Doubling Sales ProductivityHow separating sales from Lead Generation pays big dividends
Doubling Sales Productivity
In the traditional B2B sales management view, the sales reps are responsible for building his or her own sales pipeline as well as close leads. While many B2B companies do provide marketing leads to their sales team, these are typically unqualified. The expectation is that the sales reps will qualify and work the ones that are more promising.
Companies typically make the mistake of believing they are saving money by making their sales reps qualify and close leads. In reality, this is actually very far from the truth. A simple time/cost analysis of BDRs and sales reps will demonstrate that adding BDRs to focus on generating SQLs for the sales team significantly increases sales faster than costs. In fact, our analysis shows that adding more BDRs rather than more sales reps increases revenue overall.
This seems difficult for most Sales Executives and C-level decision makers to accept. The reason it is true is because the job of building a sales pipeline is very different from the job of closing deals in the pipeline. Sales reps like to talk to people, but usually face to face. They work better in a low-volume, high interaction environment. This is especially true for strategic, complex, or generally high-ticket items.
The task of qualifying leads, even for the strategic and complex sales, is the reverse. It is a high-volume, low interaction activity. The average Business Development Rep (BDR) must make 60 plus calls a day to make a 10-15% connect rate and identify maybe 12 – 15 Sales Qualified Leads (SQLs) per month. That is at least 1,200 calls in a month to produce 12-15 SQLs.
Sales reps, on the other hand, make maybe 10-20 calls a day, if that. At that rate, it will take them 3-4 months to generate the same number of SQLs as a BDR would. Not only that, but as soon as they have a few leads, they typically stop prospecting and try to close these. After all, they make real money when they close deals, not when they find leads.
The above chart shows three scenarios: one sales rep generating and closing their own leads, one sales rep paired with one BDR to build pipeline, and one sales rep paired with two BDRs to build pipeline for that rep. We are assuming that BDRs and Sales reps are paid exactly the same to simplify the analysis.
As our calculations show, sales reps are far more productive when they have a full pipeline. Also, the true cost of leads go down when the pipelines are full, since sales reps don’t waste time chasing low-probability opportunities. As a result, revenues rise the fastest for the 2-BDR: 1 Sales Rep scenario, followed by 1 BDR: 1 Sales Rep scenario, with the least amount of revenue for a single sales rep building and closing her own pipeline.
Contrastingly, the cost curve stays fairly flat compared to the revenue curve. It is clear that not only will a company dramatically increase its revenues, but its cost of sales will actually drop when utilizing BDR’s with sales reps.
How BDRs work
Business Development Reps (BDRs) thrive in a high-volume, low-interaction environment. Their pattern consists of making 60 plus calls a day and connecting on maybe 10-12% of those calls. Not everyone they connect with is the right person, but they dial until they reach them.
When they do reach the right person, the conversation typically lasts between 30 seconds to perhaps five minutes. Most of the time, they are interrupting the prospect, who tells them to call another time.
BDRs are used to this and thrive in the hunt and the constant change of people they talk to throughout the day. Their job is to find out who the right person is, ask a few qualifying questions, then set an appointment for a sales rep. Done. They hang up and go to the next on their list.
How Sales Reps Work
Sales reps prefer a low volume, high interaction environment. They prefer to have meaningful conversation with a handful of people in any given day. They like the predictability of set appointments, preparations for these appointments, and then presenting their case to a captive audience.
Most sales reps prefer to be on the move. They like to be face to face with prospects. Indeed most complex sales cant really close without significant rapport being established first. That is where most sales reps excel.
On the other hand, they are typically terrible at calling to find leads. After making a few calls (typically under 20 a day) they tend to give up and try another day. The best way to keep sales reps productive is by keeping their sales pipeline full. This does two things:
- Makes them accountable
- Makes them unafraid to cut loose a low-probability lead