company's solution.
After a baseline goal for qualified opportunities has been set, progress should be assessed monthly to ensure your SDRs are staying on track and also to help your organization adjust goals as necessary (e.g. are they unrealistic or do they need to be higher?). At Datanyze, we encourage sales development reps to experiment with new outreach tactics. For example, we have a dedicated rep who spends time each day sourcing relevant questions on Quora, serving as a resource to people posing questions about and engaging in conversations around challenges that our company’s solutions can address.
Total Amount of Pipeline Generated
Most SDRs are focused on generating qualified leads, which are then turned over to an account executive. Once pricing has been discussed with a prospect, the account executive will often assign a monetary value to the opportunity. By assessing the total value attributed to all of the deals your SDR team has sourced per month, you can track the total amount of pipeline generated.
This is the most important metric at my company. Once our account executives put a value on a deal, we consider this value part of the total pipeline. We know our conversion rates at each stage of an opportunity, so we know exactly how much revenue to expect, taken from the pipeline. This is also a particularly important metric as it filters out opportunities the team has created that either weren't good fits or didn't have the budget to proceed. It also allows you to pinpoint potential problem areas, such as SDRs who routinely over-book demos or intros with poorly qualified leads that rarely convert to actual deals.
Deal Conversation Rate
Once you're able to create a strong outbound pipeline, you'll likely begin seeing some deals close. You can celebrate, but don't stop measuring. Now is the time to look at the downstream conversion rates of your SDRs' efforts, from qualified opportunities secured to closed, outbound deals. This conversion rate will provide valuable insight into whether or not the opportunities your team is creating are closing at an appropriate rate.
To take full advantage of this critical performance indicator, it's also important to assess SDRs individually so you can identify under-performers as well as rock-stars who are consistently surpassing their goals. From there, you can make necessary adjustments, for example beefing up training or deploying new prospecting tools.
Average Contract Value and Average Sales Price (ACV/ASP)
Your outbound SDR team should be going after the big fish and leaving the long tail to the inbound team. This effort should be reflected in the average contract value for outbound deals, which should be consistently higher than inbound. Focus your outbound team on larger, more complex accounts that need a human touch, not nurturing leads. At my company, our outbound ACV contracts are, on average, 30 percent larger than inbound sales. This is because our sales development reps are focused on targeting companies who require larger, more complex rollouts.
It's critical that SDR leaders establish and incentivize metrics that hit the bottom line. By implementing these four important measurement approaches, you'll be well on your way to understanding the true performance and value of your SDR team.