How We Got Here.
In the last few years there’s been a reckoning in the SDR world, where many companies are now questioning the effectiveness of the model given lower than ever pipeline attainment. To address this, many have cut their SDR teams, considered it, or fundamentally changed how they approach sales development in order to make them profitable.
Reason 1: Growth At All Costs Mentality
In the golden era of SaaS (2015-2021), the focus for many was solely on top-line growth with little thought for acquisition cost or maintaining sound unit economics. The "growth at all costs" mentality led to companies with low ACVs hiring large teams of SDRs, AEs, managers and sales operations staff. Many of these companies had no business hiring such huge sales teams but did so to follow their peers and competitors.
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When logos were landing and funding flowed, big headcounts got approved. But as the funding landscape shifted and the selling environment became more challenging, companies were forced to confront a harsh reality. After taking a hard look at their sales math, many found that their ACVs and revenue couldn't support the bloated sales teams they had built. This led to painful cutbacks and a reassessment of their SDR programs.
Reason 2: Inexperienced SDRs
The leading SDR hiring philosophy has always been finding young experienced sellers straight out of college with little to no business acumen. For the last 7-10 years, this worked without issue given the ease of the outbound selling environment. For a while it was a literal plug and play! (more SDRs = more pipeline & ARR). But after 2021/22 this changed dramatically as the software industry faced significant headwinds when it came to new logo acquisition. Budgets shrank, connection rates plummeted, and buyer skepticism and scrutiny reached an all time high.
In response, many SDRs (who lacked core selling skills due to starting their careers in a bull market) leaned into desperation, and instead of meeting the challenge by becoming better salespeople, they doubled down on volume and turned into spam cannons.
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Around the same time, there was an explosion of sales technology geared at SDRs like the modern SEP and AI outreach tools. These tools had the opposite effect of what was intended.. Instead of helping SDRs sell better, it only scaled the rate of their terrible outreach.
Reason 3: Underinvestment in Training & Coaching
Because of the easy selling environment of 2015-2021, many SDRs and organizations hiring SDRs underinvested in sales training, leaving them vulnerable to a market downturn.
Also, newly appointed front line sales development leaders were undertrained and lacked the skills to coach their teams effectively which compounded the problem.
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In tougher selling conditions like today, everything matters more. Executing key aspects of outreach like the first 30 seconds of a cold call, email personalization, and building a relevant list, are no longer optional. Without these core skills, many SDRs were made useless once the market got tough.
LOOKING FORWARD
Why We Still Believe In The SDR Model.
While the SDR model has faced its challenges in recent years, the baseline reasons for going outbound haven’t changed. Some companies have gone all in on full-cycle sales, where their AEs handle both prospecting and closing deals. This approach can be lucrative when executed well but it also has its pitfalls. It’s not the silver bullet that some believe it to be, often leading to burnout and inefficiency as AEs juggle too many responsibilities.
We firmly believe the SDR role is far from dead. With the right guidance, training, unit economics, and technology; companies can achieve breakout success using the SDR model in 2024 and beyond. The key is not to abandon the sales development playbook but to adapt and optimize it for the current market. There is a better way.