In today’s competitive market, sales organizations need more than just talented salespeople to generate qualified leads. Sales development teams need the right tools to communicate and grow pipelines. Software-defined radio (SDR) technology empowers sales teams to drive communications forward.
Here’s how you can leverage SDR metrics to track your sales team.
Overview of SDR metrics
The key to effectively tracking sales teams with SDR metrics is knowing how to measure SDRs. These measurements are critical for building and scaling a sales development team.
Your preliminary focus areas should include:
- Budgeting for SDR expenses;
- Using projected sales data;
- Determining your need to hire more sales reps;
- Electing outbound SDR quotas.
Taking this approach to using SDR metrics has its benefits: in particular, getting started with the preliminary focus areas gets you well on your way to tracking sales development teams. After you’ve ironed out these main areas, you’re ready to dive deeper into tracking ROI and SDR activity metrics.
Budget for SDR expenses
Whether you have invested in an inbound SDR or outbound SDR, your primary goal of leveraging SDR metrics is to generate a solid ROI. Your ROI relies significantly on your SDR expenses. So, before you can accurately evaluate your SDR metrics, you must plan for SDR expenses.
Because SDR expenses vary, a budget estimation can be challenging. However, with careful planning, you can streamline your budget. Start by allocating SDR expenses into three categories: fixed costs, additional expenses, and incentive costs.
Fixed SDR costs
Fixed SDR costs can include one-time investments or other costs that don’t fluctuate over time. The following fixed costs are essential for your SDR team:
- Fixed SDR compensation: Includes both salary and non-salary salespeople compensation.
- Hardware technology: Computers, tablets, cell phones and other mobile devices needed to communicate.
- Offices supplies: Desk phones, printers, furniture, and other office equipment.
- Operational: Office space, Internet service, utilities, etc.
- Software technology: Provide top-notch sales development solutions for your sales development representatives.
The next step in estimating your SDR budget is to consider additional expenses. Here are the key SDR expenses to consider:
- Lead data: Lead sources are key for sales reps to acquire qualified leads. No matter where you are in your sales cycle, sales reps need lists of people to contact.
- Miscellaneous expenses: However well you plan, unexpected expenses will come up. Consider allocating 15 to 20 percent of your project budget for unforeseen costs.
- Product and sales training: To successfully build a sales pipeline, sales reps need product knowledge and sales training that empowers them to capture qualified opportunities.
Motivating sales reps with a payout incentive is a surefire way to improve sales pipeline close rates. Allocate funds that allow you to offer sales reps financial incentives for acquiring qualified leads. This is also an excellent strategy to boost conversion rates.
Using projected sales data
The next step in tracking SDR sales teams is to estimate how much pipeline and revenue they will accumulate.
Estimate future revenue
To review current sales development data, answer the following questions:
- Average opportunity value: What is the average value of each unique pipeline opportunity?
- Close rate: How many opportunities do sales reps close, compared to the number of opportunities they add to pipeline?
- The number of leads: What percentage of new opportunities result in new customers?
- Sales cycle duration: How long does it take, on average, to close-win the sale after an account representative adds a new opportunity?
Use sales data to motivate sales reps
Knowing these sales figures will help you keep a pulse on projected sales and keep sales reps motivated. A good rule of thumb is to review these numbers monthly or quarterly.
Team leaders can take a proactive approach by reviewing SDR sales team performance weekly and monthly. In addition, at a minimum, leaders should review individual performance with sales reps quarterly. Don’t be afraid to use these results in conjunction with incentives and employee reviews. You can also use them to stimulate peer-to-peer performance feedback.
Determine how many sales reps you should hire
Sales organizations can use SDR metrics to determine sales rep hiring needs. However, you should analyze sales data differently in determining inbound or outbound SDR needs. Keep this in mind whenever you plan to hire inbound and outbound sales reps.
Inbound sales reps
If you are deciding whether to hire inbound reps, projected sales data has more weight. It’s a safe bet for you to use sales data results at face value. Using data for hiring outbound reps can be a little trickier.
Outbound sales reps
Outbound teams typically have different client segments. This means they may have fewer opportunities but higher pipeline values per qualified opportunity. You will have to do some guesswork to determine their sales cycles, close rates, and average opportunity values.
Outbound sales cycles
Outbound teams usually have longer sales cycles. Therefore, you can add to the average sales cycle length based on what makes sense for your business. Typically, this can entail extending sales cycle length by 40 to 60%.
Outbound close rates
Typically, outbound teams have lower close rates than inbound teams. It helps if you use sales data numbers to reduce the target close rate for your outbound numbers by at least 25%.
Outbound average opportunity
It’s important to note that you will have to adjust average opportunity values if your outbound team will target a larger customer segment than your average inbound lead. If this is the case, consider adding approximately 50% to your average opportunity value.
Determining outbound SDR quotas
After you’ve acquired your outbound team, sales reps need to be held to a quota. Use your adjusted sales data to make an educated guess. Note that typically, SDR quotas can range from 5 to 25 opportunities per month.
Estimating the number of qualified sales opportunities for your outbound team is determined by the following:
- Average opportunity value
- The complexity of the sales opportunity
- Size of the target market
Keep in mind that you can make an initial estimate for outbound reps and adjust the quota on a monthly or quarterly basis. If you make adjustments, make sure you give sales reps adequate notice.
Track ROI and SDR metrics
After going through the preliminary focus areas, you are ready to estimate ROI and track your SDR team activity metrics.
Assess potential ROI
Your ROI estimate from outbound activities will depend on your industry type. The minimum ROI necessary to start an outbound team should align with standardizations within your industry. Do some research to get some ideas about how to gauge these benchmarks.
Always choose conservative numbers that make sense for your sales team goals. Avoid setting unrealistic goals for your outbound SDR team. The more realistic you are about estimating ROI, the better. Measuring ROI accurately will indicate how ready your sales reps are for outbound sales development.
Track SDR activity metrics
Now you’re ready to predict and track performance, which is where tracking SDR metrics enter into play. Focusing on activity metrics will enable you to accurately project performance.
There are common challenges that SDR teams face, but you can arm yourself with data-driven knowledge to avoid pitfalls. In addition, you should understand how data predicts the strength of your pipeline and revenue.
Avoid SDR team challenges
By examining your SDR team metrics, you can avoid typical challenges that sales reps encounter, such as:
- Too few qualified sales opportunities
- Too many SDRs for closers
- Lack of business acumen to drive team performance
Understand SDR team activity metrics
To understand the SDR team activity metrics, you need to pay close attention to your SDR team activities and prospects. Activities relate to the number of outreach attempts (calls, emails, etc.) that sales reps make to acquire qualified leads. ‘Prospects’ is another term for looking at your number of leads.
It’s a best practice to keep a close eye on your SDR metrics. Leaders should run reports that measure performance daily, weekly, monthly, quarterly, and annually. Make sure you pay close attention to the following areas:
- Activities per SDR: How many activities does the average sales rep perform?
- Activities per prospect: To get the average, determine the total activities completed by the team in the specified time frame (day, week, month, etc.). Divide this value by the total number of prospects.
- Prospects per qualified sales opportunity: Determine the total number of prospects for the specified time frame. Divide the prospects by the number of qualified sales opportunities. The result will give you the ratio of prospects per qualified sales opportunity.
These metrics help you determine both the number of leads and the number of sales reps required to achieve your pipeline and revenue goals. Keep in mind that the metrics for inbound and outbound sales reps differ. Avoid using your inbound team activity metrics to strategize for SDRs.
SDR metrics are a robust performance indicator for your sales reps, pipeline, and revenue. How do you plan to leverage SDR metrics for tracking your sales development teams?
Originally published January 19, 2016, updated August 26, 2019