Guest authored by Stuart Watson, Sales Leader and GTM Advisor
You’re fed up with drowning in initial calls and are finally ready to delegate to a sales development representative. But how do you hire the right ones and make them effective? Handing off any part of such a key function can be scary, especially if it’s to someone you don’t trust. So how do you identify the best SDR candidates and set them up for success?
Top SDR management tips
- Hiring SDRs in pairs or cohorts is more efficient and lets you compare performance
- Hire scrappy SDRs from other startups, not pampered SDRs from tech giants
- Build an enticing but equity-light, 60–70% cash and 30–40% bonus compensation plan
- Measure and tie bonuses to what creates real value for your business, while starting off with an MBO or nonrecoverable draw
- Train SDRs via docs, shadowing, customer listening tours, and test calls
- Evaluate input metrics, performance pacing and meeting quality to drive results
- Swiftly fire underperforming SDRs
In the first post in this series, we discussed how to know when to hire your first SDR based on whether you have a repeatable sales motion, can handle more sales meetings, and are ready to manage and mentor a junior employee. Now that you know you’re the right fit for an SDR, let’s lay out how to hire, train, and manage them.
Should I hire more than one SDR?
SignalFire strongly encourages that you hire SDRs in pairs (or larger cohorts for more mature programs) when appropriate. That said, depending on your level of PMF, operating budget, and the pipeline needs for your closer(s), it may or may not make sense to hire more than one SDR for your business at this time.
Combining peers who are at the same stage of their new-hire journey provides a much more efficient onboarding process and makes it much more likely that an SDR will achieve their ramped quota on time or early.
Additionally, having a same-stage peer can provide a better performance benchmark for a given SDR, adding a reference for performance challenges. If they’re both struggling, what are you doing wrong as a business or program? If one is struggling and the other isn’t, why is there a disparity?
Ideal candidate profile for SDRs
Resist the urge to hire SDRs from large companies—it can be jarring for a successful SDR to go from an organization with brand recognition, category defining product-market fit, thousands of dollars of monthly spend in sales tech, and a dedicated enablement team to a startup where they need to “figure it all out.” Their performance frequently suffers as a result.
SDRs produce 30-45% of the sales pipeline of B2B SaaS companies according to Operatix. That requires an average of 95 touches like emails or calls per SDR per day, with an average of 8 to 12 touches per lead according to Gartner. That means you need someone highly motivated and that can handle the swift pace of the job.
Ideally, you hire an SDR who has thrived at another early-stage startup. Regardless of background, we recommend you select for candidates who exhibit strength in the following areas:
- Drive and autonomy
- Growth mentality
How to interview SDRs
Now that you’ve decided to open the job, you’ve drafted a job description and you’ve pushed the job to your careers page, SignalFire’s job network (or your investors’ if they have them), and elsewhere. You have some candidates who’ve expressed interest in the role. How should you conduct the interview process?
We suggest you break the process into the following steps:
- Resume review
- Phone screen
- Work sample/exercise (typically examples include drafting a mock email to a prospective customer or doing a mock cold call exercise with a hiring manager)
- Hiring manager interview
- CEO (or panel) interview
- Reference checks
Keep screens and initial interviews to 30 minutes—this is not an executive hire or cofounder search. You should be able to get the majority of what you need from a live conversation in less time than a traditional 45- or 60-minute interview.
Decide ahead of time which attributes you’re trying to measure during each phase and adopt a scoring system to more objectively compare candidates. This will also help you adjust your assessment criteria if your new hires fail.
How to onboard and compensate SDRs
You’ve selected a strong SDR candidate who you believe will be a great fit for your company and mission.
How should you compensate and incentivize them and how should you onboard them?
When it comes to building this comp plan, you’ll likely need to offer more in total compensation than established companies in order to get recent graduates to take a risk on your company.
Additionally, SDRs will be much less likely than other early hires to value any equity you might offer. Cash targets will be their primary focus and you can true up their equity if they thrive in the role or get promoted.
Note that SDR compensation has been moving away from the historical norm of a 50:50 base:variable compensation ratio to the more frequent 60:40 or even 70:30 ratio. Since this is an early-stage role, your SDR will be wearing a lot more hats than they would be at a larger company.
If you find that you’re frequently having them help the business in ways that are keeping them from their core responsibilities, consider giving them a larger base pay percentage to reflect this wider remit.
Traditionally, SDRs are compensated on one or a mix of the following categories:
- Options include: scheduled, held, or “successful” with met qualification criteria.
- Options include: created, accepted, or advanced to a given opportunity stage.
- Closed won business
- As a lagging indicator, this is usually used as a quality incentive and is generally a small percentage of the deal (1%, a nominal amount, or capped).
- You may want to make more use of this lever if you have an especially fast time-to-close and/or a particularly small average deal size.
What’s right for your business will depend on multiple factors, including:
- Average deal size
- Whether you’re targeting SMB, midmarket, or enterprise prospects
- Buyer type
- Opportunity close rates
- Total addressable market (TAM)
- You or your seller’s capacity to engage with more new business
Which metrics should your SDR prioritize?
As a rule of thumb, companies with smaller ASPs (average sales price) and shorter opportunity cycles typically compensate SDRs primarily on accepted opportunities and secondarily on attributable won business. Companies selling primarily into the enterprise will frequently reward SDRs primarily for qualified or successful meetings and less on accepted opportunities (as an example, a company may only have a single active opportunity with a Fortune 50 business in a given year, but would find it very valuable to have qualified meetings with several business units within the company to grow the potential size of the opportunity, as well as helping to discover more addressable pain and potential champions).
Generally, you should focus on compensating your SDR for helping a prospect reach a given stage in your sales funnel or customer journey, which balances generating the most value for your business with what the SDR actually has control over.
When setting your SDR’s goals, start by benchmarking what you or your seller are able to do in terms of prospecting, meetings, and opportunity creation and scale those numbers to a dedicated full-time role.
Give yourself the flexibility to update your SDR’s targets as you complete some feedback loops, run into challenges, or see more success than expected. Try to limit yourself to one primary SDR target variable, with perhaps a secondary target that rewards quality behaviors.
SDR training strategies
Even if you’ve successfully hired a driven and self-guided employee, they’ll still need direction from you and your team. Enablement plans for large SDR organizations can be expansive and cover the entire SDR lifecycle. For your early-stage company, we’d encourage you to think about the following four categories when bringing your new SDR up to speed:
- Company specifics
- Product: Key features, problems it solves
- Competitive landscape: Top rivals and why you’re better
- Your unique value proposition(s): ROI
- ICP: Who buyers and internal champions are likely to be
- Go-to-market strategy
- Outreach messaging
- Objection handling
- Call and email best practices
- Territory/vertical and customer persona selection
- Qualification process
- Handoff process
- Documentation requirements
- Sales tooling / tech stack
You don’t need to have an entire plan fleshed out before onboarding your SDR. Instead partner with your SDR and make them a co-owner in creating and completing their enablement journey.
Throughout this process, you should be setting up your SDR to make an impact on your business as soon as possible. The feedback loops SDRs get from shadowing sales calls, listening to current customers, and directly engaging with prospects over the phone and at live events will help get them up to speed faster than any static documentation or recordings.
For larger or more mature SDR organizations, it can be common to have an SDR performance ramping period that lasts between one and three months. When hiring your very first SDR, we recommend that you keep the ramping process simple by providing either a nonrecoverable draw or an MBO-based plan (management by objectives) for the first month.
More advanced programs will have well-defined enablement plans and performance milestones that SDRs need to hit during their ramping period. When hiring your first SDR, though, we suggest they primarily shadow you or your primary seller, embracing an apprenticeship mentality. You can augment this training with SDR-specific training fundamentals.
Managing your SDR
Performance reviews for SDRs
Despite the fact that “you see them in meetings every day,” you should have structured weekly 1:1s with your SDR during which you cover the following:
- Input metric review
- Are they working with enough accounts to support your team?
- Are they conducting enough daily outreach to hit their goals? We recommend conducting no fewer than 50 outbound touches per day.
- If not, what blockers are there?
- Performance pacing
- Are they pacing toward their goal in terms of qualified meetings or opportunities?
- If not, what blockers are there?
- Quality feedback
- Make time to give structured feedback on the quality of the meetings/opportunities they set up, which might not be quantitatively tracked.
- Unlike almost any of your other early-stage employees, an SDR will need more early-career coaching.
You can also quickly review performance, goals, and paths to improvement by holding a Quarterly Sit Down.
When to fire an SDR
Most startups err on the side of waiting too long to take corrective action with an underperforming or toxic employee—addressing these issues with SDRs is no exception.
If an SDR’s performance falls behind and you’re confident that it’s not a product of unrealistic targets or PMF challenges, let them know what support they will receive to improve their performance. Also be clear about what timeline you have in mind for performance improvement (when taking corrective action, one of the most effective frameworks for helping to turn around an SDR is the “hot shot check-in”).
It takes a unique personality type and behavior pattern to succeed as an SDR. If you know in your gut that you made a poor hire or that a turnaround is unlikely, do not ignore that instinct, and find someone who’s a better fit.