An effective sales team is critical to the success of your company if you want a predictable, repeatable, and scalable sales engine. Deciding whether you should consider SDR outsourcing or internally hire your SDRs is a decision worth evaluating. Today, we’ll walk you through the decision-making process going through three important factors to consider.
What Is an SDR?
A Sales Development Representative (SDR) is responsible for taking prospects gathered through demand generation activities and turning them into actionable leads and sales discussions. Your SDRs are imperative in qualifying inbound prospects and generating new leads from outbound efforts.
SDR Outsourcing – Typical Conversion Funnel
Cost of SDR Outsourcing vs. an In-house SDR Team
Perhaps one of the most overlooked pieces of deciding if SDR outsourcing is right for you and arguably the most important factor is the cost. According to The Bridge Group, an inside sales consulting firm, the average tenure of an SDR is a measly 20 months.
Hiring an internal team means having to constantly manage fluid processes, expensive tools, and consistent lead targeting. Now, anyone who understands hiring understands that hiring is incredibly expensive. The average rule of thumb on sales team hiring is 50% burden on annual salary. According to Bridge Group, the average Sales Development Representative salary in the United States is $76,000 per year. So, for an SDR making a base of $76,000, the associated costs on hiring would be an additional $38,000.
Let’s start with job postings—how long will it take you to find the right talent? How many websites are you going to post on? How many interviews? What portions of management (or peer) time is spent in interviews? How about normal HR burdens like background checks or benefits administration? These costs (often hidden) should factor into the decision calculus.
Our internal research shows the annual total cost to manage even a two-person SDR team is $330,729 annually. We calculated this by including team salaries, tools (software, phone), manager’s base, time spent allocated to the SDR team, overhead (rent, equipment), hiring and training costs.
When you begin SDR outsourcing, you can largely eliminate the costs of recruiting, onboarding, training, and retention. For comparison, for a dedicated SDR Team at CIENCE, you’re paying approximately $5,000 per month.
The cost impacts of not going the DIY route can be less than one-sixth of the total. When thinking about a lead generation budget holistically, this attractive pricing is a good place to start. SDR outsourcing is becoming more widely considered once companies realize they can get the same (if not better) results for dramatically less cost.
There are huge performance implications to managing what is essentially a thankless job largely staffed by sales newbies —according to HubSpot, the average required experience for SDRs is a mere 1.2 years! Those with less than one year of background in frontline sales development mean the performance burden falls squarely on the management of these junior employees. Once you hire your SDRs internally, the manager needs time to learn how to work with each candidate and discover how to motivate each employee daily.
Aside from daily tools SDRs need to track progress, organize and communicate, you must also account for sales enablement technology and the training involved to learn its usage. SDR outsourcing is beneficial when you don’t want to pay for high-quality tools but still want ROI driving performance.
Another important note to highlight is that your internal team will often have lowered morale from lesser value tasks. Compounding the low average tenure of most SDRs is the constant need for promotion, or at least a career track. This creates an inherent cost center where SDRs are forever working themselves out of jobs, either because of promotion or flight. The need to backfill positions constantly brings a significant amount of pressure to any organization.
Lastly on performance, gathering targeted, accurate prospect data—crucial to sales development campaign effectiveness—is anathema to most sales professionals. This research role is as time-consuming as it is grinding. Many salespeople argue it’s the opposite of sales—it’s administration. A good rule of thumb—think of any menial tasks that can be outsourced, should be, for best performance.
Building and managing an SDR team usually requires a fair amount of trial and error and an abundance of time. Decisions like deciding which compensation models work, dealing with attitudes, loss of motivation, and outreach methodology are just a few of the issues that come to the surface when managing your internal team.
Internal sales teams often don’t work align well with marketing teams, which cause organizational issues that continually deepen. SDR outsourcing allows you to give direction and saves tremendous time, while your outsourced team takes the time to test tools, messaging and processes, as well as discover your ideal customer profile (ICP).
SDRs typically spend most of their time in research and prospecting which leads to burnout. On average, SDRs spend three hours a day on the research itself. Imagine the amount that could be accomplished during that time.
Due to the variety of tasks, the quality of research suffers too. And we are not sure it is worth the hassle. Three hours of research a day turns into 69 hours a month and 828 hours a year. Let’s take an average annual SDR salary of $76,000 and see how much money a year these three hours cost. For these calculations, we assume that on average SDR has 23 nine-hour long working days in a month.
$25,337 is the amount of money that can be invested directly in your sales and closing deals. Sales specialization is everything nowadays; it reduces cost and improves your SDR’s productivity. Take people who do the research all day long. And it’s their specialization. Compare their productivity to a renaissance salesperson who spends 10% of their time on research. Not even close. SDR outsourcing and working with a good lead generation company allows you to have a fully qualified sales pipeline.
As the SDR function becomes more mature, companies continue to explore innovative ways to accelerate growth and get the best leads into the hands of sales teams. Building a strong outsourced SDR team can provide a strategic option for scale without unnecessarily burdening sales leaders or distracting them from their core objectives.
SDR Outsourcing in 2021
Sales development representatives outsourcing is one of the top lead generation trends of 2021. The pace of information flow is getting faster every day. To keep up with it you have to deliver the best customer experience.
To achieve quality results, SDRs at CIENCE use multiple media channels available nowadays to nurture and follow up prospects.
SDR is an extremely challenging role in sales. However, as demand continues to rise, there is a steady decline in the required experience for this role. The average ramp time is 3.2 months, which is time and resource-consuming. While at CIENCE, average ramp-up time for an SDR assigned to a new client is four to six weeks.
The new decade requires new methods, and to save your company’s money, you have to consider SDR outsourcing for the role of equilibrium.
Tips for Better SDR Outsourcing
When you come up with a monumental decision of SDR outsourcing, it’s okay to have some expectations. You may hope for ROI jumping through the roof in a month or so, without any engagement from your side and a low price too. It sounds good, but it’s not how it works.
Don’t rush it.Just like every worker, outsourced SDR needs some time to adapt. You will save a lot of onboarding time, but still, SDR must understand how your business works. Give it some time while providing insights and training them on your product or service.
SDR outsourcing company will keep your internal team focused on closing new business. Nevertheless, it won’t be able to work by itself. You should be open to communication with your new sales partners, align them with your existing teams to raise their productivity to the maximum.
Think about the impact first.
You pay for the insights of experts, for a dedicated team, and an approach crafted just for your business. The price should be reasonably based on the expenses of your outsourcing partner. When someone tries to sell a brand new car to you for one-hundred dollars, you will get suspicious. Same thing here.
Make sure you mark your goals clearly, especially on what outcome you want to see. Ask a lot of questions. Choose a company that can drive expected results for you and SDR outsourcing expenses will pay off.
To Outsource or Not to Outsource?
There are many things to consider when considering SDR outsourcing. However, sit down and evaluate turnover, burnout, and the cost involved with hiring and training your inside sales team. Then think through the optimal performance of a sales development program. You may find better luck outsourcing.
Our SDR teams at CIENCE are trained to become an extension of your team, truly getting to know your business goals. We provide an in-house campaign strategist to learn your business tone and voice and work with you to develop messaging that reflects your brand. Our research team is highly educated, and their job is to focus only on research, assuring every contact and lead is high quality.
Our SDRs become part of your team and get to know your business. They are working your hours, helping your business thrive and grow. Book a meeting with CIENCE today and see how SDR outsourcing can help your ROI and save you money.
Editor’s note: This post was originally published in May 2018 and has been completely updated for accuracy and comprehensiveness.