So your CEO just gave you the green light to start building out a sales development team — nice! Now for the hard part… figuring out how many sales development reps (SDRs) you’ll need to hire in order to keep your closers busy, meet this year’s revenue goals and not break the bank.
While contemplating this question, we asked around the sales development community and got some great, data-driven responses. Below, we outline a few basic strategies for hiring the perfect amount of SDRs for your business and point out a variety of factors you’ll want to consider along the way.
*Small note: this article pertains to hiring outbound SDRs (the hunters). For more info on inbound SDRs, here’s a good article.
Hire to support your closers
As many of you know, sales development was born from the idea of specialization. Specifically, this means separating your “deal finders” from your “deal closers” in order to maximize conversion at each stage of the sales funnel. In this model, the key is to keep your closers busy with as many qualified deals as possible without spreading them too thin.
According to a recent Bridge Group survey of 222 B2B technology companies, a common practice is to employ 1 SDR for every 3.9 closers. We recommend using this ratio as a starting point and tweaking it up or down based on other important factors. Here are a few to consider:
- Inbound leads: Does your marketing team capture a large number of inbound leads? If so, consider increasing your initial SDR to closer ratio to 1:5 or 1:6 in order to accommodate for the volume of inbound deals that get passed to your closers. When your outbound SDR team is fully ramped, you can always hire more senior sales reps!
- Deal complexity: On average, how many touches does it take for your closers to win a deal? If your sales cycle is on the shorter side (<6 weeks), chances are your closers can handle more accounts and your ratio should be closer to 1:3. For longer, complex sales cycles, consider increase the ratio to 1:5.
- Upward mobility: Where will your best SDRs be in 1-2 years? In many cases, the SDR role serves as a launching point for a successful career in sales. With too low a ratio (think 1:2 or 1:1) it may be difficult to get your top performers promoted when the time comes.
Hire to meet revenue goals
Another way to determine SDR headcount is to align it with revenue goals over a certain time period. The below formula was created by InsightSquared‘s director of sales, Evan Robinson, to convince his CEO to hire 5 outbound SDRs.
Essentially, the formula works backwards from a given revenue target to determine how much pipeline must be generated and how many reps will be needed based on a predefined opportunity quota. For a detailed description of the formula and all inputs, check out the full post.
Hire to cover your target market
A third way of determining how many SDRs you should hire is to look at how many accounts you’re looking to pursue. In this scenario, you want to figure out how many touches it will take to effectively work the accounts in your target market over a certain period of time AND the total number of touches each rep has the capacity to make in that timeframe. To help you estimate each number, you’ll want to consider a few factors:
- Total number of accounts: First things first, how many companies out there are a good fit for your product? To identify your target market, think about what combination of attributes define your ideal customer and build a list of accounts that satisfy these requirements. Notable attributes include company revenue, size, industry, location and current technology providers.
- Leads per account: According to sales influencer, Matt Bertuzzi, an important factor to consider when planning out your SDR team is the average number of qualified leads per account. For companies selling to small businesses, there may only be 1-2 leads to approach, but for companies selling to enterprises this number could be as high as 10-15, which dramatically impacts the number of accounts your reps can work. According to SAP demand generation director, Morgan Jones, the number of leads per account is also impacted by the number of products you sell. Companies like SAP that have dozens of products will target a higher number of leads per account, while more singular product offerings will only target a few key decision-makers.
- Touch capacity: CallidusCloud’s SDR manager, Kevin Markl, uses the number of touches his reps produce each day to determine how many SDRs he should hire. Say for example your SDRs can make 100 touches each day, split between outbound calls and emails. Assuming a 20-day work month, this means they make 2000 touches per month. Now, let’s say each lead receives 10 touches before being closed out. This means your SDRs can each work about 200 leads per month (or most likely 10-15% more if you factor in the leads that close out before an outreach cycle is exhausted).
- Lead seniority level: According to Bridge Group President, Trish Bertuzzi, the amount of accounts your reps can effectively handle is impacted greatly by the seniority level of your average lead. To reach the c-level, your reps will likely need to put in more touches and get past a smorgasbord of gatekeepers.
What did we miss?
We hope this post helped give you an idea of how many SDRs to hire. Like always, we probably overlooked a few things that are worth calling out, so be sure to leave your advice in the comments!
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