Content Marketer Cara Hogan originally published this post on InsightSquared’s blog, as part one of a three part series.
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You understand that inbound sales can only take you so far, and so you’ve decided to build a powerful Sales Development team to help achieve your company’s aggressive sales goals.
The only problem is, you’re not exactly sure how many new Sales Development Reps (SDRs) you should hire to hit your number.
You know capacity planning is a fine balance between hiring enough reps to produce results, and wasting money by hiring more than you need. How do you find your business’s sweet spot and grow your team strategically, with one eye always on the goal line?
In this 3-part series on Sales Development 101, InsightSquared and prospecting expert Kyle Porter, CEO of Salesloft, work together to share best practices in building a powerful and successful SDR team, from planning to hiring to training. In Part 1, we examine how you can use metrics to decide how big your SDR team must be in order to hit your company-wide sales goals.
Using the right data, you will be able to hire the right number of people to grow your sales leads, find new sources of business and – ultimately – hit your sales goals:
How Many New Opportunities Do You Need To Hit Your Sales Goals?
The reason you’ve decided to create an Sales Development team is because you have a big sales number to hit next year, and you know you need a huge number of new leads to hit it.
Start by taking that top-down revenue goal for your business, and use performance metrics to figure out how many opportunities you would need to hit that number.
For example:
If you know your business is currently closing X dollars in new revenue today and you need to grow the business 2X next year, how many more opportunities do you need in your pipeline to grow 2X?
If the average sales price is X per deal, you know approximately how many customers total your sales team needs to close in order to hit the 2X number. Then, you have to understand your company’s overall win rate as opportunities move down the sales funnel. If your sales reps win 20% of the opportunities they work and your business has Y number of opportunities in the funnel to today, now you know exactly how many total opportunities you need to gain next year to hit your sales goals.
If we know our conversion rates from opportunities to close, we know how many opportunities we need to generate.
How Many Opportunities Do You Need Per Account Executive?
Once you know how many opportunities your team needs in the pipeline, now you have to consider how many opportunities each Account Executive on your team should work per week. For example:
If AEs conduct 4 product demos per day now in order to win 20% of their opportunities, you know how many demos AEs need to do in order to grow the business.
Now you know the total number of new opportunities you need to generate per day to keep your AEs busy and closing new deals.
It may be that you also need to hire new AEs in order to hit your overall number, if your current AEs cannot handle the high number of opportunities sent their way. Ideally, you want your AEs to stay busy, and always be working new opportunities. That’s the whole point of your SDR team – they should keep your closers busy at all times.
How many demos, opportunities and meaningful conversations can your Account Executive team conduct to maximize your position in the marketplace?
How Many SDRs Do You Need?
Now that you know how many meetings each AE needs in order to close deals, you need to consider how many meetings each SDR can book per week.
If you have 10 AEs doing 4 demos per day, then you need your team of SDRs to book at least 40 meetings a day.
Now, how many meetings can SDRs individually book per day?
The conversion rate of calls to meetings booked is different from business to business, and really depends on the quality of your outbound leads, the skills of your SDRs, and many other factors. However, once you get the team up and running, you can calculate how many calls your team makes per week, the average conversion rate for calls to meetings, and extrapolate from there to set activity goals. Once you understand these sales performance metrics, you can figure out how many new reps you need to hire to book 40 meetings a day and drive your business to success.
How many demos is a SDR capable of setting up each day? For our company, it’s somewhere between 2 to 4, hovering around 2 on average.
Phew, that was a lot of data! But don’t be discouraged. Just focus on the numbers, understand your business’ metrics from start to finish, and you’ll be able to hire exactly how many new SDRs you need to hit your goals.
Bottom line:
What level of activity can you expect from your SDRs and then what level of activity do you need? Then, just make sure you’ve hired enough people to meet that level of activity.