What’s happening and what do you need to do to make you’re still relevant after this change?
The sales industry is going through another drastic change.
But this time, I predict the future of sales will look a lot like it used to.
As Doc Brown, famously said in the hit 1985 movie, “We are going back to the future, Marty”.
What’s happening right now?
SDRS, Sales development reps, inside sales roles and BDMs (business development reps) are being laid off in their hundreds of thousands right across the US and the UK.
We are not immune to that here, it’s already started.
Why?
Mostly because they never really paid for themselves. They were a cost centre, not a profit centre.
When you think about it sales has to generate enough revenue and profit to cover all department costs. Finance, Ops, Leadership, all of it. If any part of the sales function is not profitable, it needs to go as it is not adding to the pool of available funds, it’s reducing the available funds.
Most SaaS company executives don’t have many original ideas in their career, typically, they just follow other organisation’s leader’s decisions.
They copy what looks like it works.
So when Salesfarce started using SDRs to set meetings for their account managers or ‘AEs’ everyone followed. (Thank you Aaron Ross and Predictable Revenue).
Once LinkedIn, Paypal, Oracle, and Amazon, also started using a separated sales approach everyone assumed those executives knew something they didn’t and so eventually everyone simply followed the leader.
Speaking of ‘following’.
If you’ve been following me you’ll know I’m not a fan of the SDR role in its current application. (That’s why I own an outsourced sales development agency. I’m dissatisfied with how most businesses are doing their SD motion right now).
Placing your least experienced sellers into the toughest role in the organisation with the highest failure rate and highest levels of staff churn was always a bad management strategy.
And, now that the easy money has disappeared (Interest rates, and by extension the cost of money, has increased) SaaS companies are looking to cut any activity that’s not making them money.
So these SDR- front-of-funnel type roles are being retrenched or their numbers reduced across the globe.
4 Reasons why SDR roles are largely unprofitable?
1: Poor leadership
Leading an SDR team takes specific expertise not just off-the-shelf ‘sales’ experience. Ordering them to ‘do more’ is not the direction needed for this sales function.
2: The proliferation of Sales Engagement platforms
They have allowed us to SPAM our entire TAM (Total Addressable Market) with emails and LinkedIn messages.
Again, more activity is not the answer.
3: Outreach, in its current format, is mostly useless.
We have reached a point where there is so much noise that it takes something truly special to cut through and gain attention.
Most businesses simply don’t have the rigour or the desire to execute effective, meaningful outreach.
4: Using SDRs as disposable pawns
- Is morally bankrupt
- Positions prospecting as low-level work
- Creates poor client experience.
Back to the Future.
When I started in sales the world was black & white, I mean sales was black & white. There was just one type of seller.
We sold to existing clients, we found new clients, and we grew our new and established accounts.
We did transactional and strategic sales. We did all the sales.
Now, we call this type of rep a FULL CYCLE rep.
I believe this is where many businesses should return to.
One salesperson who sells to existing accounts and has the responsibility to also bring in new business.
E.G. Their typical quota is 70% from existing business and 30% from new business.
I’m not the only one saying this either, if you watch and listen to the really thoughtful boys and girls on social channels they agree.
These voices are typically harder to find than those who support the sales engagement platforms.
Just this week Jason Bay and Kyle Coleman were talking about this on Jason’s Outbound Sales Podcast.
I spoke about it with Felix Krueger on his Fast Forward Enablement podcast over a year ago.
IMO, if this plays out as I suspect, this is a good result because it means the separation of AE/ SDR functions.
This would then make prospecting something all sellers need to do and is not left to the most junior person on the sales floor.
And, most importantly.
Because of the time challenges this will create for the full cycle rep – (they are busy) prospecting will need to happen on those targets most likely to convert. There is no room for wasted energy.
For most sellers, targeting will need to be smarter and tighter.
Lastly, because the full cycle rep is more experienced the initial interaction with clients will be more valuable, more targeted and contain more context.
Spray and pray will be gone.
I like these outcomes – a lot!
The biggest question for many sales leaders will be how should they get to a team of full-cycle reps from where they are now.
Do I keep my best SDRs and promote them or do I retrain my current AEs to be able to prospect smarter?
With sales wages increasing significantly in 2022 and now on the decline – I suspect more companies will be inclined to bring as many SDRs up as they can and make any AE’s who choose not to prospect redundant.
What does this mean for you?
My advice:
1: If you’re an AE right now.
Sharpen your prospecting skills and show the leadership team you’re willing and able to bring in new business.
2: If you’re an SDR right now.
Show the leadership team you’re committed to the business and you’re keen to step up. Importantly show them that you truly understand the business outcomes you and your clients are creating by working together.
Grow your industry-specific network.
3: If you’re a Sales leader right now.
Looking for the above and, on top of that, who is coachable.
Who has growth left in them versus who is going to be hard to (re)train?
If someone drags their feet in this switch – it’s likely going to slow you down.
When it comes to sales team development, I think we should always look to coach the middle, support the high performers and relocate the lowest performers.
Spending lots of resources on your low performers can feel like the right thing to do but when it stops you from moving the middle two steps to the right and up it has an outsized negative impact on your team results.
Gains are had at moving the middle up and to the right.
When should you move?
As soon as you’re uncomfortable with.
A: The results your SDRs are getting versus what they (really) cost to run.
B: The way you’re business is being presented by your SDR function.
I.E. What’s the customer experience like?
Customers are less likely to put up with crappy outreach now more than ever. Vendors are being blacklisted inside organisations just because the cold call targeting was off or the email arrived poorly timed.
I’ve seen the responses, I know this is true.
Or C: You have less than 5 SDRs
NB: Want to test your SDR calculations, try this calculator.
OK – The Elephant in the room:
I can hear you asking how can I say this and still own and support an outsourced Sales Development Agency.
(refer to the reasons why the SDR function is broken)
1: We have strong sales-dev experience and focused leadership.
2: Unlike most corporates, our people aren’t trying to move into another role. They see themselves as professional prospectors. They are not pawns at the bottom of the sales ladder.
Prospecting is not something we ‘have to do’ in order to get somewhere else, we actually enjoy doing it.
3: We use highly targeted outreach methodologies most businesses can’t replicate.
We spend too much time on things like data quality and on our outreach methodology, simply it can’t be replicated by most corporate sales teams.
What’s going to be the biggest challenge for the modern sales professional and sales leadership in this transition?
How can you get people who thought they have outgrown prospecting back into a daily prospecting routine?
Maybe it’s time to rehire all those 50-something sales dogs.
“Quick! To the DeLorean”
