Business and sales leaders in the tech sector almost always underestimate the true cost of building an in-house SDR function. They’re quick to reference the headline costs of salaries and commission. But in our experience, these are just the tip of the iceberg.
When we get to talking in depth about the process of setting up the SDR function, it rapidly becomes clear that the opportunity cost is a far greater issue. In the time between deciding you need a new or upweighted SDR function and the point when you’ve got your SDR team up to strength and operating effectively, major pipeline and a competitive edge that your solution had may have slipped through your fingers.
SDRS are a rare breed
It’s easy to overlook the time, effort and expense of effective SDR recruitment, training and onboarding. Your recruitment team may have great skills and experience in hiring marketing and salespeople, but SDRs have a specialised skillset that’s harder to identify and validate. Truly skilled and experienced SDRs with a great track record are a rare breed – and they’ve become increasingly more expensive to hire and retain.
It will likely take your recruitment team a lot of time to get to grips with the role and candidate profile, pulling them away from business-as-usual recruitment. A smart move is to augment your HR team with an experienced SDR recruiter, but of course that too comes at extra cost, and takes yet more time to deploy.
In-house SDR average costs and key data:
- Total annual cost of a UK Enterprise Technology SDR – £175,218 (considers salary, commission, payroll tax, pension, benefits, sick leave, IT costs, training, admin, management)
- Mean SDR tenure – 14.2 months
- Average SDR turnover – 39%
- Time to hire an SDR and onboard them for effective delivery – 3-4 months
- Culture fit and ability to cope with change are critical success factors
Source: Clarify, 2021
Preparing for churn
Another challenge that sales managers and business leaders typically come up against is maintaining a process for SDR onboarding and ongoing recruitment. However great an employer you are, SDRs are notoriously prone to churn. Their skills are in high demand and it’s a challenging role that isn’t for everyone, so not all talent will stay the course. Therefore, you continually need to build a pipeline of candidates or have a trusted pool of talent that you can lean on. You need to onboard them rapidly, so they can start to deliver the pipeline benefits you need quickly, which demands more resources and costs.
Managing a successful sales team
Furthermore, you need to have in place the management structure to provide the ongoing coaching and development to avoid your function becoming one that’s all volume (meetings, calls etc) but no value (low conversion to pipeline and revenues). This is a completely different sales motion, even in enterprise SDR than your enterprise AEs – every member of this team needs daily attention.
It’s not as simple as choosing between in-house and outsourced teams
At this point, you’re probably expecting our trump card – it’s time for you to outsource SDR to Clarify and sweep all those costs and concerns off your board room table. But that’s not our intention. Through this piece, we hope to spread the word that a black-and-white, either/or approach to SDR resourcing is reductive and simplistic in today’s market.
For one thing, the value you can gain from an in-house or outsourced SDR operation depends a lot on its scale. As a rule, we’ve seen that teams of under ten are unlikely to be cost-effective in-house, but scaled up and properly supported, they can definitely deliver superior ROI.
Aligning your approach to your organisations needs
For another, the smart money today is directed into optimising your SDR function in whatever way is right for your organisation’s current needs. If you have an existing in-house team, honing and upweighting their skills and improving your processes can deliver substantial performance and efficiency improvements.
If you want to build an in-house team, your best investment may be in expert advice to do it right first time – support with recruitment and onboarding and market-leading training and processes to empower your SDRs. And using outsourced SDRs in the short-term can help you minimise the opportunity cost while your team gets up to speed.
If your pipeline strategy is phased or your business is undergoing a transformation, you might do best with a blend of in-house and outsourced resources that you can flex to match your business need. You may wish to outsource part of the process – such as training and recruitment. If you do go for a fully outsourced SDR function, it’s vital to plan for an investment of senior executive time in scoping and optimising delivery, hand-in-hand with your SDR partner. You definitely don’t want to fall into the classic outsourcing trap of ‘your mess for less’.
“Almost two decades’ experience in SDR solution design for tech sector organisations has clearly shown me that there are no one-size-fits all solutions. But there is a surprising amount of naivety when it comes to anticipating the total cost of fully in-house SDR delivery, even though business and sales leaders are now firmly convinced of the function’s value.”
David Meyer, Managing Director of Sales
If you’d be interested in talking through your options or pose me a challenge relating to your current or planned SDR set-up, I’d relish the chance. Get in touch directly with DMeyer@clarifyb2b.com