Outbound prospecting for highly targeted lead flow

transcript

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

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

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)

Startup Killer There is a common problem:

An out of balance Business Model

Monetization

Cost to

Acquire a

Customer

Entrepreneurs are over-optimistic

Sales Complexity

FreemiumNo Touch

Self-ServiceLight TouchInside Sales

High TouchInside Sales

Field SalesField Sales with SE’s

How I assumed the two would relate

A rough estimate of CAC versus Sales Complexity

FreemiumNo Touch

Self-ServiceLight TouchInside Sales

High TouchInside Sales

Field SalesField Sales with SE’s

$0-$10

$50 –$200

$1,000 -$2,000

$3,000 -$8,000

$25,000 –$75,000

$75,000 –$200,000

Rough Estimates of Cost of Customer Acquisition (CAC)

The relationship is roughly exponential

Clearly adding

Human Touch

dramatically

increases costs

$1,000

$10,000

$100,000

Freemium No Touch Inside Sales Field Sales

Sales Complexity

CAC (logarithmic)

$1,000

$10,000

$100,000

$1,000,000

Freemium No Touch Inside Sales Channel Field Sales

Sales Complexity

Value / Pain / Urgency = LTV (logarithmic)

High CAC, requires high scores for: Value, Pain, Urgency

Unprofitable:LTV < CAC

• Throughout history, specialization has been the breakthrough to better techniques. It allows people to excel at a few specific tasks.

• Sales is no exceptionKen 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

Prospecting

Inbound

Qualification

Inbound

Account

Executives

(Closers)

Customer

Success

Account

Managers

(Farmers)

Outbound BDRs fit here:

Outbound

Prospecting

Inbound

Qualification

Account

Executives

(Closers)

Customer

Success

Account

Managers

(Farmers)Inbound

Research

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

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

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.

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.

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.

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.

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

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 Attempt:

Call or emailConnect Conversation

Meeting or Demo

For each stage, measure Quantity and Conversion Rate

Connection Attempt:

Call or emailConnect Conversation

Meetingor Demo

Quantity over time

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

MyProduct.com

HOW IT WORKS DESCRIPTIONOur product

allows you …

BUY NOW!

Only $9,999.99

In a perfect world…

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

BuildTrust

SellFirst

Contact

First Contact

Build Relationship

Only OK if the buyer is in a buying cycle

OFTEN NECESSARY TO FIND TOPICSTHAT ARE NOT RELATED TO THE SALE

BuildTrust

SellFirst

Contact

Build Relationship

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 beforeyou ask for anything

Resources

ForEntrepreneurs.com

Interview with Aaron Ross

Vorsight