The End of the SDR?
In this new virtual world, sales floors packed with headset wearing 24-year olds dialing for dollars has become a thing of the past. And even as offices and tech company operations gradually return to normal, sales floors will be a lot leaner than they were before.
Two factors are driving this:
Sales and marketing as a % of total spend
Diminishing returns of volume outreach/more efficient software distribution models
Tackling point 1: Prior to COVID, sales and marketing budgets for hiring and tools were virtually limitless. Once a company realized product-market fit, they would raise capital to grow, grow, grow without abandon. The board not only gave full sign-off on hiring as many sales bodies as possible-it was encouraged. They needed to win as much market share as fast as possible to drive equity value and get acquired or go public. Usually without ever turning a profit.
When the economy shut down in March 2020. This model was put to the test on a number of different fronts. First and foremost, CEO’s and CFO’s needed to take a good look at their balance sheet to identify places to preserve cash, uncertain of when business would return to normal. By and large, cost cutting occurred on the S&M expense line. Which makes sense: if we don’t know when things will return to normal, and commerce has virtually stopped, why would we staff so many people to facilitate commerce? As a result, a lot of BDR, AE and marketing layoffs occurred.
But a funny thing happened, people/companies adapted and commerce not only quickly returned to normal, it flourished in the new virtual environment. Zoom all but eliminated the need for in-person meetings and the leaner sales team could be far more productive by not spending so much time traveling. Revenue growth rebounded across the board and much quicker than expected. Additionally, without allocating budget for superfluous office and travel expenses, these high-growth VC-backed rocket ships now had a healthier bottom-line, earlier in their company life-cycle.
Tackling point 2: the “new normal” and uncertainty associated with job security caused SDRs to overwhelm prospect inboxes for the sake of activity to prove they were actually working from home in a WFH environment. The significant uptick in emails in a decision-makers inbox turned every email sent into white-noise. Buyers who previously received dozens of emails a day, may have taken a call with a vendor who sent the right email at the right time. In April 2020, after they began receiving hundreds of emails per day, executives made it a priority to buy a tool that automatically pushed all carbon-copy, SDR emails to spam.
As a result, adoption of more user-friendly software distribution models like product-led growth (at that point in the “early adopters’’ phase) accelerated significantly. It was no longer a VP of Product’s pet project, this new buying environment caused CEOs and the board to push their companies to devise strategies and incorporate PLG into their go-to-market playbook as fast as possible.
So, is this the end of the SDR? Not quite. It’s the end of the SDR as the primary engine of growth. The combination of sales people being more efficient, and the accelerated adoption of new-age distribution models allow companies to grow faster with a leaner salesforce. But, for most companies, there will always be a need for a human to guide a buyer through a process in an appropriate manner.
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The End of the SDR? was originally published in Bluebird Analytics on Medium, where people are continuing the conversation by highlighting and responding to this story.