When designing the structure and composition of your sales development team, there are three main things to consider.
1. The number of SDRs needed
Work out the number of SDRs needed by settling on the ratio of SDRs to Account Executives (closers).
To work this out, use this top-down approach to calculate your ideal ratio of SDRs to AEs. (you’ll need to know your conversion metrics).
First, calculate the expected revenue of your sales team.
Let’s say you have 10 AEs and you want them to generate $8,000 in Monthly Recurring Revenue (MRR) each month.
Your average deal size is $1,000 MRR.
That means each AE will need to close 8 deals per month.
You know that your AEs need two opportunities to close one deal on average.
So you need 16 opportunities a month.
If you get a yield of two opportunities from every 5 demos, then you need 40 demos a month.
In this example, let’s say each SDR generates 40 demos a month.
That means you need a 1:1 ratio of SDRs to AEs.
2. Lead Assignment
The most important thing to consider in designing your SDR lead assignments is conversion.
Answer the question: “How will we set up our team to optimize for conversion?”
- Random Assignment – Leads are randomly assigned to SDRs.
- First Come/First Served – SDRs are teamed with quota-carrying AEs and only work on leads in their territory. The territories can be geographic or industry specific depending on your sales process.
- Inbound versus Outbound – In this scenario, the team is split between SDRs who qualify only inbound leads and SDRs who are responsible for outbound prospecting.
- Buyer Persona Type – SDRs might be assigned to leads by company size such as SMB, mid-market, or enterprise. When you decide on your lead assignment rules, make sure you have the proper time zone coverage.
Experienced, dedicated sales development management is absolutely essential to the success of the team.
While you may require a manager/contributor in the early days of the group’s existence, there must be a dedicated manager in place once there are three or more SDRs.
The biggest mistake organizations make is to have the SDRs report to a VP of Sales or Marketing who has other responsibilities.
SDR teams typically require intensive coaching and proactive management.
For best results, there needs to be an SDR Manager and the SDR:Manager ratio should not exceed 8:1.