Sales Development

What is Sales Development?

Sales development is the business function that handles the front-end activities in the sales cycle. These include finding, segmenting, connecting with, and qualifying potential leads.

At its core, the main goal of sales development is to set qualified appointments with prospects that have a high potential of becoming customers. A lead that meets these criteria is called a sales qualified lead (SQL).

Sales development is, in many ways, a bridge between marketing and sales. It is often considered to be an extension of lead generation, as its main focus is to uncover and qualify prospects for sale.

A company’s sales development team accomplishes its goals using a variety of techniques, including cold calling, emailing potential leads, and using social media channels (namely, LinkedIn). They are usually the first human contact a potential customer has with the company.

Synonyms

• Business development
• Inside sales
• Sales prospecting
• Demand generation

Importance of Sales Development in Revenue Growth

As the first point of contact in the sales cycle (and main controller of lead volume and quantity), the sales development team can make or break a company’s ability to generate revenue. The importance of their role can be seen both in terms of how they influence the sales funnel, as well as customer retention and loyalty.

Focus on Connecting with Prospects

The very essence of sales hinges upon the ability to form meaningful connections with prospects.

Particularly for startups, the lion’s share of revenue isn’t necessarily from inbound traffic. Ads are expensive. SEO takes a long time to work. It’s unlikely a customer would learn about a new product or company on their own (or even be able to find them).

This means their growth is contingent on reaching out to potential customers, engaging them, and eventually converting them.

In most cases, buyers prefer to do the research themselves. But there comes a point where speaking to a sales rep is a requirement for selecting the right product. It’s the sales development department that helps them cross that bridge.

Lead Qualification

Sales reps rely heavily on having quality leads to work with. Sales development teams play a key role in creating this pipeline by carrying out sales qualification processes for the leads they produce as well as marketing qualified leads (MQLs) generated elsewhere.

A streamlined sales cycle is a product of working with well-qualified leads. When reps work with highly qualified leads, they are essentially fast-tracking the process. With a clearer understanding of the prospect’s needs and potential pain points, reps can tailor their approach, making the entire procedure more efficient and effective.

Increased Conversion Rate

When buyers move through the funnel at their own rate, the chances of them making it through are a lot lower.

Investing in solid qualification efforts ultimately leads to better returns. With a precise focus on leads that have a higher propensity to convert, sales and marketing efforts yield better results. This not only improves the bottom line but also boosts team morale, as they close more deals. and earn more.

Sales and Marketing Alignment

Sales and marketing functions within a company are increasingly intertwined. From 2021 to 2022, more than 40% of companies have seen an increase in alignment. A huge reason behind this is the evolution of sales development as a strategic business function.

Sales development representatives are on the frontline, interacting directly with leads. The insights they glean about customer preferences, objections, and pain points provide invaluable feedback to the marketing team. Real-time information informs marketing campaigns, content creation, and overall strategy, making them more resonant and effective.

Most importantly, an effective sales development team also facilitates a consistent customer experience. When they share information, sales and marketing departments give buyers accurate, consistent messages throughout their journey.

Improved Win Rates

When sales and marketing are well-aligned, win rates tend to go up. There are a few reasons for this:

• A good first impression of a sales rep makes customers more willing to go through the process.
• Sellers uncover critical pain points during conversations (some of which, the prospect is unaware of).
• A more personalized, tailored approach makes prospects feel valued.
• Buyers get the right information at the right time, which helps them make an informed decision.

Especially in businesses with a high degree of product complexity, a solid sales development team helps increase first-time buyer conversions.

Long-Term Retention

Engaging the right types of customers from the outset ensures that the relationship is built on a foundation of mutual benefit. Proper prospecting delves deep into understanding a lead’s pain points, needs, and motivations.

Businesses can tailor their solutions more effectively when they truly understand what a customer wants. Customers who feel their needs are addressed are likelier to stick around.

Roles in the Sales Development Team

A typical sales development team consists of a director, account executives, and sales development representatives. In some cases, an organization may outsource some of these roles.

Director of Sales Development

The Director of Sales Development sets the overarching strategy for the sales development team. They are in charge of defining sales goals, measuring KPIs, and ensuring that the team has the right resources, tools, and training to succeed.

Typically, the Director of Sales Development reports to the VP of Sales or the Chief Revenue Officer (CRO). In some organizations, they might also report directly to the CEO.

Their responsibilities encompass a wide range of tasks, including:

• Team management: Hiring, training, and mentoring sales development representatives (SDRs)
• Strategic planning: Setting sales targets, devising strategies to achieve them, and translating them to impact on revenue
• Reporting and analysis: Continuously measuring and analyzing the performance of the sales development team against set KPIs
• Collaboration: Working closely with both sales and marketing leaders to ensure alignment in strategies and goals
• Resource allocation: Ensuring the team has access to the tools, technology, and training to perform their roles effectively

In larger organizations, the Director of Sales Development handles the higher-level tasks tied to revenue growth, while the team management responsibilities are given to a Sales Development Manager.

Account Executive (AE)

Account Executives are the closers in the sales process. Once the sales development team qualifies leads, AEs take over to dive deeper into the prospect’s needs, provide tailored presentations, and ultimately negotiate terms to close the sale. They’re adept at understanding the nuances of their product or service and how it fits into the broader context of a prospect’s business or individual needs.

Their primary responsibilities include:

• Closing: Taking qualified leads through the final stages of the sales pipeline to secure the deal.
• Managing relationships: Building and nurturing relationships with new and existing clients to ensure long-term satisfaction and loyalty.
• Product knowledge: Maintaining an in-depth understanding of the product or service offerings to take a needs-based or solution selling approach.
• Pipeline management: Tracking and managing prospects in CRM and keeping stakeholders informed about the sales forecast and potential roadblocks.
• Post-sale account management: Depending on the company, AEs might also be responsible for customer onboarding and addressing concerns or queries they might have.

Larger companies have multiple levels of AEs, with incrementally higher commissions and responsibilities. Newer AEs manage emerging markets and small accounts, while an Enterprise Account Executive would be considered senior-level.

Sales Development Representative (SDR)

Sales Development Representatives are on the front lines of sales development. They identify prospects, generate interest in the product or service, and qualify leads to pass on to the AE team for a demo or deeper conversation.

SDRs manage two types of leads: inbound and outbound.

• Inbound leads are people who have already shown interest in learning more about a business’s offerings. This can happen through website visits, social media engagements, or clicks on an advertisement. They made the decision to book a sales demo.
• Outbound leads are people who may or may not be aware of the company’s product, but could potentially benefit from it. SDRs use research and the ideal customer profile (ICP) to identify these leads. Then, they contact them directly to start a conversation.

By leveraging their skills in research, communication, and social selling, sales development professionals can help businesses reach out to more potential customers and close more deals. This leads to an increase in the company’s revenue growth.

Outsourced Sales Development

Some organizations choose to outsource some or all of their sales development arm. An outsourced sales development team provides access to experienced, qualified professionals primarily specializing in lead generation and appointment setting.

The main reason a business would choose to outsource sales development is to gain access to professionals with more experience than they could hire in-house. Outsourced teams sometimes specialize in a specific product or sector, giving the company access to highly specialized expertise.

Sales Development Metrics

To track sales activities like qualifying leads and setting appointments, businesses use sales development metrics. Leaders use these metrics to measure sales performance, identify trends, and benchmark progress.

Operational Metrics

In the context of sales development, operational metrics refer to the measurable data points that underscore the day-to-day functioning and efficiency of the sales development process. They help sales leaders track and optimize the performance of their SDRs and AEs.

1. Lead response time: The average time it takes SDRs respond to new leads or inquiries. Five minutes is the benchmark, but sellers convert nearly 400% more often when they answer within a minute.
2. Activity volume: The number of calls, emails, or other outreach activities an SDR performs in a given timeframe.
3. Connection rate: How many outreach attempts (like calls or emails) result in meaningful interactions with potential leads.
4. Lead-to-MQL conversion rate: How many leads show interest in the company’s products by engaging their content.
5. MQL-to-SQL conversion rate: The percentage of leads from marketing that are actually qualified to buy, indicating the targeting accuracy of marketing collateral.
6. Appointment setting rate: The number of successful appointments set by the SDRs compared to the number of leads or connections they’ve made.
7. List penetration: This metric reveals how thoroughly an SDR is engaging with a given list of leads or prospects. If the penetration rate is low, it might indicate that more effort is needed or that the list quality isn’t optimal.
8. Email open and click-through rates: The amount of recipients who open outbound emails and click on embedded links.

Strategic Metrics

Strategic metrics provide insights into the broader goals and long-term strategies of the sales development function. They offer a bird’s-eye view of how well the sales development efforts align with and contribute to the larger organizational goals. They’re closely tied to the company’s overarching objectives and can influence decision-making at the highest levels.

1. Sales pipeline value: The total potential revenue of all the deals currently in the sales pipeline.
2. ROI by lead source: How profitable each lead source (e.g., inbound marketing, events, referrals, outbound efforts) is.
3. Average deal size: The average value of the deals closed by the sales team (and individual members/cohorts).
4. Sales cycle length: The average time it takes to move a prospect from the initial contact point to a closed deal.
5. Cost per lead (CPL) and cost per acquisition (CPA): CPL measures the cost of acquiring a new lead, while CPA assesses the cost of acquiring a new customer.
6. Lead velocity rate: Month-over-month growth in qualified leads.
7. Churn rate of qualified leads: The percentage of qualified leads that don’t progress in the sales cycle, giving insights into potential gaps or misalignments in the qualification process.
8. CLV:CAC ratio: A comparison between customer lifetime value (CLV) and customer acquisition cost (CAC) to assess the profitability of acquiring a new customer in a certain segment.
9. Sales team retention: Though somewhat qualitative, understanding the satisfaction and retention rates of the sales development team can offer insights into team dynamics, effectiveness of leadership, and overall alignment with company values.

Sales Development Best Practices

For a successful sales development strategy, businesses should proactively nurture their leads through consistent and high-quality interactions. To do this, they must create an environment where SDRs can excel in lead qualification, appointment setting, and pipeline management.

Define Lead Qualification Criteria

Clarity is key. Establish clear definitions for MQLs, SQLs, and buyer personas. This makes it so sellers spend their limited time with the highest-quality leads.

Pay attention to the qualities of customers that convert the most often. Add these into the sales playbook and use them to onboard new reps.

Regularly revisit and adjust your qualification criteria based on feedback from the sales team and changing market dynamics. Ensure that both marketing and sales teams agree upon and understand these criteria to maintain consistency in lead handling and messaging.

Define the Sales Development Process and Roles

For a sales development strategy to be effective, there needs to be a clear outline of the process and a comprehensive understanding of the roles involved.

Start by outlining each step in the process and identifying who is responsible for it. Define success metrics at each stage to measure progress and track areas where improvement may be needed.

Important documents to include when mapping out the process include:

• Call scripts
• Email templates
• Scheduling tools
• Customer segmentation worksheets
• Lead scoring criteria

Invest in Training and Coaching

Sales onboarding is the first step, but continuous training and coaching is essential for the long-term success of your sales development team.

Set up regular check-ins (e.g., sales QBRs) to review performance, provide feedback, and discuss changes or challenges they have. Make sure teams have access to all the data and resources they need to be successful.

It’s a good idea to invest in external training sessions or conferences to further develop their skills and knowledge as well. Important sales tasks like rejection handling could easily become workshops or group activities.

Build a Fair Compensation Plan

If you want to retain your SDRs and AEs for as long as possible, you have to ensure that they feel valued and appreciated. Commission is a good start, but it’s only the tip of the iceberg.

Here are a few ideas:

• Revenue share: Offer reps a slice of revenue generated by them.
• Performance bonuses
• Profit sharing
• Non-monetary incentives (e.g., extra PTO)

Tools to Maximize Sales Development Productivity

In order to maximize the success of your sales development team, you need the right tools. Here are a few popular options:

Customer Relationship Management (CRM)

CRM software provides a central repository of customer information, including contact details, purchasing history, and timestamped interactions with the sales team. Every sales org needs one. Otherwise, managing leads is impossible.

Sales Intelligence

Sales development teams need sales intelligence tools to assess their sales strategies, forecast future revenue, and identify trends in customer behavior. Sales intelligence tools can also provide insights into competitor data and market conditions, which are invaluable for sales development planning.

Sales Engagement

A sales engagement platform is an automated tool that helps SDRs stay on top of their outbound outreach. Features like email automation, calendar-scheduling tools, and lead scoring capabilities make it easier to track and prioritize leads.

Sales Enablement

Sales enablement tools help sales development professionals create, share, edit, and manage their collateral. Based on a lead’s current pipeline stage, product interests, or conversations, sales enablement software presents the seller with the most relevant content. They send this content to prospects for better engagements and more successful sales pitches.

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