Happy New Year everyone. Hope that you all had a good Q4s and were able to enjoy some time off as well.
My 2017 predictions blog post generated a lot of discussion on Twitter and LinkedIn over the last two weeks. I expected some pushback around the death of the MQL, but surprisingly that didn’t materialize. I also assumed there would be some chuckling (and even derision) around my prediction about direct mail being cool again and that happened. But the biggest source of discussion came from the prediction around tech SDRs reporting into marketing. The discussions on LinkedIn prompted lots of questions and clarifications, so I thought it merited a separate post.
The idea of SDRs reporting into marketing isn’t new. In some research from mid-2015, we found that inbound-only tech SDRs (those qualifying inbound leads) reported into marketing about half the time while outbound SDRs reported into marketing much less frequently (closer to 25%). Inbound-only SDRs were clearly part of the demand gen function rather than the sales function and the only pushback I ever heard from clients on having them report to marketing was when some of their job involved outbound (either because the inbound volume wasn’t high enough or to assist on some sort of inside-sales blitz). I don’t have specific survey data to support this, but my conversations with both clients and other tech vendors seems to clearly highlight two things. More tech companies are using in-house SDRs for outbound prospecting (especially in North America) and more of those teams are reporting into marketing. The former is happening because outbound SDRs have high ROI, there are more and better tools to help with data, engagement and automation, because the buying process is more complex and because good field and inside reps are hard to find and retain. But why the change in reporting structure?
We’ve heard several reasons for the change. First, outbound prospecting via SDRs isn’t dramatically different than other demand generation activities. It’s certainly more personalized, but thanks to ABM, marketers are getting less reliant on mass e-mails and other broad-based marketing approaches. Marketers aren’t making phone calls or sending LinkedIn connection requests, but what fundamentally is the difference between an e-mail or advertising campaign run by marketing vs an e-mail and phone campaign run by an SDR? Yes there is a difference in scale, channels and calls to action, but the endgame is the same. You are trying to generate demand from targeted companies for which you can ultimately drive meetings or demos.
Unsurprisingly, the metrics are also more closely aligned to the ones marketing cares about. Regardless of where they report, the SDR is handing off to the field at a point very early in sales process. The SDR is not the one to determine whether it’s an opportunity, let alone carry it through to completion. From a demand gen perspective (whether in a traditional or ABM-centric world), CMOs are ultimately trying to drive a qualified prospect to engage with a salesperson. That is the job of the SDR as well. The sales organization is primarily concerned with closing deals and sales reps are compensated on their ability to do that. Like others in the marketing organization, the SDRs may have some of their variable compensation tied to pipeline revenue attainment for the company or a business unit, but they don’t carry a specific quota. We’ve also observed that when SDRs report into marketing, the pressure comes off to “be busy” by making x number of phone calls and sending y numbers of e-mails per day. The goal is to drive outcomes, not just hit volumes and as long as enough meetings are being set and opportunities created, demand generation leaders will not be placing much emphasis on activity volume when it comes to KPIs.
Third, and maybe most importantly, SDRs need a lot of ongoing training and enablement. You can send them through sales bootcamp and have salespeople give them pointers around how to improve their prospecting techniques, but the bulk of the enablement is typically driven by product marketing. These are often 23 or 24-year old kids, not seasoned sales reps. They need to know the right messages, ways to overcome objections, and enough information about the product and the market to sound intelligent on the phone. And they need to know this on an ongoing basis. Many of these things aren’t really the domain of the sales organization (even an SDR manager) and even if they were, you can easily see situations where they are pushed to make more calls rather than get the proper amount of ongoing enablement.
I’m not suggesting that it can’t work to have the SDRs report to sales. I’ve seen plenty of situations where it works well, especially when there are good relationships between sales and marketing. And it’s not uncommon to see the role bounce back and forth from one year to the next. And if you don’t have a clear path for a successful SDR to move to the field because they work in marketing rather than sales (a technicality that can be easily remedied both during hiring, but also through formal processes), then you shouldn’t make it a marketing responsibility. But the point I’m trying to make is that there are plenty of reasons as to why it makes sense and why I expect to see the trend continue. And remember, I only need to get 30% of my predictions right to be successful, at least from a baseball standpoint!
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