Do we still need SDRs in 2023?
Do we still need SDRs in 2023?
Its a hot topic
Sales Development has been a key role in tech sales for the last 20 years, serving as career entry point for many of today’s top sales leaders, but in today’s economic climate many execs are questioning if the SDR role still makes sense given changes in consumer behaviors.
Let’s break it down by asking 3 questions:
What are the origins of the SDR role?
What are the problems with the SDR role in 2023?
Why retire the SDR role now?
What are the origins of the SDR role?
While the answer for folks who grew up in tech sales is, “its always been that way”, it is a question that routinely perplexes sales leaders who come into tech from other industries as the norm outside of tech is for salespeople to do both prospecting and closing, aka “full cycle salespeople” (or as I like to call them, “salespeople”).
There are actually two answers.
1. People watched Boiler Room and thought “let’s do that in tech!”, without realizing that the reason prospecting and closing are separate activities in financial services is more out of necessity (you need to be a licensed broker in order to close) than by design. Ok this probably isn’t the answer but the historical proximity of finance and tech means we can’t rule it out.
2. People saw that Salesforce had SDRs in their early days (circa 2005) and copied them. It seems like this is actually what happened. After all, the world looked a lot different back then to how it looks today. We had:
Prospects (like me) who worked at desks with phones that they always answered in case it was a customer or their boss calling. Cold call connect rates were so high, it was rare that you couldn’t get hold of someone on the phone.
Prospects (like me) lived in their email yet top salespeople did not use email for prospecting. Selling tech in 2005 was all about physically getting into the building so you could walk around and schmooze for opportunities, because that’s how it had always been done. This emphasis on real-world interaction meant that our work email inboxes contained only internal and customer communications. It was so rare to get unsolicited emails from vendors that you’d most likely respond so it was worthwhile to hire digitally-savvy college grads who’d grown up with email and the internet and have them take advantage of this.
Prospects (like me) who were used to being sold to, rather than going online to do our own research. There was very little product information available online so the norm was to have vendors come pitch to us in order to learn about their products.
There were no social networks for professionals. LinkedIn was TINY in those days, with about a million users, most of whom (like me) weren’t quite sure why they’d signed up for it. The LinkedIn feed as we know it didn’t show up until the early 2010’s, so people only went there when they were looking for a new job.
Combine this ease of access with a great product at a great price and its no wonder Salesforce took off like it did. And with many of those early employees going on to lead sales and marketing at other tech startups, it’s easy to see how the wheels were set in motion to make the SDR role an integral part of tech sales.
What are the problems with the SDR role in 2023?
There are two that come up repeatedly in conversations: 1) It’s a frustrating experience for buyers and 2) It’s challenging to get consistent results. Let’s dig into each of those:
1. It’s a frustrating experience for buyers. In 2023, the default way to buy anything in our lives is to go online, do research and compare pricing before contacting vendors — we do this for everything from a $50 gadget on Amazon, to a $50k car on Toyota’s website, to a $500k condo on Redfin.
Yet when it comes to a $5k software purchase for our business, for some reason we have jump through an unbelievable number of hoops. We have to:
Fill out a form on a website.
Book a meeting with an SDR.
Wait for the meeting to happen.
Answer the SDR’s qualifying questions.
Act delighted when told “looks like it makes sense for you to meet with one of our AE’s.”
Book a meeting with an AE.
Wait for the meeting to happen.
Answer the AE’s questions. 50% chance you repeat yourself.
Finally…get a demo and if we are lucky, pricing on the same call.
It’s no wonder buyers find this process frustrating.
2. It’s challenging to get consistent results. This stems from trying to get the ROI to pencil out:
There’s a high fixed cost to running an SDR team relative to other lead generation channels. You have to pay fir salaries, benefits, tech tools and training time, with no guarantees of leads or revenue. Companies try to mitigate this by making Sales Development a lower-paying, entry-level role.
In an effort to drive consistency with entry-level employees, sales leaders have to limit the number of decisions an SDR has to make, cutting out strategic thinking, research and personalization steps to focus on button pushing and using automation to trade volume for lower response rates.
Lower response rates lead to SDRs getting assigned the lowest quality leads because AE’s are afraid of burning bridges with their best leads. “We’ll keep the Tier 1’s and 2’s for the AE’s and give the Tier 3’s to the SDR team” is an all too common trope in sales teams (even though the AE’s never get around to prospecting most of their own leads). Lower response rates also increase the focus on volume, leading to MQL criteria being softened (“let’s make the lead form shorter!”) and lead quality declining further.
Lack of success in the role leads to high turnover in the role. 100% of folks who start out as an SDR see it as a stepping stone to becoming an AE in 1-2 years, but struggle to get consistent results and burn out from the monotony of the role. And yes, while there are a handful of superstar SDRs who can miraculously think strategically, be subject matter experts and achieve influencer status on LinkedIn, it’s not realistic to expect this across the board.
Why retire the SDR role now?
The buying experience has shifted for good. People have come to expect B2C buying experiences in all aspects of their lives, including buying software for work. If I can configure a $50k Toyota Highlander and get an online quote before talking to a dealer, why can’t I do the same when buying software?
The email channel is beyond saturated. Buyers’ inboxes are full of vendor spam outreach. As a CRO I get 30+ a week and I know that’s on the low end. The only outbound play that works anymore is a warm intro from a mutual connection, and with warm intro success rates at minimum 10x higher than cold outbound, it’s worthwhile for AE’s to just run the play themselves.
Nobody answers cold calls unless their day-to-day job involves answering cold calls. The number of buyers with phone-dependent jobs is dwindling every year as businesses adapt to their customers wanting to do business online.
LinkedIn is still a great channel but the volume is capped. You can’t send more than 100 connection requests per week and more than 50 inMails per month. Both of these motions can easily be automated and don’t justify a full time position.
Inbound lead qualification can be fully automated. The fear of “the form not converting because it has too many fields” is outweighed by the increase in lead quality and the fact that B2C experiences have trained us to hand over our data more freely. We’d rather answer questions on a form than answer questions on a sales call.
The weak economy has forced the ROI discussion. Companies are no longer flush with cash so every expense needs to tie back to ROI. When compared to other marketing channels, the relatively high fixed cost of running a sales development team makes it hard to justify.
As for those superstar SDRs on your team? Just make them AE’s already. If they can think strategically, prospect consistently and be subject matter experts, there’s no doubt they can be great at closing too. In fact, they’ll probably be your top performers.
RIP Sales Development. Long live full cycle sales.
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