There's been a lot of noise recently about how the decline of sales is leading to the extinction of the Sales Development Rep (SDR) role, driven by increasingly more difficult economic climates, declining response rates in outbound prospecting and changes to technology with the advent of AI.
The reality is that it's not the SDR role that needs to go away. If anything it's the complete opposite and time to double down, but not in way you might think.
The Henry Ford Model - The Moving Assembly Line
In 1913 Henry Ford introduced the moving assembly line to his factory to helpf reduce the cost of the Model T. The concept was simple:
Reduce the variety of tasks that an individual does, instead giving them one single task for an entire shift.
The output of this was the each task was completed with greater speed and efficiency, increasing throughput and quality. With more complex tasks this approach becomes even more important, as the operator gains an in-depth knowledge of the task, whether it be needing to orient a part in a certain way to fit it together, or knowing that parts can catch or snag that slow the process down.
The assembly line process is not only a logical and sensible approach to managing people, but it is engineered for success with each task and responsibility carefully crafted to maximise the capacity and throughput of each individual.
The Predictable Revenue Model
The Predictable Revenue Model adopts the assemble line approach and applies it to sales, which is an increasingly complex and time consuming role as the years pass.
The tasks of a salesperson have swelled over the years, and despite the introduction of sales productivity tools to help with areas like finding prospects and cadencing & sequencing, the success rates have decreased in a way that in part has worked to offset that progress.
The introduction of AI support has worked to make things even worse - Whilst it's become easier to do more with less, that increased volume from EVERYONE has acted to decrease overall response rates to sales activities, moving everyone one step forwards and two steps back.
With that, the the notion of the SDR role dying is a puzzling one, as the fundamentals of sales haven't changed and instead have just evolved:
Demand is generated
Demand is captured
These two (massively simplistic) components are why the SDR role was invented, to help split out the roles and responsibilities between SDRs and AEs.
Sales is getting harder, capacities getting smaller
With the difficulty of sales increasing, the importance of being both efficient and effective in each sales task carries out becomes exponentially more important.
The ability to do this is inherently tied to a salespersons capacity, or the amount of sales activities that they can carry out, and decreasing effectiveness is practically the same as a decrease in capacity.
Take this scenario:
It took 10 hours to do 100 tasks that generate 5 meetings
It now takes 10 hours to do 100 tasks that generate 3 meetings
Is this any different to this:
It takes 6 hours to do 60 activities that generate 3 meetings
Now ask yourself - If your Account Executives (AE's) had their time limited to 60% of what they used to have, would you want them to spend half of that time prospecting?
The answer will be a resounding NO. You want them focussed on managing and closing deals.
But what is happening at the moment is a mass declaration of the end of the SDR role, with responsibilities being wrapped up under AEs. It's a short sighted way of restacking a sales org, and one that doesn't particularly scale well.
Keeping knives sharp - A poor use of resources
It doesn't matter how much time an AE has, if it is possible to entirely fill their calendar with opportunities and deals to handle, no sane sales leader should trade out actively working on opportunities for prospecting.
Even when the usual excuse of sales reps keeping close to prospecting to keep their ears to the ground and skills sharp doesn't really stack up if you're trading keeping prospecting skills sharp at the expense of closing skills - A packed out calendar should always win out as a priority.
If an AE can earn twice as much on their base as an SDR, does it really make sense for half of their working day to be doing the same work as someone paid half as much?
It's pretty confusing how
Reviewing the revenue math
So what does this mean?
It means an even more aggressive approach to the predictable revenue model, and one that probably flips the "ideal ratio" of AE to SDR on its head for many organisations.
Here's an example:
There are 16 hours of opportunity work needed a day, and 32 hours of lead generating work.
Historically this would have probably looked like this:
4 AEs with doing 4 hours each of opportunity work, and 4 hours of lead gen work
2 SDRs with 8 hours of lead gen work each.
Assuming a $40K salary for the SDR and an $80K salary for the AEs, that's a wage bill of $400k a year.
The new approach would be far more aggressive:
2 AEs doing 8 hours of opportunity work
4 SDRs doing 8 hours of lead gen work
A wage bill of $320K a year (a 20% saving)
Why are businesses not taking this approach?
In part, doubling down on the 360 AE role keeps them clear of admitting the obvious - The growth at all costs approach of stacking AE talent for quota coverage doesn't work.
Unfortunately for many businesses they have already hit their SDR teams with major Reductions in Force, as they were easy targets to PIP out of a business - Re-hiring these back in would require additional layoffs across their AE teams to reset the balanace.
Some businesses that I've spoken with are already questioning their actions over the last few years, and realising that they could operate their current revenue run rates with considerably streamlined AE teams, but it would require re-building SDR teams which takes time.
What's the solution?
The solution is clear - Better capacity analysis and planning and a completely fresh and holistic approach to building their sales teams.
Reversing major strategic directions won't be easy, and without a fresh approach guiding the nuances of capacity, and the flow of opportunity & revenue through a business it will be impossible to course correct.
For many, it's already too late.
We believe that it's time for businesses to rethink their approaches to sales capacity, the way they build teams and monitor progress, and build out strategic plays & investments.
Nothing is dead, it's simply evolving.
Clevenue helps businesses to create Sales & Revenue Capacity plans, that are representative of real life performance and potential. Drop the outdated revenue models and approaches, and discover the reality of sales capacity in your business, and how you can build a sales team that hits target.