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Sales Consulting
June 29, 2020

How I Built an SDR Team That Drove 600% Revenue Growth

Kyle Vamvouris
CEO, Vouris
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I was the 24th hire at an early-stage fintech startup, and I was unbelievably excited. I wanted to make a huge impact on the company and I rallied behind their mission. We were going to make a difference. 

I was the first manager hire in the sales department, and my job was to build the sales development (SDR) team. I didn’t know it at the time, but this was going to be one of the most impactful experiences of my life.

Rat-infested office

Hockey stick growth. Constant change. An extreme amount of pressure. The company was highly-touted, and expectations were high. Much of this expectation fell on the SDR team. 

Our job was to set every sales meeting our account executives would conduct. No meetings meant no sales.

We couldn’t let that happen.

In under 2 years, we grew to a team of 12 SDRs. We graduated from a tiny rat-infested office to a large suite in San Francisco. We set thousands of meetings and drove over 600% revenue growth, which helped the company raise a $21 million series B. 

I loved every second of it, but it wasn’t easy. I ran into obstacles, and definitely made some mistakes. In the end though, I found a winning formula for building an SDR team. My goal today is to share it with you, so you can do the same for your startup.

I’ve broken the process for how I did it into 7 easy-to-follow steps. I’ll walk you through each of them in detail, sharing anecdotes and lessons I’ve learned, along with some helpful tools and templates I wish I had then.

By the end of this article, my goal is for you to know everything you need to build and scale a winning SDR team. 

Oh, and if you’re in a rat-infested office today, don’t worry – we’ll get you out of there in no time. 😊

Ready to get started?

Table of Contents:

Step #1 – Craft Your Sales Development Strategy

As with many things in business, the first step towards a successful sales development program is putting the right strategy in place. Getting this right is crucial.

The strategy you choose determines how you build and manage your SDR team. That's everything from what kind of people you hire, to what prospecting tactics they use, to what technology you put in place.

I've seen a lot of companies get this wrong. They waste valuable resources on bad hires or broken processes, which could've been avoided with a little upfront planning.

So, what does sales development strategy involve? And how do you craft the right one? Glad you asked! There may be minor differences from company-to-company, but every sales development strategy falls under one of two buckets:

Lead-Based Sales Development Strategy

This strategy is all about speed. You want your SDRs to tear through their lists as quickly as possible. The goal here is to sift through a large volume of prospects to quickly find the low-hanging fruit – the ones that are in pain and ready to buy.

This sales development strategy requires a lot of calls and emails. Your SDRs each have tens of thousands of accounts on their lists and need to be efficient. They might call each account once, leave a voicemail, send a quick email, and then move on, rinsing and repeating until they get a warm “lead” on the line. 

Lead-based strategies are best-suited for startups with large markets of relatively small accounts. For example, the FinTech startup I worked for sold 401(k) plans to small businesses. There were over 300,000 accounts, and the annual contract value (ACV) for each was small – only a few thousand dollars on average – so we couldn’t afford to spend much acquiring customers. We had to be efficient.

If your startup sells to a large market of small accounts, a lead-based sales strategy is probably the best approach for you.

Account-Based Sales Development Strategy

If lead-based sales development is all about speed, this strategy is all about precision. Rather than tearing through a large list of small accounts, with account-based sales development your SDR team will spend more time working a small list of big accounts. 

Big accounts like these are harder to sell to. You’re competing with lots of other companies to get their attention, so simply getting them on the phone can be harder. But once you do get them on the phone, you also have to navigate a longer, much more complicated sales process with multiple stakeholders and a lot of red tape.

Success with this strategy is about much more than making a ton of dials. Your SDR team needs to be focused and creative, often working in close tandem with an account executive to establish contact and build a relationship with a target account. An example here might be a startup selling a DevOps SaaS solution to Fortune 500 retailers.

If your startup sells into the enterprise or even the mid-market, an account-based approach is likely the way to go.

Step #2 – Hire SDRs That’ll Go the Extra Mile

Since my time with the FinTech startup, I’ve spoken with over 50 different startups looking to build SDR teams. The number one biggest question they’ve all asked me is how they can hire the right people. 

A lot of founders I’ve spoken with have tons of anxiety around this. And for good reason.

Making a bad hire on the sales side costs money – not just in wasted salary, but in opportunity cost as well. More than that, it costs time. And if your startup is like most, you don’t have any time to waste, so it’s crucial to get hiring right out the gate. The first step to doing that is hiring the right people.

3 Qualities I Look for in Sales Development Representatives

Having the right people in place is crucial – especially when it comes to SDR teams. Having now helped many different startups hire sales reps, I’ve found that there 3 big characteristics to look for in potential hires:

1. Good Work Ethic

The SDR role requires a lot of hard work. I’ve found that the best candidates take pride in their work, and have demonstrated some sort of past success, be it in a previous position, volunteer work, or extracurriculars at school.

2. Natural Curiosity

SDRs are going to face a lot of rejection. Rather than immediately giving up, you want the SDRs that are going to dig deeper to get to the root of what the needs of the prospect really are.

3. Unique Personality 

This is a big one, and probably one you won’t hear all that often. When building an SDR team, you want diversity. You want lots of unique perspectives. When you put these perspectives into an environment that values them, you get a lot of ideas that can improve the entire team’s results. 

At my FinTech startup, I attribute a lot of my team’s success to this. Here are some examples how unique perspectives were valuable:

  • One sales development representative was typical hardworking sales guy. He figured out a voicemail with a super high callback rate.
  • Another rep had a background in venture funding. He thought of a LinkedIn prospecting tactic as a way to get ahold of prospects. It worked.
  • We also had an SDR that majored in landscape architecture. He moved the plants around in the office to make it a nicer workplace (little things like that do make a difference).

Hiring for Lead-Based vs. Account-Based SDR Teams

Your sales development strategy does require different personality traits to be successful.

For a lead-based approach, you’re going to want candidates with more aggressive personalities. These are the workhorses. They’re not fazed by having to call 50+ companies a day – even if that means setting only a few meetings each week. If that’s what they have to do to make quota, that’s what they’ll do.

On the flip side, an account-based approach takes a more organized personality. You want an SDR with high EQ who can truly understand the dynamics of a particular company, and can personalize their messaging to multiple stakeholders.

Account-based personality types tend not to do well in lead-based strategies, and vice-versa, so this is something you’ll want to watch out for in your interview process.

A Few Tips on Sourcing SDR Candidates

As any recruiter will tell you, sourcing quality candidates is a very important step towards making a good hire. Here are a few tips to help you do this:

  1. Post on the Vouris Startup Sales Job Board: we have a job board for recruiting startup SDRs and AEs which gets thousands of views and over 50 job applications a week. Posting is free!
  2. Headhunt from Other Companies: follow other startups (especially those in your vertical) on LinkedIn. When their SDRs reach the 1 year mark, that’s a perfect time to reach out, as they’ve had long enough to get over the honeymoon phase and become more open to new opportunities.
  3. Ask Your Best Job Candidates for Referrals: high-performers tend to hang out with other high-performers. If you really liked one of the candidates you interviewed, ask them for a referral!

Step #3 – Develop an SDR Onboarding & Training Plan

If there’s one part of running an SDR team I think is the most important, it’s onboarding and training. I prioritize having a structured SDR onboarding and training process before everything. 

The experience an SDR has in the beginning of joining a startup is directly related to how well they perform, and how likely they will stay when things get tough. If they received a disorganized onboarding and training program, it might take them a long time to ramp up. And when times inevitably get tough, they may grab onto the pattern of "this company is disorganized and that will make it unsuccessful." If they believe that, why would they stay?

Conversely, if they had a structured onboarding and training program, they’ll succeed faster and build lots of good will towards the company. Further, when times get tough, they’re more likely to look at themselves and say, “what could I be doing better?”

At the FinTech startup, I created a structured onboarding, training, and promotion plan. Here’s the 30,000-foot view of what it looked like:

Day 1 - Company overview, hardware setup, HR stuff, and competitive landscape.

Day 2 - Prospecting strategy, cold call overview, shadowing SDR calls.

Day 3 - Cold call role-playing, cold calling (yes, I put my SDRs on the phones on day 3).

Day 4 - Day 3 learning, cold call role-playing, cold calling.

Day 5 - Day 4 learning, cold call role-playing, cold calling.

On their second week, they would begin a formal training process that consisted of three tiers.

  • Outbound Prospecting 101 - 3 days a week for 3 months
  • Intermediate Prospecting - 2 days a week for 3 months
  • Advanced Prospecting - 1 day of training, 1 day of teaching prospecting 101 for three months.

Along the way, if they hit specific metrics, they got promoted a total of 3 times. After their third SDR promotion, if they hit specific metrics, they entered a transitional Account Executive role. The reason for this structure is that SDRs want to learn and grow in their career. The structure helped improve their skillset and the career progression motivated them to continue to work hard.

Step #4 – Incentivize Performance with an SDR Compensation Plan

When building your SDR team, getting the comp plan right is crucial. Incentives are certainly not the end-all be-all, but getting them wrong could lead to jaded, unmotivated SDRs that aren’t likely to stick around. 

A good SDR compensation plan does two things:

  1. Motivates your team: a good comp plan will incentivize SDRs to perform well. It gives your reps enough security to not feel too stressed, while also incentivizing high achievers to push the boundaries of what’s possible.
  2. Encourages them to stick around: replacing SDRs (especially the good ones) is expensive. A good comp plan will improve job satisfaction and provide financial incentive for an SDR to stick around.

Here’s a little guidance around how SDR comp plans work.

How Do SDR Compensation Plans Work?

An SDR’s total projected compensation (On-Target Earnings or OTE) is comprised of 2 components:

  1. Base Compensation: this is the SDR’s guaranteed compensation paid as a fixed annual salary. For startups, we recommend a minimum of 50% of your SDR comp plan be in salary. If this is your first team and you don’t have a good benchmark on performance, you’ll probably want to be higher – 60% or 70%. 
  2. Variable Compensation: these are incentives such as sales commissions, bonuses, or SPIFFs, which are tied to a performance metric such as Meetings Booked or Sales-Accepted Opportunities (SAOs).

The first thing you’ll need to do when putting together a comp plan is get the mix between these two right. This begs the question…

How Much Base Compensation Should I Pay my SDR Team?

For startups, base compensation should represent 60% – 70% of SDR On-Target Earnings. Now, I know what you’re thinking… “But Kyle, shouldn’t more of their compensation be paid in commissions? We need to stretch our runway any way we can!”

Totally understand. But here’s the deal. As a startup, you likely don’t have enough clean sales data to make accurate projections. Since these projections determine how you set up your variable compensation, your SDRs are likely to miss their OTE through no fault of their own, which can lead to them becoming jaded and unmotivated.

Further, variables completely out of their control might hurt their ability to set quality meetings. Let me give you an example…

At my FinTech startup, leadership decided to abruptly change our target market. The SDR team went from calling on every vertical to just one. With such a small segment, there were not enough leads for the whole team – the SDR team quickly exhausted their list. On top of that, all of the warm leads they’d been scheduled to follow up with suddenly became useless because they were in the wrong industry.

Meeting generation tanked. It was real bad. The SDR team’s SAO totals dropped by 80%, and didn’t recover for nearly 2 months. Fortunately, we paid 60% of their compensation through salary, so the financial impact wasn’t critical. The team’s morale was shot, but they were still able to pay rent and put food on the table. If our compensation mix had been heavier on variable comp though, that might’ve put them in a bad financial situation. And we might’ve lost a few reps.

If you’re just starting your sales function from the ground up, go with 70% base. If you’ve been around longer and can more accurately project performance, feel free to go heavier on the variable comp. But never under any circumstances go lower than 50%. Your SDRs will appreciate the security of fixed income, and be a whole lot more satisfied with the job.

How Should Variable Compensation Be Set Up for my SDR Team?

This is a topic worthy of its own post, but I’ll give you a high-level overview in a few steps:

Step 1 – Decide What KPIs to Incentivize

Here are the most common kpis SDRs are compensated by:

  • Meetings Booked
  • Meetings Completed
  • Sales Accepted Opportunities (SAOs)
  • Pipelined Created
  • Revenue Generated

Getting this right is pretty important. The end goal is to generate qualified opportunities for your sales team, so they can win lots of deals and make you lots of money. It does you no good if your SDR team books a ton of low-quality meetings because that’s how they’re incentivized.

At Vouris, we recommend having 70% of the SDR’s variable comp be tied to Sales Accepted Opportunities, which are basically meetings where the account executive confirms that the prospect is qualified and has a good chance of closing. This keeps the rep focused on booking only quality meetings. We also tie 20% to meetings booked, to incentivize volume a bit without compromising meeting quality.

The last 10% we tie to revenue generated. This again incentivizes quality, but it also encourages the SDR to follow the opportunity as it progresses through the sales process. I’ve found that those sales development reps who follow deals all the way through the sales cycle typically perform better when they are Account Executives. It’s also a nice little incentive to stick around. If you have a bunch of deals potentially closing in the next few months, you’re going to want to stick around and see the payout for those deals. 

Step 2 – Determine the Payout for Each SDR KPI

How much do you pay an SDR each time they hit a KPI? This is an important question to answer, and it’s going to require some goal setting and a lot of math. 

First, you need to determine how much revenue each rep will need to bring in each year. This is a high-level organizational goal. You determine how much revenue the company needs to generate in a year, then divide that number by the number of reps. 

Once you have this, you need to work backwards from there through every step of the sales process to determine how many meetings booked or SAOs are needed to get enough closed deals to hit that revenue target. You could spend hours building out an initial model, but ain’t nobody got time for that. 

Instead, fill out the form below and you'll get access to a downloadable sales compensation sheet you can customize for your sales organization.

It’ll help you follow along and calculate exactly how much you should pay out for each KPI to hit your OTE.

SDR Team Comp Plan1

Head hurt yet? Well, bad news for you. There’s one more step.

Step 3 – Add Accelerators

These are multipliers that increase the SDR’s payout as they reach different levels of quota attainment. Essentially, these are incredibly powerful incentives that can motivate your reps to exceed quota. In some good months, this can lead to really big payouts for your best-performing SDRs, which gets the entire team excited and motivated to do the same. 

The spreadsheet we shared lets you mess with accelerators as well.

SDR Comp Plan 2


Step #5 – Build an Effective Sales Development Process

Alright, so you’ve crafted your strategy, hired your team, and set them up with a killer comp plan. Now it’s time for the fun stuff. 

The goal of sales development is to have your reps take a prospect from knowing almost nothing about your company to wanting – even being excited – to engage in a sales conversation. To do this, you need a solid process.

What channels will your reps use in their outreach? Will they make phone calls? Send emails? Connect on LinkedIn? Maybe comment on their prospects’ posts? 

Further, what job titles will they be targeting? How many times will they attempt to connect before moving on? And what message will they deliver when they do connect?

Answering these questions will be different for every company, and is something you’ll be continually iterating on over time. That said, every sales development process can be broken into 3 distinct stages.

Stage 1 - Identify

In this stage, your goal is to determine who your sales development reps will be targeting. Essentially, you’re building an outreach list to load into your CRM. 

Who you add to this list should be based on the following criteria:

  • Firmographics: these are things like industry, location, company size, annual revenue, etc. Essentially, you want to first filter down to your ideal customer profile, or those companies that are most likely to purchase your solution.
  • Prospect Role: what is the prospect’s job title, and how much purchasing authority do they have? Are they a decision-maker, or a lower-level influencer?
  • Inbound Activity: is this someone who has engaged with the company before? Perhaps they’ve requested a demo from your company, or downloaded an eBook. 
  • Past Sales Engagement: is this a prospect your rep has connected with before, but maybe the timing wasn’t right? These prospects go into your rep’s follow-up list, and are a very big source of qualified leads.

The list your SDRs are targeting is a big lever you can pull to improve performance, and is something you’ll want to manage on an ongoing basis. 

Stage 2 - Engage

Once you have your outreach list in place, your sales development team needs the right combination of prospecting tactics (email, phone calls, social media, etc) that maximizes their chance of connecting and having a meaningful conversation with a prospect. 

Doing this requires answering 4 questions:

  1. What channels will reps use to reach out?
  2. What message will they deliver on each of these channels?
  3. How many times will they reach out on each of these channels, and in what order?
  4. How much time will pass between each of these touchpoints?

Taken together, the answers to these questions make up your sales sequence. While you can provide some high-level guidance here, it’s best to let each sales development rep figure out what works best for them (as it usually differs from rep-to-rep). 

This is one area where having a diverse team really becomes an advantage. With lots of different personalities and ways of thinking, your sales development team can get really creative. Different reps can try different approaches, and when one finds an approach that works really well, those learnings can be shared with the whole team.

Stage 3 - Qualify

Okay, so you’ve identified a list of prospects for your reps to call on and they’ve begun to reach out. But what happens when they actually get a prospect on the line? This is where lead qualification comes into play.

Qualifying leads is one of the most important functions of your sales development team. Here, your rep asks a series of questions to determine the prospect’s likelihood to become a customer. Essentially, they want to determine if this prospect is worth passing over to the account executive?

Lead qualification is a big topic in its own right, but at a high level, here’s what you’re looking at:

  • Can this prospect get the budget they need to purchase our solution?
  • Do they have the authority? If not, what other B2B decision makers will they need to engage?
  • What are their pain points and business goals?
  • How motivated are they to solve the problem that your product helps with? Is your product a nice-to-have, or could it be a game changer?
  • How fast are they looking to move on a solution like yours? Does your solution fill an urgent need and they’re looking to act on quickly? Or does it fall low on their list of priorities?

If the prospect is interested and meets most of these criteria (at least 3 out of the 4 questions), they are deemed to be worth pursuing and become a Sales Qualified Lead (SQL). The SDR will book a meeting and then pass them over to the account executive to continue moving them through the sales funnel.

Step #6 – Maximize Productivity with 5 Essential Sales Development Tools

When you’re a startup, efficiency is the name of the game. You have a small team with limited resources, so using technology to help your reps increase their activity levels can make a huge difference.  

That last point is an important one. They’re salespeople, after all – not sales machines. 

Here are 5 sales development tools you can use to maximize your team’s output:

Sales Development Tool #1 - Data Provider

Data is the fuel that powers your sales development engine. If you don’t have a source of data that provides accurate email addresses, phone numbers, and other contact info, you’re dead in the water. 

Here’s a list of solutions you might choose for building your prospecting list:

To evaluate providers, send all of them the same sample list and compare how well they enrich it.

Sales Development Tool #2 - CRM

Your CRM system is the database at the core of your sales process. It’s where all the contact data you gather is stored, and acts as a single source of truth that tells you how engaged a prospect is and where they are in your sales process. 

For startups, you’ll want to choose a CRM that’s simple and easy to use. Some CRMs (looking at you, Salesforce) can get unnecessarily complicated, and require your SDRs to spend a lot of time keeping it clean and up-to-date. That’s time they could use making phone calls or sending emails. For this reason, we recommend HubSpot.

Sales Development Tool #3 - Sequencing Tool

When it comes to sales automation, a sequencing tool is a must-have. Especially if your reps are prospecting in multiple channels. 

A sales sequencing tool is a software system for managing all of a rep’s activities. Good ones give them an interface that they can log into that’ll tell them exactly who they need to reach out to any given day, and what channels they need to reach them on. It’s one simple interface that takes the coordination and timing of the sales sequence completely off the rep’s plate, so they can focus purely on the execution.

Some examples of good sequencing tools would be Lemlist, Salesloft or Outreach.

Sales Development Tool #4 – Agent-Assisted Dialer

An agent-assisted dialer is an extremely powerful lead generation tool. With an agent-assisted dialer, a team of trained human agents do all of the phone dialing on behalf of your sales reps. Once they get a prospect on the line, they transfer them over to your SDRs.

Essentially, this eliminates all the busywork that SDRs would typically have to do while cold calling, such as navigating a phone tree or taking with a receptionist. This allows your SDR team to spend way more of their time having conversations with qualified prospects, which means more meetings for your sales team. 

For example, we recently implemented an agent-assisted dialer called Connect Leader for one of our clients. They quickly went from only 43% quota attainment each month to 122%, which represented a ~3x increase in pipeline!

Sales Development Tool #5 - Lead-to-Account Matching

If you run an account-based sales development team, a lead-to-account matching tool is a must have. When a prospect inbounds via your website, it’s oftentimes difficult for your CRM to identify whether they are part of an existing account or not. This creates a messy database, and causes the lead to get routed to the wrong rep.

We recommend using LeanData to keep your account-based sales organized and efficient.

Step #7 – Focus on the SDR Metrics That Matter & Helping Them Get There

Improving SDR performance is all about holding them accountable. And to do that, you need to be tracking the right metrics. If you have an SDR that’s struggling, good metric tracking gives you a window into exactly where the process they might be underperforming, where you should focus to help them improve.

Furthermore, setting clear expectations around these metrics and making them visible to your reps will motivate them to increase their performance. 

So, what SDR metrics should you be tracking? Generally, I like to divide them into two groups:

Input SDR Metrics

Inputs are a quantity metric that measure sales activities and allows you to forecast your results. They answer questions like, “how many meetings will we book this month” or “what percentage of conversations lead to a scheduled meeting?”

Here are 3 critical input metrics to keep your eye on:

  1. Calls & outcomes: how many calls are being made, and what are the outcomes (no answer, connected, meeting scheduled, etc)?
  2. Emails & outcomes: how many emails are being sent, and what are the outcomes (no reply, replied, initial meeting scheduled, etc)?
  3. Meetings scheduled: how many meetings has the SDR team booked? This gives you a good indication as to whether or not your team’s on track.

Output SDR Metrics

Outputs are a quality metric, which helps you understand how well your SDRs are performing when they connect with prospects. They answer questions like, “how many meetings does it take to close a deal” and “how much revenue does each SDR generate a year?”

These are the 3 most important:

  1. Future Meetings: how well is the SDR filling the AE's sales pipeline?
  2. SAOs: how well are the SDRs doing at qualifying their prospects?
  3. Revenue: are AEs actually closing deals from the meetings your SDRs book?

Helping Them Get There

Beyond compensation and the measuring the above metrics above to make sure your team isn't falling behind, what speaks to your team is the support you provide to help them stay on top of things. The SDR gig is a grind and the most successful SDRs can provide you insight on exactly how they organize their day and activity required to get to goal. Keep yourself or your team on track with our sales action plan. This can help make sure your SDRs remember to take action tackling daily activity & training goals in "bite sized blocks."

Conclusion

My time building an SDR team at an early stage startup company was the biggest learning experience I have had to date. I have now advised several other startup companies on how to run their b2b sales teams with great success. The core of my advice comes from the experience of actually doing it. It is not based on theory. It's based on the fundamentals of team building while applying best practices for SDR teams.

It's not easy, but anyone is capable of building a world-class SDR team. Apply some of the learnings I shared above mixed with your own experiences and I truly believe you will have great success.

P.S. If you want help scaling your SDR team through the roof, schedule a chat.