If your organization needs to grow market share while managing customer acquisition costs, a Sales Development Program could help you push past limitations and scale your successful sales efforts.
As the leader of Sales Operations at Phreesia, I am constantly reviewing the processes and tactics we use to drive bookings growth in the right direction. During the early years, we relied almost exclusively on trade shows to generate leads for our SaaS patient intake platform. To augment these efforts, our sales executives had taken to cold calling to find more leads–a costly and ineffective way to fill the pipeline. We wanted them to focus on closing business rather than kicking down doors to start new relationships that had a low likelihood of conversion.
If we were going to continue our growth trajectory, we couldn’t keep doing the same things, so we decided to establish a new sales development strategy that focused on outbound prospecting and generating qualified leads. By splitting our sales efforts into two distinct specializations, we believed that we could continue to grow market share while keeping our sales executives focused on what they do best—closing deals.
In 2015, we launched our Sales Development Representative (SDR) Program, staffing it with young, hungry people who could be trained in the “Phreesia way” to identify, engage and develop qualified new leads. After two months of training, our first group of six SDRs was ready to pick up the phones, send out emails and generate leads for our sales executives.
The results exceeded our expectations. Within one year, Phreesia was able to double annual sales bookings. But the benefits didn’t end there.
Here are two other major ways that Phreesia’s SDR program benefited the company, followed by what we learned along the way:
1. Sales Development lowered our acquisition costs
In addition to significantly increasing the number of qualified leads, the Sales Development team also lowered our cost per lead by enabling us to use early career staff to perform work that was previously handled by seasoned sales professionals.
Initially, the SDR team was solely focused on qualifying opportunities. As the program matured, we found that we were able to train our SDRs to take on more of the customer education process. Today, our SDRs perform about 50 to 60 percent of the activities that our sales executives used to handle, which has reduced the costs associated with nurturing leads, shortened the sales cycle and reduced the time our more highly compensated sales executives need to spend on closing those opportunities.
2. Sales Development strengthened our pipeline of account executives
Our ambitions for growth require us to increase the size of our sales force every year. Before launching our Sales Development Program, we could not identify, onboard and train account executives fast enough to fulfill our goals. The SDR program has given us a strong bench who are ready to be promoted from sales development reps to account executives whenever we need them.
At the outset of the program, we predicted that it would take up to 18 months for an SDR to be ready for promotion, but we’ve since discovered that top performers are ready in half that time. Even better, they are proven candidates who already understand our culture, industry, products and customers. The day they’re promoted, they’re ready to hit the ground running. (More on how we trained them effectively below.)
Based on the results we’ve seen at Phreesia, as well as my years of experience as an operator and management consultant, I’m confident that any organization will benefit from an SDR program.
Whether you’re challenged by generating leads, managing the cost per lead, or finding enough top sales talent, SDRs make a positive impact.
What we learned from the roll-out of Phreesia’s SDR program:
1. Sales Development puts the focus on process
One of the key benefits of a Sales Development program is that it enables you to put people who are relatively young and inexperienced into one of the most important jobs in the sales function. But to do that, you need to create and teach a thoughtful, disciplined and highly repeatable process. We distilled crucial knowledge about our company, products and customers into a series of discrete activities that can be taught to virtually anyone to allow them to perform higher-level sales activities.
Our training regimen for SDRs, which we called the Phreesia Passport, structured their first two weeks of learning, practicing and testing in a highly-motivating and competitive curriculum that enabled them to earn stamps in their Passport at each milestone. Only once they earned all their stamps were the SDRs free to hit the phones and emails in pursuit of new leads.
By focusing on process, we found that we could entrust more sales activities to our SDRs and maximize the value of their contribution. Our SDRs are now responsible for most of the customer education process, and occasionally even close some of our smaller deals, leaving our top sales talent to focus their energies on more challenging, high-stakes deals.
2. Trust must be built between Sales and Sales Development
Adding Sales Development to your existing process means taking lead qualification away from your sales executives and asking them to trust people far more junior than they are to nurture leads into opportunities. Their livelihood is now effectively in the hands of a group of twenty-somethings straight out of school. That’s a big leap of faith, and you need to show them that the SDRs are supported and guided by a well-thought-out system. Plan to build a system that supports quick wins to prove the model, and integrate a strong communication process that keeps your reps informed and shows them that the people upstream are on the same page.
One of the ways we did this at Phreesia was to clearly establish a list of qualification criteria for the ”baton pass” of a lead from SDR to sales rep. The SDR is expected to ensure each lead meets three core qualification criteria for budget, urgency and need before handing it off. Even then, the sales rep will reconfirm all three criteria with the lead and if any are unmet, the lead is handed back to the SDR to nurture until ready. This handoff requires the SDR and sales executive teams to collaborate constantly. It helps build mutual trust as the SDRs learn what each rep needs to be successful and the sales execs coach the SDRs to continuously improve their skills.
3. Any Sales Development Program must be continually refined
Our Sales Development Program was initially successful, but we continue to review and refine it to get even more value out of our SDRs. For example, it took us around two months to onboard and train SDRs at first, but by honing our training expertise, we cut that down to just 14 days. We also reviewed the division of responsibilities between marketing and SDR team. While our first group of SDRs were expected to identify and nurture leads, we found that we can improve results by having marketing adopt some of those techniques to generate leads and keep SDRs focused on reaching out to those leads.
Here’s the bottom line.
Every fast-growing company will reach a point where a previously successful approach can no longer support the level of growth required for the future. If your organization needs to grow market share while managing customer acquisition costs, a Sales Development Program could help you push past the limitations and scale your successful sales efforts.