Scaling brings many challenges, but one of the biggest is how to create sustained commercial growth, driven by acquiring new customers. As efforts scale, most businesses eventually ask the same question:
Should we rely on marketing efforts and increase budgets or hire more Sales Development Representatives (SDR's)?
A pretty difficult question to effectively answer, and one that could be modelled in virtually unlimited directions - Let's explore the pros and cons of relying on marketing versus hiring more SDR's:
Relying on Marketing for Lead Generation
Marketing plays a crucial role in attracting and engaging potential customers. Businesses can create awareness, build brand equity, and generate interest in their products or services through marketing, but it can also come with hidden resource costs.
Pros of Relying on Marketing:
Scale and Reach: Businesses can reach a broader audience and increase brand awareness, leveraging channels such as content marketing, social media advertising, and search engine optimization. With marketing efforts attracting a wide range of potential customers, it can really help expand the top of the sales funnel.
Long-term Strategy: Marketing initiatives often focus on building a strong foundation for lead generation over time. By consistently delivering valuable content, nurturing relationships, and establishing thought leadership, businesses can create a sustainable pipeline of qualified leads, contributing to long-term business growth.
Cost Efficiency: Depending on the maturity of the business and marketing tactics employed, marketing efforts can be cost-effective in the long run compared to hiring and maintaining a team of SDR's. Automated marketing systems and tools can help streamline processes, reducing manual efforts and associated costs.
Cons of Relying on Marketing:
Time and Resource Intensity: Developing effective marketing campaigns and strategies requires time, expertise, and resources. It may take a significant amount of time to see tangible results and optimize marketing efforts for lead generation. Patience and a well-thought-out marketing plan are essential.
Lack of Direct Customer Interaction: While marketing efforts create awareness and generate interest, they may not provide the personalized, one-on-one interaction that SDR's can offer. This can make it challenging to build strong relationships with potential customers and address specific pain points. Personalized interaction can be crucial for converting leads into customers.
Lead Quality and Conversion Rates: While marketing can attract a large pool of leads, it may not always guarantee high-quality prospects. The conversion rates from marketing-generated leads to closed deals may vary, as some leads may not be fully qualified or ready to make a purchasing decision. Lead qualification and effective handoff become critical considerations, and might even require an SDR team to be involved.
Hiring More SDR's for Lead Generation
Sales Development Representatives (SDR's) focus on lead generation, qualification, and nurturing. By hiring more SDR's, businesses can capitalize on their skills and expertise to drive effective lead generation efforts, but as team members they need to be hired in and trained, and so aren't so much of a quick fix.
Pros of Hiring More SDR's:
Dedicated targeting & Reach: SDR's are able to reach people and personas that marketing might not be able to, thanks to access to data tools and direct methods that can't be effectively leveraged at scale by marketing, such as social media channels and cold calling.
Personalized Messaging: SDR's provide a human touch to lead generation efforts through personalized outreach, such as cold calling, targeted email campaigns, and direct conversations. Their ability to engage with prospects directly allows for tailored messaging and relationship-building opportunities.
Cost effectiveness: In some instances, SDR's can be a cost effective approach to dialling up lead generation as an additional layer outside of marketing, especially when compared to AE's (account executives). By focusing solely on lead generation and qualification, SDR's ensure that AE's spend their time and effort on high-value prospects, maximizing their productivity and closing rates.
Cons of Hiring More SDR's:
Recruitment and Training: Hiring and training SDR's can be a time-consuming and resource-intensive process. Finding individuals with the right skill set and sales acumen may require extensive recruitment efforts. Additionally, adequate training is necessary to ensure SDR's can effectively execute lead generation strategies.
Cost Considerations: Hiring and maintaining a team of SDR's involves significant costs, including salaries, benefits, and additional resources such as technology platforms and tools for efficient lead management. Financial considerations need to be weighed against the potential return on investment.
Scalability Challenges: Scaling a team of SDR's can present logistical challenges, particularly when it comes to managing a growing volume of leads. Ensuring proper coordination and communication between SDR's and AE's becomes crucial as the business expands to avoid bottlenecks and maintain a smooth lead handoff process.
Which lever do I pull?
Determining the most appropriate route to take between relying on marketing or hiring more SDR's for lead generation depends on various factors and unique business scenarios. Let's explore some key considerations that can help you make an informed decision.
Time: If time is of the essence and there is a need for immediate lead generation results, the quickest but most costly route will be paid marketing, especially SEM, this however is limited to your available reach.
Whilst taking a little longer, hiring more SDR's can be a more cost efficient route where they can quickly engage with prospects, qualify leads, and initiate the sales process, providing a more direct and proactive approach to generating opportunities.
If you have the luxury of time and are willing to invest in a long-term lead generation strategy, focusing on marketing efforts can yield sustainable results over time at lower cost, but again can be limited by audience reach.
Scalability: Consider the scalability of your lead generation efforts. If your business is experiencing rapid growth or has aggressive expansion plans, hiring more SDR's can offer the flexibility to scale your lead generation capacity according to demand. SDR's can be trained and onboarded relatively quickly, allowing you to adjust your team size as needed.
On the other hand, marketing efforts may require more time and resources to scale effectively, especially if they involve content creation, SEO, or building an online presence.
Predictability: Hiring more SDR's can provide a higher level of control and predictability over lead generation as you have a dedicated team focused on prospecting and qualification, with leading metrics that can be a good indicator or pipeline building progress.
Conversely, marketing efforts may have more variables and can be influenced by external factors such as changes in algorithms, market trends, or competitor activities. Consider the level of certainty and predictability you need to make informed decisions about resource allocation.
Resource Availability: Hiring more SDR's incurs direct costs such as salaries, benefits, and training expenses, but also comes at the time cost of lost time due to interviews, as well as the lag between initiating hiring through to a fully ramped team member. You need to seriously evaluate whether you have the in-house expertise or the capacity to train and manage an expanded SDR team effectively, as stretching management can have an overall detrimental impact to your existing teams.
Marketing efforts may require investment in technology platforms, advertising campaigns, content creation, and SEO optimization to effectively scale beyond their current state, and so also need assessing to see if you have the resource to execute effective lead generation campaigns.
The decision of whether to rely on marketing or hire more SDR's for lead generation is not a simple question to answer or one where there's a one-size-fits-all solution. It depends on factors such as the business's specific needs, available resources, target audience & industry, and growth goals.
Some businesses may find that a combination of both approaches yields the best results, leveraging marketing efforts for broad reach and brand awareness while complementing it with a dedicated team of SDR's for personalized outreach and lead qualification.
Dedicated approaches to modelling the impact of hiring, promotions and lead volumes can help you build a robust plan, and testing the "what if's" around it can ensure that the plan you build won't capsize in rough waters, ensuring a more stable and predictable route to growth.
At Clevenue, we believe there's a simpler and smarter way of understanding the dynamics of growth, and building it into a plan that works. We remove the complexities of spreadsheet planning, the uncertainty of market dynamics and provide a real time view of a plan and where businesses can project themselves to land.