With the Rise of the Inside Sales Rep and the Sales Development Team, one of the most common questions that comes up is about the ratio of appointment setters to closers. First, a quick primer. Sales Development Reps/Business Development Reps (BDRs) were popularized by the 2011 book Predictable Revenue. BDRs use email and phone to prospect, qualify leads, and set appointments for Account Executives (AEs), which close the deals.
Overall, the main goals is to have much more specialized functions on the sales team. Too often, expensive sales people are used to cold call (prospect), respond to inbound leads, set appointments, deliver demos, write proposals, and close deals. The modern approach is to have one team dedicated to prospecting (Business Development Reps), one team dedicated to following up with inbound leads (Market Response Reps), and one team taking the qualified leads to close (Account Executives).
Now, back to the original question regarding the ratio of BDRs to AEs. Of course, every business is different, but one constant stays the same when thinking through the ratio of BDRs to AEs: the Account Executives should have as many Business Development Reps as necessary such that the AEs are only working active, qualified opportunities. Everything that takes place before an engaged lead is ready to start the buying process should be handled by the BDRs. More often than not, sales teams have too many AEs and not enough leads. One strategy in this common scenario is to let go of the low performers and use the money saved to hire more BDRs until the successful AEs are well fed.
The next time someone says they want to hire more sales people, ask the hard questions and figure out if they really need Business Development Reps and not more Account Executives.
What else? What are some more thoughts on the ratio of Business Development Reps to Account Executives?
One thought on “The Ratio of Business Development Reps to Account Executives”
I cannot say I agree with either the segmentation of the sales process or how management views this strategy. Interestingly I am about to post a very relevant post on this very topic. To elaborate I will say this, the segmented sales attack does work in some cases but not across the board. It will work when there is a slower more complex sales cycle involving a system engineer or design architect etc. However what I have seen happen is due to buyers becoming increasingly knowledgeable most of the sales are done on the initial contact by phone. This is simply because a buyer has better and stronger product knowledge and the talk track gets right down to business quicker.
I have witnessed many times the AE or outside rep really just cleaning up the details at a client but gaining recognition and stronger pay premiums as the inside telephone sales pro gets an attaboy. I see this dynamic changing and it going to a two stage sale process, one a tel pro pre close…. and two, a needs analysis and a cleanup onsite of the paperwork. So in fact the higher skilled person on the cycle is the inside BDR because they now adopt more responsibility. Gone are the days of someone setting a meeting veiled in mystique, buyers want facts and to quantify whether that meeting is worthwhile BEFORE they commit.
Another side effect I see happening is the AE or outside rep is getting fat and lazy, losing their drive to be a true hunter and prospecting for their business. Once self reliant they now blame the lead base and have an excuse to not close because the lead was bogus. I believe this will eventually change back to what once was the normal sales directive. One) a sales performer that can close on the phone or in person and TWO) lowly assistants and interns to alleviate workload from a closer. With a slow business environment and global recession these additional roles have gained traction but eventually will fade as companies will not be able to afford to have second rate talent engaged with client bases.
Make no mistake, a strong BDR should have no excuse they cannot go onsite to clean up a deal especially since they have the background intelligence on the client. Additionally the AE should be able to prospect and find their own next deals through referrals or networking and the inside marketing role should be a PLUS, a bonus perk of sorts but certainly not instead of.