Berries 1220605

Part 8: Life at 1,000 Dials a Day — How Many of These, How Many of Those

In this blog series’ introduction, “Going Fast — Adapting to Life at 1,000 Dials a Day,” I asked this question: “Does this change our ideal BDR/SDR-to-AE ratio?”

And I answered, in brief, “Yes — you need fewer BDR/SDRs per AE (for two reasons: SDR/BDR efficiency; and enabling AEs to prospect effectively for themselves).”

The “this” in question is the ability of an accelerated SDR using fully navigated dialing to effortlessly have 40 or 50 or more conversations per day, and therefore — with proper list care and coaching — to schedule meetings for AEs at both a higher rate and more predictably.

And the “Yes” is, as I read it again, perhaps overstated. I really should have written, “Yes — you might choose to have fewer BDR/SDRs per AE.”

After all, if your average pace of scheduling meetings rises from 1 per SDR per day (usually the easy pickings, it turns out) to, say, 3 per SDR per day, you might choose to promote the most promising 50% of your SDRs to AEs. This assumes, of course, that you are employing the classic model of the SDR role being a path to the AE role.

With the SDR-to-AE ratio at 1:2, the math might be:

       6 SDRs x 1 meeting per day, which produces 6 total meetings per day for…

       12 AEs, who each then have .5 meetings per day, which generates…

       2.5 new revenue opportunities per week per AE, sourced by the SDR team, which equals…

       30 total new revenue opportunities per week.

However, accelerating the SDRs’ meetings set per day by 3x with fully navigated dials and promoting 50% of the SDRs to AEs, resulting in an SDR-to-AE ratio of 1:5 instead of 1:2, yields:

       3 SDRs x 3 meetings per day, which produces 9 total meetings per day for…

       15 AEs, who each then have .6 meetings per day, which generates…

       3 new revenue opportunities per week per AE — a 20% increase — which equals…

       45 total new revenue opportunities per week — a 50% increase!

In this case, you change your SDR-to-AE ratios because you can. A 50% decrease in SDR headcount and a 25% increase in AE headcount results in a 50% increase in new sales opportunities and, by inference, in revenue itself.

Of course, there is no free lunch. The 3 SDRs are living the high life at 1,000 dials a day, and someone must pay for all those dials.

Say the SDRs cost $350 per day, the AEs cost $625 per day (both at on-target earnings), and the 1,000 fully navigated dials were bought in such quantity that they cost only $500 per day per SDR. Then the total team goes from costing…

6 SDRs x $350/day + 12 AEs x $625/day =
Total team cost of $9,600 per day

to costing…

3 SDRs x $350/day + 15 AEs x $625/day + $1,500 total/day for navigated dials =
Total team cost of $11,925 per day, an increase of 24.2%.

Now it looks pretty simple: increasing the total cost of the team by less than 25% yields a 50% increase in the number of sales opportunities. That’s what I call “good math.”

If the cost of selling itself is very high as a percentage of revenue — like 100% or more, as it is for many venture-backed SaaS companies for quite a while (until “death do us part” in the case of too many in this category!) — you are vastly better off increasing your selling team cost by 25% in order to get a 50% increase in revenue opportunities.

You are in control of the ratio of your SDRs to AEs as long as you can increase the SDR team’s output sufficiently to grow sales opportunities twice as fast as cost. Perhaps the math is a bit daunting, but it works!

Links to Intro, Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7,  Part 9, Part 10, Part 11, and Part 12 of this blog series.