🎙️Transcript: Scaling Your World Class Sales Development Organization
True Ventures' "True University"
"Scaling Your World Class Sales Development Organization"
Lars Nilsson, Ralph Barsi
June 13, 2017
Summary
In this educational session for True Ventures portfolio companies, Ralph Barsi (ServiceNow) and Lars Nilsson (Cloudera) share comprehensive insights on building and scaling world-class sales development organizations.
Ralph opens by establishing the two fundamental objectives every SDR organization must have: driving revenue pipeline and driving talent pipeline for the business.
The discussion covers the critical distinction between SDRs and quota-carrying reps, with SDRs focused solely on qualifying leads and setting meetings rather than closing deals.
Key topics include optimal manager-to-rep ratios (200-300 leads per month per SDR), compensation structures (12-15 meetings per month quotas), and the importance of tracking meeting conversion rates to opportunities.
The presenters emphasize that SDRs should not set meetings more than seven business days out and should introduce calls before handing off to account executives.
Both leaders stress the importance of creating clear 18-24 month career paths broken into six-month chunks, with many companies creating intermediate roles like renewals teams or corporate sales to bridge the gap between SDR and full enterprise AE positions.
The session includes extensive discussion of technology stacks (Salesforce, Eloqua, Outreach, LeanData, LinkedIn Navigator) and the criticality of clean CRM data through centralized account management.
Throughout, the presenters emphasize that SDRs must speak in the language of prospects' business problems rather than pushing product features, and that successful companies create systems that allow even recent college graduates to generate qualified pipeline when equipped with proper tools, processes, and playbooks.
BIG Takeaway
Every SDR Organization Has Two Core Objectives
Sales development teams exist to drive both revenue pipeline and talent pipeline for the business. If you stick to these two objectives, you will create a system, process, or formula for repeatable and almost predictable pipeline on both fronts.
Understanding this dual purpose clarifies vision and helps leaders balance business needs with individual career development, recognizing that today's SDRs become tomorrow's account executives, customer success managers, or leaders in other parts of the organization.
SDRs Should Manage 200-300 Leads Per Month
Best practice benchmarks indicate that a sales development rep can effectively handle 200-300 leads per month while maintaining quality. This workload allows for proper research, multi-touch follow-up sequences (up to 15 touches on high-scored leads), and meaningful conversations.
Teams should track not just meetings booked but also meeting completion rates and conversion to opportunities, as these downstream metrics reveal whether SDRs are truly qualifying prospects or just gaming meeting numbers.
Never Allow Meetings Set More Than Seven Business Days Out
Anyone can say yes to a meeting a month away, and the odds of that meeting actually executing are very low. Set firm guidelines that meetings must occur within seven business days maximum, ideally within two to four business days.
Meetings that get pushed repeatedly and never execute should be clawed back from SDR quotas the following month, as this indicates poor qualification or lack of genuine interest from the prospect.
Create Clear 18-24 Month Career Paths Broken Into Six-Month Chunks
Set expectations during recruiting that SDRs will spend 18-24 months in the role, but break this tenure into four six-month periods (freshman, sophomore, junior, senior).
The first year focuses on mastering the craft of sales development. At the one-year midpoint, hold a "come to Jesus" meeting where SDRs decide whether to continue pursuing sales or explore other paths. The second year involves the company investing resources to prepare them for their next role so they can start acting as if they're already one or two positions ahead.
Build Intermediate Roles to Bridge the SDR-to-AE Gap
The jump from SDR to enterprise account executive carrying a seven-figure quota is often too large. Create intermediate roles like renewals teams (managing existing customer renewals) or corporate sales teams (selling to SMB with shorter sales cycles over the phone).
These stepping-stone roles allow SDRs to develop sales skills progressively over 3-5 years, with each role lasting 12-18 months. Companies that fail to create these paths will lose their best SDRs to competitors who do.
Speak the Language of the Prospect's Business, Not Your Product
The fix for low response rates is teaching SDRs to lead with the prospect's business issues, industry challenges, and critical business problems rather than pushing product information.
When an inquiry comes in, connect dots immediately: "I noticed you spent 30 minutes on these three pages. Here are three things people in your role typically call us for. How would you stack rank these issues?" This service-oriented, problem-solving approach resonates far more than feature-focused pitching.
Invest in Comprehensive Sales Technology Stack and Operations Expertise
Modern SDR success requires sophisticated technology: CRM (Salesforce), marketing automation (Eloqua/Marketo), email sequencing (Outreach/SalesLoft), sales intelligence (DiscoverOrg/ZoomInfo), lead routing (LeanData), and prospecting tools (LinkedIn Navigator).
However, technology without proper implementation is worthless. If you don't have legitimate sales operations or marketing operations expertise, hire consultants who know how to architect these systems properly. Poor implementation will cripple your organization's effectiveness permanently. Technology, strategy, people, and process must all be covered to succeed.
Transcript
Lars Nilsson (00:00:01):
Thank you, ladies. Thank you very much. Also, I've been advising into the True Portfolio for about five years. So some of you I may already have met and for those that I have not met, if any of the topics and things that we cover today you want to double click on and have further conversations, please know that through the generosity of True and the partnership, you have access to me with phone calls, emails, texts, and even meetings if it's here in San Francisco. So feel free to connect with me after this if you want to talk shop on anything, SDR, sales operations and what have you.
(00:00:50):
This is exciting for me, not only because this is the fourth time I've done this at this event, but the fact that I get to have Ralph, someone else with me is huge. I have watched Ralph up in front of groups probably for the last two or three years, and I now have someone that I view as a mentor. So hopefully we'll have some fun today. There's not a lot of structure. There's not a lot of slides. I've put some things up here to remind me not to forget, but really start thinking right now of those things that you think you want to ask. And they can be literally anything sales related. We might focus the discussion on generating demand and building pipeline through the role of an SDR, but really Ralph and I can talk on just about anything as it relates to sales, marketing, demand gen, lead operations, building SDR teams and what have you.
(00:01:55):
So with that, I really want to let Ralph do most of the talking, which might be difficult for me. I'm going to jump in now and again, but truly it's an honor for me to have my pal, Ralph with me here today.
Ralph Barsi (00:02:10):
Well, the feeling's mutual, Lars, thank you for having me and thank you all for carving out this hour to invest time with Lars and me. So again, my name is Ralph Barsi. I currently run the worldwide sales development organization at ServiceNow right here in the Bay Area. It is a global team with today 138 people on it. About 80% of that team is comprised of sales development reps. You'll also hear that term as an SDR or an ADR or a BDR. The other 20% or so represents frontline management and directors of the respective geographic locations across the world. So there is a twofold objective that our organization has in the sales development function. And it's funny, but it's the exact same twofold objective as every sales development organization should have, no matter how small or large the organization. And that is to drive a revenue pipeline for the business and to drive a people or a talent pipeline for the business.
(00:03:16):
And if you are a business owner or a leader of a sales development organization, and you understand that it's really that simple, if you stick to one of those two objectives, all will be well. You will have a very crystal clear vision for the business and in the process you'll create a machine, a system, a process, a recipe, or a formula for repeatable and almost predictable pipeline, both on the revenue side and on the people side. So I think a lot of our talk today will center on one of those two objectives. As Lars mentioned, the two of us have, I think, a wealth of experience over the last couple decades in running teams of all different sizes in all locations. And the objective for us today is to make sure that we can impart at least one nugget of value that you can take from this session and immediately apply and see some lift as a result of.
(00:04:17):
I think it was apropos that Sharon spoke this morning because I think it's important in order to gain perspective no matter what session you're embarking on, whether it be this morning or this afternoon, you must start with gratitude. You have to start with an attitude of gratitude. Sharon spoke to us about empathy today. I think it was fabulous that she got up in front of that room and spoke to us for a good 30 minutes, dealing with the obstacles that she's dealt with throughout her life. And I think we just need to take a moment to be grateful for everything that we have, that we can wiggle our fingers with no pain. We're sitting at Haas Hall, which is one of the most prestigious schools in the world, and we get to just hang out and talk about sales development and the B2B world and SaaS.
(00:05:07):
Right here in the Bay Area, if you make $40,000 a year, you're in the top three and a half percent of the wealthiest people in the world and you're 52 times wealthier than a billion people on the planet. And I think a lot of people just forget that, how great we've got it. So make sure that you're always working on shaping your attitude of gratitude. And then when it comes down to hitting the phones for your business or trying to drive that revenue pipeline or that people pipeline, you have perspective going into it and it's just not that complicated at the end of the day when you realize how good you do have it. Cool? So I thought that set the tone a little bit.
Lars Nilsson (00:05:48):
So I want to make sure that we're talking about sales development and that role, that function for companies is very, very specific. It is not a quota carrying role where you're a salesperson that is carrying a discrete quota for closing business. So I just want to spend a little bit of time defining what I mean by sales development, because it's a role that grew up here in the valley for B2B technology companies that have to move quickly. So just a raise of hands for those of you that have SDRs or an SDR organization currently running in your companies. Okay, great. Cool. Does anyone here have more than 10 SDRs in your company? How many SDRs do you guys have? 30 now. About 30. And who are you with? Okay. Awesome. How many quota carrying reps do you guys have? And are the SDRs solely responsible for qualifying, setting meetings for the quota carrying reps?
(00:07:00):
So you have a one-to-one ratio. God, that's so huge. It's big. Covet that.
Ralph Barsi (00:07:10):
Oh, that's incredible.
Lars Nilsson (00:07:12):
So I want to define it here for you now, what I think of as an SDR. So SDRs, their job is twofold. They are the men and women that manage inbound leads or MQLs, whatever you want to call them. They triage them, they research them, they make outreach and contact disposition. They consume what marketing delivers from a lead perspective. They also, if and when there is time or it's deliberate, they also do cold outreach to companies that you guys have targeted that you've put in your target addressable market. And it's a very different process, managing inbound people that are knocking on your door versus going down the street and knocking on doors where people may not even know who you are. So two very important functions that can be done by the same individual, or you can decide if you want to have an inbound team dedicated to inbound or a team dedicated to outbound or create hybrid.
(00:08:29):
So these are all things that we can dig deeper in, but the most important thing is to realize that these individuals, their sole purpose is to create an appointment for your quota carriers.
(00:08:45):
The big deal here is if you have quota carrying sales reps and you hand them a quota, you want them to retire it as soon as possible so that they can hit their number and they can accelerate because if you get 50 to 80% of your sellers hitting their quota and exceeding, you are going to propel your business. This is a little bit controversial, but there are a lot of VPs of sales out there today that believe that their quota carriers should also be prospecting. They should also be managing inbound and doing outbound. While I think that is a great thing, and if they have time, they should be, but I don't want the people that are carrying quota to have time to prospect because it's hard. And it's so hard that it's something you can't stop because once you start prospecting, there's a cadence, there's a rhythm and there's a structured process of sending out emails, following those emails up with phone calls and doing it again and again and again.
(00:09:53):
And it is one of the hardest jobs there is. And so if I can focus my quota carriers on deal mechanics and working the pipeline they have, that's what I want them to do. And again, every deal is different, every company is different. I'm just giving you my yin on it.
Ralph Barsi (00:10:18):
I want to just double down on what Lars said about who's doing the prospecting, because I get asked this question consistently when I speak on panels. And why have your account executives focus on the mechanics and minutiae of a deal when you can have a more junior person doing the prospecting? Well, the fact of the matter is, everyone should be prospecting, but the level of sophistication and the type of prospecting is going to be very different between the two. So for me, prospecting can be as fundamental as following someone's company page on LinkedIn or following updates of an industry on LinkedIn, retweeting something that a prospect tweeted out just to bring goodwill or writing a really insightful comment on an article that someone has published in any given channel. Those are examples of prospecting.
(00:11:06):
So at ServiceNow, for example, we firmly believe that the sales development rep, the SDR, should be prospecting at least 50% of their time. And if it's not, they're being asked to do things for an account executive that the AE shouldn't be asking them to do, like administrative work, for example. So we want them to spend 50% of their time prospecting, 40% of their time qualifying inbound MQLs, SQLs, right? To Lars's point, the inquiries that come from the website or from a campaign, et cetera. And then that final 10% doing internal administrative type work, whether it's updating CRM or sending an email internally or taking a meeting internally, whatever it might be. Anything more than 10% becomes problematic because then time is being wasted and used inefficiently.
(00:11:55):
There's a lot of other things that we could talk about on that topic, but I think we'll just take it question by question now if that's okay with you.
Lars Nilsson (00:12:03):
And I probably shouldn't laugh when I'm talking about this because it really is a lot, but when you guys all leave here today, if you have SDRs or you're going to get SDRs, you need to have a CRM and you should know what a CRM is. And if you don't, again, you need to understand that the technology of being able to store your prospects, your opportunities, your clients in a database is imperative because it allows you to organize, it allows you to automate, and it allows you to track what's going on with your business. And if you don't have that and you're not organized, you can't scale. So that is one of the fundamental pieces that's needed if you're going to build an SDR organization because that's where all the work, all the actions and all the activity is stored and reported on.
(00:13:07):
And then for you guys that are the CEOs or the head of revenue or marketing or product, you have a set of KPIs and metrics that's coming out of that data that is being stored. And they end up driving the business decisions. And if you don't have that stuff being logged in a standard procedure by everyone, then you don't know what's going on. And that's not a very good place to be when you need to raise capital or start forecasting. So it turns out the cleanliness and the hygiene of your data is uber important. And we have invested in very smart people that their job is to basically make sure that all the stuff that's stored and being logged is clean, that if I say Ralph and I are two different accounts, but we're both ServiceNow, you should have one ServiceNow.
(00:14:07):
So if you have 20 ServiceNow accounts in your system, it's a problem. I can get on my soapbox on this forever because clean data is such a big deal. But just so you know, that's something that you have to pay attention to because if you have 10 SDRs calling into Oracle and five of them are calling into the same person and you have duplicate accounts, it's a very, very bad thing. Not only are you bothering the hell out of the prospect because they're getting pinged five times by the same freaking company, but it doesn't look good. So anyway, sorry.
Ralph Barsi (00:14:49):
They're awake.
Audience Member (00:17:09):
Can you share with us any industry standard metrics that you measure the SDR with regarding MQLs and SQLs and attach rates and lift rates that we should be looking at?
Ralph Barsi (00:17:22):
I could share some of mine. Lars, you could share some of yours and I could also send you some resource information straight up from the industry where a number of companies were assessed and these benchmarks have been published. So KPIs that we follow in our sales development organization include the number of leads that are managed at any given time. The best practice that we've seen is if a sales development rep is handling 200 to 300 leads per month, that's manageable and workable. We also manage and measure the number of meetings that that SDR books on a daily and weekly basis, and also the conversion of those booked meetings into meetings that are completed or meetings that occur, and then what becomes of those meetings. So as we talked about earlier, the twofold objective being revenue pipeline and people pipeline, keep in mind that you are, in most cases, creating your next generation of account executives and field reps from the sales development bench, if you will.
(00:18:29):
So it's critical that sales development reps are always tracking and monitoring what becomes of their meetings. If I convert a bunch of meetings and I send them to Lars, my account executive, yet a month or even a couple weeks later, they spill out of the top of the funnel because they just weren't thoroughly qualified, they weren't a good fit, timing was off, et cetera, that doesn't look good on me because those are some key things I need to be qualifying for way upfront so that to Lars's point, Lars can work on the mechanics of the deals he has in his pipeline and can bring those deals across the line. So do you want to share statistics because those are some of the, at least the KPIs that we're measuring and monitoring.
Lars Nilsson (00:19:11):
Yeah. At the highest level, we quota our SDRs for the most part with either 12 or 15 meetings a month, and that's what we pay them on, whether they convert or not into opportunities. We measure the follow-up of those meetings very tightly. In other words, if an SDR has set up a meeting for his or her rep the following Tuesday and that meeting executed, then I have a 24-hour SLA on the rep to decide after that meeting occurred, is it going to go into the pipeline because they, in their gut, feel there's a potential sale there with a sales cycle or not. And I want to know whether or not the meeting my rep booked converted into an opportunity or not. So at the end of a month, if I have one rep who's converting 80 to 90% of her appointments and another one who may be overachieving on the number of appointments, but very few of them are converting into opportunities, then it's a data point for me to dig in and try to understand maybe they're not taking the qualification far enough along.
(00:20:35):
The sales rep who takes the meeting, executes it, has to provide feedback. The only way that they're going to uplevel their SDR and coach them to get better is by giving them feedback on that meeting. One of the ways we do that is we require every SDR to audit the meeting they set up and they actually introduce. So when the meeting occurs, it's the SDR that opens the bridge, introduces the rep, and then hands off the call. So there's this kind of teaming going on. That way, the SDR is listening to the entire call and begins to pick up learnings. And if they're overlaid to three, four, or five reps, during any given week, they are learning about the product, they're learning about the industry, they're learning how to have second and third level conversations with active prospects.
(00:21:37):
So that conversion is a big deal for us to understand if an SDR is kind of upleveling themselves. And then there's a lot of metrics around if an SDR is going to follow up on an inbound lead, how many touch points are they going to have with that lead before they cut bait and put them into the marketing automation nurture pile?
(00:22:02):
And depending on the score of the lead, we go up to as many as 15 touches and touches in our world are emails, phone calls. It might be a touch through social, through LinkedIn, but if we have a high scored lead that's inbound and we've given that 15 touches, we're not going to Marketo or Eloqua them to death because they'll end up just hitting the email opt out button and then we lose the marketing rights forever.
Ralph Barsi (00:22:38):
Sorry, Lars. Here's the tough part when it comes to number of touches against a lead. So let's just take a step back and think about this for a minute. A lead is an inquiry. It's someone who's actually inquired about your offering or your business, and it's the job of the sales development rep to actually address that inquiry. And wouldn't you know the person who's inquiring doesn't respond most of the time? "Hey, I'm kind of interested in your offering. I've been on your website." "How can I help you? What is it that's interesting about our offering, our website?" Crickets, silence. It's incredible to me how humans behave when it comes to this. So the fact that I have to attempt up to 15 times to actually help you is absolutely ridiculous. So the fix is, it's important that the sales development rep speak in terms of the inquirer or the prospect, their business, their critical business issues, their marketplace, instead of talking about our offering, our company, our history, news and compelling events that have happened about us. That's really not what the prospect is all about.
(00:23:46):
So the smart sales development reps, when they lead in with those first passes on correspondence, what they're doing is they're actually connecting dots from the outset with that inquirer. "Hey, Lars, I noticed that you were perusing our website. It is 2017 and we have some pretty fancy software that tells me you were on our website for 30 minutes. I noticed specifically you ran these three pages. Here are the three things that people in your role, in your industry, typically call us for. They're having problems with A, B, or C. If this is an issue for you, how would you stack rank that issue and how important is it that we actually address it today or this week? If timing is off and it makes more sense for us to talk next week or next quarter or next year, that's fine too. I want to make sure that our business has a seat at the table when the timing is right.
(00:24:42):
And if I'm no longer in the role because I've been promoted, here's my mobile number. I'll make sure that when you are ready, I can still route you to the right person who's going to help you." When you're sending messages like that about service, help, assistance, it just resonates much more with any of us in this room because we're all buyers as well, and that's how I like to be treated. I don't want product information pushed on me per se. I want somebody to help me identify what problems I might be encountering and how to fix them fast so that life is much more convenient for me. So it's critical that the language that's being used, remember again, when Sharon said this morning, you have to speak their language. So the better a sales development rep and salesperson for that matter understands the language of their marketplace, the more their message is going to resonate.
(00:25:34):
Yes, sir.
Audience Member (00:25:35):
So one thing I did with my last company, instead of having an SDR contact them immediately, an incoming inquiry, we had an onboarding engineer connect with them either via intercom, live chat, or phone call and address, we were selling to developers. So instead of having a salesperson engaged, we had, "Hey, let me solve your problem in next 20 minutes." And after that person, after we deliver value to that developer, they've got immediate value out of our interaction, then we pass them onto the SDR to talk more about the commercials and then went through the sales cycle.
Ralph Barsi (00:26:13):
I think that's beautiful. If that works for you, my hat's off to you. That is called comprehensively understanding your audience and your marketplace.
Audience Member (00:26:23):
Are you seeing companies doing that today or are they going with the SDR route and then do this?
Ralph Barsi (00:26:29):
In my experience, I typically see the latter where they go the SDR route. However, you mentioned chat, for example, so there's a lot of different methods or vehicles that a sales development rep will use to correspond and almost troubleshoot what those issues are initially before we decide whether or not it makes sense to engage. But I think that's a fabulous idea. Yep.
Audience Member (00:26:51):
Lars, you mentioned that it was important to you guys, it sounds like it's management to track whether or not it becomes an opportunity. Do you have metrics or compensation? So you said 12 to 15 meetings, but do you penalize or reward the SDR for converting to an opportunity? So do like two points for a meeting, but minus one if it doesn't prefer to opt.
Ralph Barsi (00:27:14):
A great question.
Lars Nilsson (00:27:16):
Yeah. So we have in North America, we have one inbound team and we have two outbound teams and the outbound teams, we have a point system. We don't ever take anything away, but we give more points for a meeting that is, if you're a director level or above, you get more points. If the meeting converts into an opportunity, you get additional points. So we're trialing that right now, this point system. In other parts of the world where we have teams, we're still just on a meeting basis. And this is an important point I want to make. When an SDR sets up a meeting for his or her sales rep, yes, there are a lot of companies that may not be ready for what we are selling today, but the opportunity to connect with a persona at a target account is huge because that half hour meeting, we are branding, we are talking about our solution, we are asking questions about their pain, we're understanding whether or not they have talked to any of our competitors.
(00:28:31):
The value to us and to the sales rep to have conversations with legit prospects, that is what I am paying my SDRs to do. And so whether it converts or not, there is huge value there for the sales organization and for grabbing the historical perspective of the notes that say, not only are they not ready for us, but they have had our competitor installed for three years, the odds of us unseating them in the next six months are very low. Maybe we punt on these guys for that time. Or again, there's a lot that can be captured at any meeting. So every meeting is not going to convert, but I want to pay my reps for getting their reps in front of them. So what we never penalize, the only thing we penalize for is they set up the meeting, it never executed. It got pushed so many times and then it ended up never executing.
(00:29:34):
We call that a clawback and that will go against their number the following month. And if I have reps that have two, three clawbacks every month consistently, then there's a problem too. It probably wasn't qualified to begin with. The other thing we never allow is for an SDR to set up an appointment more than seven business days out. Anyone can say yes to a meeting a month out. And the odds of that converting and executing are very, very low.
(00:30:08):
So we have a lot of guidelines and parameters about how far out. It can certainly be that day, but it's usually within two to three or four business days. Yeah.
Ralph Barsi (00:30:32):
Can everybody hear the question, by the way? Can anybody not hear it? Okay.
Lars Nilsson (00:30:38):
Question about revenue bands, giving points for 500 million plus companies with four points too. Did you say you implemented that based on personas? So yeah, so what you're talking about now is a very important topic for everyone. That's segmentation. And it's also understanding and deciding what your target addressable market is. At my company, the company I work for now, Cloudera, we spent a lot of time years ago deciding the group of companies that we believed we would want as customers. Today, people refer to that as your ideal customer profile. Our ideal customer profile is the Fortune 8,000, 8,000 companies.
(00:31:29):
And it turns out that there's 8,000 companies above $1 billion in revenues. Those are big enterprise companies. They have a lot of employees. They have a lot of systems, databases. They are high potential for a big data solution. So what we did is we entered all 8,000 of those accounts in our CRM. And because we did it from a curated database, Hoover's or whatever you choose, you have the full legal name of the company, you have the revenues, you have the headquarter address, you have the industry, you have all the things that you then want to lock down your CRM with because if you ever, and this is just kind of a side point, if you decide to let your sales reps enter accounts into your CRM, that is the day that you start entering duplicates and dirtiness. And you will not be living in a clean world.
(00:32:30):
One other question about this too is we have people that are getting into companies or they have some smaller ones. Are they centralizing the SDR function or are they putting them out in the field? Should we hire someone fresh out of college or should we hire more experienced SDRs? How do we hire them and scale them quickly?
Ralph Barsi (00:33:01):
Yeah. I would say many companies centralize their SDR organization. In the United States, we have ours in Austin. In Europe, we have it in Budapest. In AsiaPac, we have it in Singapore. We have anywhere from 15 internationally in one center, and we have up to 50 in our Austin center. And our hiring profile is generally younger in their careers people. In fact, we hire a lot right out of college. And to Ralph's opening, what has happened as SDRs mature and become good qualifiers, they end up realizing that sales is either going to be their path or not. And the really cool thing that's happened at our company is that many SDRs have gone on and gone down a sales path, and many have graduated to full-blown outside sales account executives, but others have realized maybe this is not their jam, but our marketing organization or our sales operations team, and we are now pollinating the rest of our company with young, energetic, talented people. They've been onboarded into our company's culture.
(00:37:42):
They understand what it's like to talk to prospects and customers, and they're killing it for these other organizations. And for someone in marketing to inherit a one or two year SDR that has all this energy and exuberance and will and want to be at the company, they end up exceeding because now they've been given a chance to do something different. So it's a really cool thing to see a career path being generated from people coming into your company that are younger in their careers. And because again, talent acquisition is probably what I spend most of my time thinking about. There's a lot of people that if they're not happy and they're not getting developed and they're not putting tools in their bag, they're going to hear about other companies that do those things and you're going to lose them.
(00:38:55):
Yeah. So the question is, it's a really hard job and how do you keep them for more than a year? Because again, are there any SDRs in this room?
Ralph Barsi (00:39:04):
Awesome.
Lars Nilsson (00:39:04):
Let me ask the group, have any one of you that is not an SDR ever spent a six hour day pounding the phones and pounding the emails and listening and talking and seeing replies? And has anyone ever done that? Raise your hand if you've done that. All right, so you guys know. It literally is one of the hardest jobs. And if you haven't, most of you that have SDRs, they have a rookie cord. Plug in and listen to what they do, look at what they do every day. It is an art based on the technology that has been stitched together that the operations and the SDR manager has put in front of them.
(00:39:54):
It's like you're sitting in a cockpit. There's screens and you're going in and out of different systems and you really have to be sober when you come in in the morning as an SDR if you're going to be effective. So what I did at Cloudera when I realized the jump from SDR to quota carrying sales rep was too far of a leap, I created two other organizations to help them get there. The first one was renewals. I found in the research and KPIs that our churn was starting to creep up. And when I dug into it, it was in our compensation plan, our sales reps were not getting comp the same value by doing a renewal as they were a new logo or an expansion deal. And so guess what? They didn't care as much about that renewal.
(00:40:53):
And if they couldn't get their customer to expand, they weren't going to hang out and try to renew them. So anyway, I ended up creating a business plan and asked to get two reps to kind of do this experiment. And that was two years ago. And now we have a global renewals team, 11 members, and that is a source of pride for an SDR to buck for that promotion and get it. Then about a year ago, we saw an influx of inbound leads for smaller companies below the $1 billion mark that we have for our ICP. And we created a quota carrying inside team called corporate sales. Again, allowing them now to take their skills, product skills, their qualification skills, and do sales over the phone, shorter sales cycles to the SMB, further developing their sales skills. And then from there, and again, each role is about a year to year and a half.
(00:42:00):
So over a three to five year period, we kind of have this path, this career path, if you want to go into quota carrying outside enterprise sales, and that's how we've done that. And I will tell you, if you don't create a path for your SDR, you will lose them.
Ralph Barsi (00:42:18):
Yeah. For us, assuming you have a renewals team or a corporate sales team for them to go to, you do have to create a well-lit career path and you have to manage their expectations during the recruiting phase. So for me, I've gotten a lot of flack over the years because for us, the requirement for incoming SDRs is 18 to 24 months in the role, and their jaws usually drop and hit the ground. But then we explain that if you take 24 months and you break it into four chunks of six month periods, for example, freshman, sophomore, junior, senior, they realize that that first year, freshman and sophomore, they're really focused on mastering the craft of sales and sales development and really understanding our profession wholeheartedly. At that mid-year point or midpoint of whatever tenure you decide, you have an audible called, and you sit with, for example, our chief revenue officer or the sales development leader and the SDR themselves, and it's at that juncture that they can choose or not to throw their hat in the ring and continue down the sales path, as Lars mentioned.
(00:43:26):
Most of them want to end up as salespeople, but a lot of them don't. After one year, that's a really good opportunity for them to assess what path they want to take for the next two, six month periods. And then that second half, that's where the company really puts some skin in the game and invests time and resources to bring them up to speed on whatever role they're going to so that they can start to act as if they're already a role or two ahead of where they are today. And that's worked really well for me in the last three companies that I've been in and it really helps in managing the expectations of candidates when you're recruiting them.
In your experience, what percentage of SDRs make it to the AE stage?
(00:44:13):
Probably 80%, but it's a majority. Those that don't, it wasn't a fit for us or for them. And over 18 months, you're both going to figure out whether or not you're going to keep dating. And I firmly believe because I've seen it over and over and over again, that people become indispensable through their hard work. And if there's not capacity, for example, in the next rung up, companies will move mountains for A players. People who are consistently producing and are thinking and working outside of the box, for example, hosting lunch and learns for their colleagues, always presenting at maybe a company all hands or contributing an article or something for the company blog, just way beyond doing phone and email all day. Companies will make way and make room for people like that to grow and develop in the company.
Lars Nilsson (00:45:05):
I'll tell you this. I've seen a really, not weird, but a really cool shift in the profile of an enterprise class software sales rep. And when I say that, I grew up in that world and the people that were making a million plus in commissions every year were people that came out of the Oracles of the world, the SAPs, right? Really long, arduous year plus long sales cycles where at the end of it, it was a seven, eight figure deal, but today, and Cloudera is a company where we do those kinds of deals, but the SDRs that have gone through the career path program and gone out into the field, and we had our first one go in maybe two years ago, and since then we've had seven. At this year's sales kickoff, when I looked at the names of the people that were in the top performers, every single one of them, and they're still in their 20s.
(00:46:07):
So they don't have a 20 year career that they've developed to sell enterprise class sales, but I know why they're doing well, and they're doing well because they understand how to outbound prospect. They understand how to generate interest, inspire, and teach their prospects about our technology, because that's what they've been doing for the last three, four years.
Ralph Barsi (00:46:29):
They played the long game. A lot of them are hasty and want to get out the door because their friends are already account executives and making another five to 10K maybe per year. So they want to jump after that carrot and they do so not having mastered the fundamentals, not having mastered the bounce pass or the chest pass of sales and sales development, and they find themselves in these closing roles and within 18 months, more often than not, they're on a performance plan because they're not managing their pipeline development, they're not working deals in the middle of the funnel because they did not take the time and did not have the patience while they were sales development reps to learn that process. And frankly, a lot of losers out there have goals and the winners have systems that they use, and it's those sales development reps that embrace the systems.
Audience Member (00:47:23):
Two things. One, you mentioned there were articles or some metrics, so I've got James who is going to follow up with you afterwards and get that information. Wonderful. And then we can disseminate it out. Happy to share that. And my question is, a lot of these, we deal with a lot of startups that have a variety of ACVs in play. So does the SDR model require to be cost effective for the company? Does the ACV need to be higher than pick a number of 10,000 a year? Does it work all the way down to a three, $400 a month recurring revenue type deal? Or is it really 10, 25, 100K or higher that needs to be in the business model?
Ralph Barsi (00:48:08):
I mean, are you talking about with respect to compensation and size of team?
Audience Member (00:48:11):
No, I'm talking about, does a company need to have an SDR program if their annual contract value is $6,000?
Lars Nilsson (00:48:18):
Oh, got it.
(00:48:20):
Yeah, that's a good question. And as I've been hopscotching around the True Portfolio, when you start an SDR team, and again, a lot of them get started because leads are starting to come in and they're kind of falling all over the floor if you haven't put a CRM and a process in place. And I was talking to a founder just last week and she's the only one, she doesn't have sales yet. So she's managing inbound and she's doing outbound, but she's not tracking anything in CRM because she doesn't know what that is yet. And again, it's a great problem to have, but very soon you're going to have to create standards and you have to put in a process and you're going to have to manage all this stuff. And the importance of Sales 2.0 technology, CRM, the marketing automation, I'm a true believer that if you can create not only half your pipeline, but half your revenues automatically without any sales, if you are generating and creating the kind of inspirational, thought provoking content that is driving conversations and eyeballs and clicks into your system and you're managing those inbounds and you're pathing those inquiries down smart, intelligent paths so that people can self-select into or out of a direct conversation.
(00:50:06):
And what I mean by that is, and I say this, this is Craig Rosenberg that came up with this, if you're a founder of a company, then write your first line of blog before you write your first line of code. And what he means by that is if you truly believe you're going to found a movement and you're going to disrupt a market or a space, start writing about it, start talking about it because that's the kind of content that can be placed out there into the world. It can be blogged, it can be posted, it can be shared. Salespeople need content like that to put out in the world as leave behinds when they send emails out to talk about when they leave a voicemail.
(00:51:00):
And if you're doing that part right, then you're generating the pull, right? The awareness and the pull and the conversations. And you can legitimately take an inquiry that comes from inspirational content that gets tripped over when someone's looking to solve their pain and allow them to self-select into offers or into promotions or into trials or into POCs, whatever it is you decide because people are searching for solutions to their pain more than ever and they don't want someone to pick up the phone and call them 3.2 seconds after they hit your website. They literally want to be left alone so they can research and read and learn, but if you provide value to them and allow them to get a little bit more of it, then you can guide them down a path to where at the end of it, it might be click here to talk to a subject matter expert that can help you.
(00:52:10):
And then what you get at the end of that, you don't get a lead. You get a qualified opportunity where someone is saying, "Yeah, I want a free proof of concept that is set up by whatever it is." So the power of a great online digital content marketing team person process is huge. And then on the other side of that, certainly you need to start answering high quality leads and you need to start, whether it's quota carrying sales because it's a low ACV and it doesn't make sense to have a one, two punch SDR-AE.
(00:52:57):
So it's a long way of saying, I don't know if there's analytics on below a certain ACV, but if what you're selling either sells itself or can be sold over the phone within a week or two or three at most four, then I might not do an SDR and have people that are satiating the demand for these inbounds and what have you. And again, whether you have a freemium model, I know a lot of companies start with that and then they end up figuring out how long they let them go free and start to try to convert them to their first tier of paid offering. So again, lots of different models and again, I love noodling through the modeling of how to create a revenue engine, a pipeline generating engine from what it is you guys are selling. It's fun as hell and I love doing it.
Ralph Barsi (00:53:59):
I can't pinpoint a minimum or a threshold on the ACV question, which is a fabulous question, but in my experience, typically when the revenue goal is established, if you're going to build say two to 3x pipeline around that, that informs whether or not it's time for a sales development function. But I'll examine that further because that's a fascinating question as if it's driven by any ACV amount. What is the ACV for ServiceNow roughly? For us, it really runs the gamut because we sell to small businesses, but we also sell to the enterprise. So Lars was talking about the Fortune 8,000, our ideal customer profile is the Global 2000. So in those cases, you could see seven figure deals done, whereas on the smaller end, it's five figure deals. Yep.
Lars Nilsson (00:54:50):
Ours is a land and expand model. Our ACV on a new logo deal is 70 to 100K for a strategic prospect. It's 50 to 70 for an enterprise, and it's 30 to 50 for an SMB. But our solution, if you adopt it, because a big data solution replaces a lot of other very complicated stuff that companies have been implementing for 10, 20, 30 years. Our follow on deal will go from 100 to five million. And again, we're selling into companies that when they get it, holy smokes, you mean we can land all of our data from all time of all types in one place and compute and analyze from it? Okay, we're in. So our renewal, our upsell and renewal of that Fortune 8,000 company is huge. So we have customer success managers. We have lots of people that end up spending time with our new logo, big account to make sure that everything is going because we'll end up with a 10X, 20X order of magnitude bigger deal the second time around.
(00:56:15):
Yes, sir.
Audience Member (00:56:17):
At what stage do you put the CSM attached to an account? What size of that account would it have to be to have a CSM assigned to a new sale?
Lars Nilsson (00:56:31):
We implemented the CSM model into just our strategic. It's an expensive model if you're not putting quota on them, but I love that model because they're the ones that are engaged with the customers. So I don't know. I think it depends, but...
Ralph Barsi (00:56:58):
It absolutely depends. It depends on whether or not your offering is a self-service model, for example. So I think a clear example that everybody would be familiar with is LinkedIn. It's very intuitive. Everybody knows how to use LinkedIn, but as soon as that footprint to Lars's point starts to expand throughout an enterprise size organization, and there's an actual account-based initiative, for example, to penetrate the marketplace, that's where CSM can come in and really make sure that the organization is optimizing their use of the subscription. Just a few minutes left, maybe time for one or two more. Sir?
Lars Nilsson (00:57:35):
What kind of technologies are you using to scale your SDRs? So Ralph and I spend a lot of time, I believe selling is all about activities. It's phone calls, it's conversations, it's emails, it's trials, it's proof of concepts, it's connections and...
Ralph Barsi (00:57:58):
Education and enablement as well.
Lars Nilsson (00:58:00):
It turns out that with the technology that has come out over the last 15 years since salesforce.com came into the world, you can dial technology in to a place that can accelerate demand gen beyond anything I've ever even remotely thought possible. I used to hire SDRs that had a minimum of five years because it's hard to get the phone hung up on you all day long, but today on the back end of a very well thought out technology stack and an even better thought out process and procedure where you can generate playbooks and scripts, you can pull in people right out of college and give them this technology, these playbooks and say, "Go do that." And they will go do that and they will generate legit pipeline that converts to opportunities that goes down the sales cycle and closes into revenue at a rate that I've never seen before.
(00:59:11):
So it's huge. I'll rattle off the main technology. We use salesforce.com on the CRM side, Eloqua on the marketing automation side. SDRs log into Outreach, which is an email sequencing platform that allows them to drip emails out to targeted personas into our ICP.
(00:59:39):
They spend a lot of time in LinkedIn Navigator. We have a technology called LeanData that auto converts inbound leads against our targeted accounts. So instead of a top of the funnel lead sitting there for one of our biggest accounts and owned by a rep and waiting for an SDR to find the time to triage and research, it automatically falls through the top of the funnel and gets converted against the account and pings both the sales rep and the SDR. So in a split second, the account executive who is responsible for that big account will know, wow, that's cool. And they can have a discussion right then and there who's going to follow up. So those are four of the cooler things that we use.
Ralph Barsi (01:00:27):
Yep. We use Eloqua. We have a proprietary CRM, which is super fun. With respect to Lars's comment on phone and email, we use a soft phone service called 3CLogic. That's also an auto dialer. We're actually exploring email technologies like Outreach, like SalesLoft, like HubSpot, for example. There's a variety of data sources that really inform our reps in terms of intelligence and insights on accounts and on people. And that runs the gamut from DiscoverOrg to ZoomInfo to Leadlander to RainKing. There's a number of them out there that are aggregating that intel and insights and it goes on and on. But technology is as important as strategy, people, and process. If you have those four categories covered, you're cooking.
Lars Nilsson (01:01:19):
I would say if you don't have a legit sales operations, marketing operations person or team, spend the money and get a consultant who knows how to do this because you will screw things up through your existence at your company if you don't have this. That's how important it is.
Audience Member (01:01:41):
With a technology company like yours, the market is changing pretty rapidly right now.
Ralph Barsi (01:01:55):
Great question.
Audience Member (01:01:55):
Cloudera, AWS does all that for me. And you obviously have an answer, but after you get a lot of these, don't they have feedback to say, "Hey..."
Ralph Barsi (01:02:10):
One would assume that they do have a lot of feedback. The more buttoned up companies actually do, as Lars mentioned earlier in this talk, it really comes down to the closed loop process. You have to have that constant feedback loop happening or else you'll die on the vine. So as the marketplace scales, for example, at ServiceNow, our investor thesis includes expanding into different verticals like customer service, human resources, security operations. As those industries respectively scale and morph over time, we have to evolve as well. And unless we're getting that closed loop feedback from the feed on the street and the objections that we're hearing in a pattern basis, we won't make it very long unless we're evolving with those changes. I think we're out of time, which is not fun, but you've all been very generous with your time. Lars, thanks for having me.
(01:03:05):
I'm free to hang around if people have additional questions. And to your question earlier, we'll be sure to get those resources in your hands. Thank you.