Blog post

Why Tech SDRs Should Report Into Marketing

By Todd Berkowitz | January 06, 2017 | 9 Comments

Technology and Emerging Trendssales enablementABM


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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  • Ray Carroll says:

    Todd – Interesting perspective. If I reflect back on my time at Marketo, our SDR team was the most productive when it reported to Marketing. That being said, it’s all about where they are going to get “love” and “attention”. If that’s Marketing, don’t fight it. If it’s sales, so be it. Thanks for sharing your insight.

  • Tom Murdock says:

    Great piece Todd. There are solid arguments on both sides of this one. I’m in the sales camp because I want checks and balances with marketing, SDRs to get day-to-day tactical management and coaching from their reps and sales managers on the full sales process (not just prospecting) and to build a really solid farm team of future AEs. At the end of the day, every organization should decide: which leader (marketing or sales) is most passionate about the SDR program through the lens of those 3 elements. That person should own the SDRs IMO.

  • Jeremey Donovan says:

    As Ray & Tom noted, SDRs should roll into the leader (CMO or Head of Sales) who is most knowledgeable and passionate about their success. I’m in the sales camp, however, having run SDR teams wearing both hats. (1)The most important reason for in-sourcing outbound SDRs is for training future inside sales & field reps (2) outbound SDRs have far lower ROI than inbound (3) The world is become more clear – outbound SDRs are for demand gen; marketing automation is for nurturing (4) Sales vs. marketing makes no difference in KPIs which should either be meetings or sales-accepted opportunities. (5) I’d love to see Gartner actually benchmark the prediction accuracy of its analysts (of which I was once one).

    • Todd Berkowitz says:

      Jeremey- I can see the value in having them report to sales and my prediction was that a majority would report to marketing. If you are really committed to training them and nurturing them and not getting hung up on productivity metrics, there is a lot of value in having the outbound SDRs report into sales. The problem is that it we saw a lot of clients that simply didn’t have that commitment and it simply made more sense in moving them to marketing. Plus, with the decline in the value of mass e-mails sent through marketing automation systems and a limit to what you could accomplish through inbound alone, there was a corresponding increase in the use of personalized e-mail outreach from SDRs. But I’m not a stickler on where they report, I just tell clients to give them the attention and guidance they need, wherever you put them in the org.

      Regarding predictions, these weren’t the official “Gartner Predicts” kinds of predictions. These didn’t all have quantities and time frames, nor was the same level of rigor in peer review. Plus, some of mine were pretty subjective. How do you measure if direct mail is cool again? And if I named a direct mail company as a cool vendor, would that make direct mail cool? And finally, I set the bar low. I just want to bat .300!

  • Bill Ball says:

    Todd- I’ve heard this discussion internally and within enablement circles. You do an excellent job at examining the different lenses: organizational function and success, rep function and success, and finally rep career path and ongoing development. I see the case for outbound with sales and inbound with marketing, but like Jeremey Donovan mentions, they benefit from rolling under the exec “who is most knowledgeable and passionate about their success”.

    My question is about the SDR’s development. I have extensive firsthand familiarity with the reality of very junior reps who are new to the business world, let alone sales and marketing. YES to ongoing everything, YES there is a struggle with quantitative metrics vs qualitative ones. You mention this isn’t “the domain of the sales organization (even an SDR manager)”. However, I don’t see the case for whose domain it should be and why? Would love to hear your thoughts (and those of others) on this.

    • Todd Berkowitz says:

      Bill- Thanks for the comment. Let me caveat this by saying that I get to be the outside “expert” and I don’t have to actually manage a team of SDRs. So I don’t want this to come across like I’m sitting in some ivory tower. In fact, I’d recommend you talk to someone like Matt Amundsen from Everstring. Last time I talked to him, his team (he manages the SDRs) actually ran parallel to sales and marketing and reported to the president. That may be the ideal scenario.

      But in terms of domain, if you believe that outbound SDRs are essentially there to generate demand (even if you call it prospecting), then it really should be the domain of marketing. If the team is big enough to have a full team with an SDR manager or director, you can have them report directly to the CEO or the VP of Demand Gen. But if you are talking about a smaller company (like many of our clients), you may have only a couple of SDRs and wouldn’t have a manager. So the logical place would be to put them under the Director of Demand Gen. But that person may not be adept at managing the SDRs. You may have a better management situation if you put them under product marketing instead given that they will be responsible for enabling them. But even that isn’t perfect.

      A lot of this looks good on paper, but it really depends on the dynamics of the organization and who wants to step up and take responsibility. At some point, the team grows and it becomes a cleaner situation. But it’s not uncommon for the team to bounce around a few times.

  • Steve Dille says:

    As noted, I’ve seen the reporting both ways. I like the concept of who is more passionate about it… SDRS need a lot of attention to be successful and sales VPs are looking for deals and sometimes SDRS just don’t make the priority.

    As a CMO, I like owning SDRS. Primarily because if I can, I like handing over meetings to sales vs. a lead many of which never get followed up on. Its more qualified and advanced and valuable. On the other side of the argument, I think that if sales is contentious towards marketing and blaming their struggles on unqualified leads, then it makes a lot of sense to have SDRs in sales. They still have to work very closely with marketing. But what that does is give sales the ability to qualify and accept the leads and it ends some debate about if the leads are good because they are now both qualified and accepted by the Sales VPs organization.

    • Todd Berkowitz says:

      Thanks Steve. Your last point is spot on. If sales is acting that way, there is really no incentive for the CMO or demand gen team to take on that responsibility. But I’d also argue that without a good working relationship between sales and marketing, the SDRs are the least of the problem.

  • Todd, not sure how this suddenly appeared on my radar screen but it did:))

    We have been doing SDR research for 7 years. In our latest SDR Metrics and Comp report (355 tech co’s participated) we found that 76% of all SDR groups report to Sales. Having said that, if inbound only they were 2.1X more likely to report to Marketing.

    In all honesty, it doesn’t matter where they report. The only thing that matters is they report up to someone who had the bandwidth, passion and expertise to manage and grow the team.