What’s a Business Development Rep?

 Sometimes also called:

 Sales Development Rep
 Market Development Rep

 Function: Outbound Prospecting

 Highly specialized
 Only does outbound

 Cold Calling 2.0

 Whoa!

Isn’t David Skok a board

member at HubSpot, and a
huge advocate of Inbound
Marketing?
Inbound Marketing

 Get Found!
 Marketing that
customers love
 Using Content,
Social Media,
etc. to reach
buyers in their
purchasing
journey
Inbound Marketing: What it’s NOT:

 Cold calling
 Spamming
 Interrupting their favorite
TV shows with Ads
 Etc.
So why use Outbound Prospecting?

 Marketing is not producing enough leads

 It can take time for Inbound Marketing to ramp up

 Marketing is not producing the right kind of leads

 You have a clear set of target customers
 Biggest accounts
 Most likely to buy
When not to use Outbound Prospecting?

 Low LTV
 Lifetime Value of a Customer
 If you can make $10k in the first year, BDR’s can work
The Key Elements behind “Business Model”

 Cost to Acquire the Customer (CAC)

 Profit from that Customer (LTV)

 There is a common problem: Startup Killer

An out of balance Business Model

Entrepreneurs are over-optimistic

Cost to
Acquire a
Customer
(CAC)

Monetization
(LTV)
Sales Complexity

No Touch Light Touch High Touch Field Sales

Freemium Field Sales
Self-Service Inside Sales Inside Sales with SE’s
How I assumed the two would relate
A rough estimate of CAC versus Sales Complexity

No Touch Light Touch High Touch Field Sales

Freemium Field Sales
Self-Service Inside Sales Inside Sales with SE’s

Rough Estimates of Cost of Customer Acquisition (CAC)

$0- $50 – $1,000 - $3,000 - $25,000 – $75,000 –
$10 $200 $2,000 $8,000 $75,000 $200,000
The relationship is roughly exponential

Clearly adding
Human Touch
dramatically
increases costs
CAC (logarithmic)

$100,000

10x
$10,000

$1,000 10x

$100

10x
$10

$1
Freemium No Touch Inside Sales Field Sales
Sales Complexity
High CAC, requires high scores for: Value, Pain, Urgency
Value / Pain / Urgency = LTV (logarithmic)
$1,000,000

$100,000

$10,000

$1,000

$100
Unprofitable:
LTV < CAC
$10

$1
Freemium No Touch Inside Sales Channel Field Sales
Sales Complexity 
• Throughout history, specialization
has been the breakthrough to
better techniques. It allows
people to excel at a few specific
tasks.

• Sales is no exception
Ken Krogue, Inside Sales.com
Why Specialize?

 Lack of Motivation
 Experienced sales people hate to prospect
 and are usually terrible at it
 Given the option to do Prospecting, Closing or Farming,
sales people will gravitate to the things they like most

 Lack of Focus
 Even if they are good at it, as soon as they generate
some pipeline, they will be too busy to continue

 Specialized metrics are required

 … to gain visibility into what is working, and what is not
Why Specialize?

 Converting a lead to an opportunity requires its own

playbook
 … and subsequent training and coaching

 Sales development is fundamentally different than the rest

of the sales cycle.
 The science of connecting with someone is hard enough
 when you connect, you have a few seconds to generate interest
 and a couple minutes to handle objections and close for a
meeting.
 Effective sales development requires full-time management,
specific training, and constant coaching.

Courtesy of TOPO blog

 How does Specialization work?

Outbound
Customer
Prospecting
Success
Account
or
Executives
Account
(Closers)
Inbound Managers
Inbound
Lead (Farmers)
Leads Qualification
 Outbound BDRs fit here:

Research

Outbound
Customer
Prospecting
Success
Account
or
Executives
Account
(Closers)
Inbound Managers
Inbound
Lead (Farmers)
Leads Qualification
When is it appropriate to Specialize?

 As soon as you can afford to have more

than two sales reps
Who should you hire? - Company 1

 If I have 3 similar candidates

 (which at this level happens all the time)
 If one of them played college sports they will win

 Someone who is a good

listener, challenger
 They show up prepared
 They ask great questions
 And can tell a story
Who should you hire? - Company 2

 We hire right out of college

 We recruit smart kids from good colleges
 Our best luck has been hiring kids with business degree
backgrounds - ie: Bentley, Babson, Bryant
 But honestly, any smart, very curious, passionate and
hard working, recent grad will do
Who should you hire? - Company 3

 Hungry, creative and thick skinned

 It's all about getting someone's attention so being
creative with your voicemails and emails is
important
 You will get a lot of "no" so you need thick skin and
a short memory
How much should you expect to pay?

 Company 2
 40K base salary
 8K annual bonus - 2K per quarter
 with the ability to over achieve

 Bridge Group
 Approx. $47,000 in base
 $71,600 in total comp
 Lower or higher based on location or target market
 E.g. in Silicon Valley, SDRs with significant experience calling
enterprise accounts and decision makers can make over $100K
in annual target compensation
What results can you expect to see?

 Measured in Demos or Meetings:

 Company No. 1
 20 per month

 Company No. 3
 8 per month

 Other Data I have seen

 15-30 per month
What is the Cost of each Meeting/Demo?

 20 leads per BDR per month

 BDR Cost
 $71k total cost
 Plus 40% overheads
 Equals $99k annually

 Cost per meeting: $414

How long will it take for them to ramp up?

 Company No 1.
 2-4 weeks to start being productive
 2-3 months to be fully ramped up
 After about 6 months it's possible that
they are ready for inside sales
Lessons learned – from Aaron Ross

 Aaron Ross – set up this function at Salesforce.com

 Lesson One:
 Finding the right person to call is the hardest part
“If I could find the right person, I could usually have a
productive business conversation with them. It was just
a pain in the ass to find them, especially in the F5000
size companies!”
Aaron Ross: Breakthrough

 In Desperation, I Tried An Experiment:

 I’d always assumed that mass emailing executives
wouldn’t work. Don’t I need to carefully craft each email
to them to make it personal?

 I wrote one email that was a classic salesy cold

calling letter: “Do you have these challenges? X, Y
Z…”.
 I also wrote a totally “short and sweet” different
email simply asking for a referral to the right
person at the company.
Aaron Ross: Breakthrough

 On a Friday afternoon, I sent two mass emails from

Salesforce.com:
 100 of the “classic salesy” emails to F5000 executives,
 100 of the “short and sweet” emails to the same kind of
list.
Aaron Ross: Breakthrough

 Out of 200 emails I sent, I had 10 responses back!

 Response rate for the “salesy” email: 0%.
 Response rate for the “short and sweet” email: 10%.
 Again, these were from C-level and VP-level executives
at large companies.

 At least five of the emails I received from the short

and sweet campaign were positive …
 referring me to other people in the organization as the
best person for a conversation about sales force
automation.
Aaron Ross: Breakthrough

 I discovered that mass emailing C-level F5000

executives, with specific kinds of emails, can
generate 9%+ response rates
 Those high response rates (8-10% or more) from
high-level executives have held true year after year,
even with my current clients, seven years later.
Aaron Ross: Breakthrough

 Use a referral/researching approach rather than

cold calling people directly.
 You can generate quality referrals from cold contacts
who have never heard of you via short and sweet email
templates
 NEVER SELL in these “request for referral” emails
Case Study: Acquia Metrics after One Year

 Created extra $6 million in Sales Qualified Leads

 Closed $3 million in revenue already
 … from the first 18 months of pipeline generation
 (which will multiply fast now that the flywheel is rolling)

 Grew prospecting team from 3 to 25 reps (USA & UK)

 Added a manager in each location

 Creating an extra $2m in pipeline per ramped rep

 … or about $12-$15m in qualified sales pipeline/quarter
 … and still growing
 many prospectors are still ramping because the team is growing so fast

 Prospecting went from generating nothing to creating 40% of the new

business sales pipeline.
 Read the full case study here:
 http://predictablerevenue.com/blog/case-study-acquia-on-the-100million-revenue-growth-track-trajectory
 What’s Expected Of A Prospector At Acquia

 300-500 outbound emails a month

 100 “quick conversations” / “call connects” a
month
 … with all kinds of people

 20 longer Discovery Calls

 … with influencers/decision-makers

 15 Sales Qualified Leads

 … passed to and accepted by salespeople

With thanks to Tim Bertrand, Acquia

Acquia expectations for pipeline & revenue:

 Average outbound deal size: $50k in ARR (Annual Recurring Revenue)

 15 SQLs / month = $750k pipeline generated per month
 A lower goal than a common goal of 8-12 SQLs per month/rep
 because they’re going after large accounts

 Expected $55k-65k ARR per month per prospector

 Or $720,000 in ARR per year per prospector.

 Doing the math, with 20 prospectors after just a year

 At $600k Annual Recurring Revenue per prospector
 Acquia already expects to add an incremental $60 million in pipeline and
$12-$15 million in Annual Recurring Revenue in 2014 at a minimum
 At a 10x revenue valuation, that’s an extra $120-$150 million in equity
value to investors in just 2.5 years.
 And they’re planning on roughly doubling the team again (to ~40 reps) over the next
18 months, which will help them add an extra $30 million per year in ARR
Training, Coaching, Recognition, etc.

 A big and important topic

 Too long to cover here
 Resources
 Vorsight
 Aaron Ross
 TOPO
 Reality Works Group
 The Bridge Group
 InsideSales.com
Metrics

 Map out the process:

 Call or email (Connection attempts)
 Connect
 Conversation
 Meeting or Demo

 For Each stage, measure:

 Quantity
 Conversion rate
Map out the process

Connection
Meeting or
Attempt: Connect Conversation
Demo
Call or email
For each stage, measure Quantity and Conversion Rate

Quantity over time

Connection
Meeting
Attempt: Connect Conversation
or Demo
Call or email

Conversion Rate (%)

Coaching for Problem Areas

 Low Conversion rates from one step to another

highlight a problem area for specific reps
 Use the reps that are best at that stage to coach the reps
that need help
Leaderboards

 Public display of results triggers competitive drive

 Show intermediate results as well as
meetings/demos

 Example supplier: Rivalry

Technology

 There is a ton of very helpful technology

 Marketing Automation (HubSpot, Marketo, etc.)
 List builders (SalesLoft, InsideView)
 Prospect intelligence (LinkedIn, Google, HubSpot, etc.)
 Dialers
 Email tracking (HubSpot Signals, YesWare, etc.)
 Multi-media emails (ClearSlide, Brainshark, etc.)
 VoIP phone systems that auto-update CRM
SalesLoft screenshot
Persistence

 6-9 call attempts

 2-3 emails or voicemails

 Best practice (from Ken Krogue, InsideSales.com)

Resolve the age old dispute between Sales & Marketing

 Sales: “Not enough leads”

 Marketing: “I gave you a stack of leads, and you
didn’t call any of them”

 Solution: BDR function

 Raw Lead  MQL (Marketing Qualified Lead) - done by Marketing
 MQL  SAL (Sales Accepted Lead) - done by BDR
 SAL  SQL /Opportunity - done by Acct Execs
In a perfect world…

MyProduct.com

HOW IT WORKS DESCRIPTION

Our product
allows you …

Only $9,999.99

BUY NOW!
Why doesn’t
this work?
The Buying Cycle

Awareness Consideration Purchase

Triggers

 Moving house
 Movers, phones, cable TV, furniture, insurance, etc.

 Starting a new software project

 PaaS (Platform as a Service), Dev Tools, etc.

 Need to hire a lot of new employees

 Applicant Tracking System

 Just lost my data in hard drive crash

 Backup software/service

 Read about a scary new Android smartphone virus

 Anti-virus software
 First
Sell
Contact
Only OK if the buyer is in a buying cycle

First Build Build

Sell
Contact Relationship Trust
 OFTEN NECESSARY TO FIND TOPICS
THAT ARE NOT RELATED TO THE SALE

Build Build
Relationship Trust

First
Sell
Contact
Examples

 Educational Events
 Personalized Data that is of value to the customer
 Free Software: HubSpot’s WebSite Grader
 Meetings with other Execs with the same title
Think of your Buyer like a Bank Account

You must make a Deposit before you can expect to make a Withdrawal
Never underestimate the important of Research

 A personalized email has a far higher chance of

success
 If the company is public, look up the CEO’s
discussion of quarterly results

 Some companies can automatically send

personalized emails
 Based on scanning their web sites (e.g. SEO)
Conclusions

 Valuable tool in the right circumstances

 Must specialize
 Invest in the right management, training, etc.
 Metrics are key

 Look for ways to add value before

you ask for anything
Resources

 ForEntrepreneurs.com
 Interview with Aaron Ross

 Vorsight