Developing B2B sales: should we do it or not?

In my work, I have come across two approaches to organizing sales in B2B. The first is to recruit salespeople, give them some goal in the form of sales volume or profit volume, and monitor their efforts. The second approach is to build some controlled flow of transactions and carry them out sequentially through the stages of the sales process - awareness of the need by a potential client, readiness to place an order, placing an order, shipment and delivery, post-sales service. These two approaches are fundamentally different from each other.

For myself, I have always defined them as “gathering” and “conveyor belt”. The first option is not particularly effective and, most importantly, predictable. It is very easy for company executives to suddenly realize that they are facing a significant cash gap, with all the ensuing consequences.

"Conveyor" is a modern, one might say scientific approach based on calculating the sales forecast for a month, quarter, year, and sometimes longer periods based on the probability of transactions. In Russian, it is called "sales funnels", although in my opinion, this is not quite the correct translation of the concept of sales pipeline or sales funnel. The correct translation would still be "sales conveyor". Apparently, the term "sales funnel" is based on a graphical representation of the passage of transactions through the sales process, during which the probability of a transaction increases, and the number of transactions decreases since some of them lose relevance for various reasons, visually similar to a funnel.

I would still prefer to talk about the sales pipeline. The concepts of Sales pipeline or sales funnel - describe the process of systematic management of the sales process from the moment of searching for potential deals, through determining the probability of a sale (deal qualification), to its closure and building subsequent relationships with the client motivating him to make a repeat purchase. At each stage of the process of working with the flow of potential deals, some deals are eliminated as having no prospects, the probability of the remaining ones increases, but in general the number of deals decreases. The number of deals with a probability of 100% form the end of the pipeline or the end of the sales pipeline. The amount of sales at this stage should correspond to or be higher than the sales goal that the company sets for itself. The fullness of the pipeline at any given moment in time should correspond to this goal. The sales forecast is also based on the calculation of the volume of deals taking into account their probability. The further in time the predicted date of closing the deal is, the lower its probability, the more deals there should be on the pipeline to ensure the required sales volume.

That is, we are talking about a dynamic process that has certain physical characteristics and which can be controlled. Managing this flow to grow revenues and profits is a critical function for B2B companies. Oddly enough, but it is the management of the sales pipeline that is very often ignored not only by startups, but also by mature companies.

Where does the sales pipeline come from? Its source is usually marketing activities that are designed to generate interest among potential clients in the company and its products or services. PR, seminars, conferences, mailings, advertising. All representatives of invited organizations who have shown at least some interest in the company's products or services turn into leads or potential clients. Next comes the task of clarifying how serious the potential client is about concluding a deal. Conduct his qualification - understand whether he has a corresponding need, determine the size of the potential deal, the state of financing and the availability of a budget to meet the need, understand the time horizon during which the deal can be concluded. That is, determine whether it is worth further developing relations with this potential client.

Companies that organize sales in the “free search” style leave work with all clients to the sales department, inefficiently spending time and resources on sifting through all the potential deals that sellers manage to find. In the presence of a pipeline, sales development representatives (SDRs) are engaged in qualifying potential deals. Their responsibilities include not only working with the flow of potential clients arising from marketing activities, but also cold calling to the relevant database of organizations and processing incoming requests. The quality and efficiency of the SDRs largely determines the dynamics of the sales pipeline, since they are the ones who fill it. After a deal or a potential client has been qualified in accordance with the criteria defined by the company, and a relationship has been established with him, the potential project is transferred to the sales department, whose task is to close the deal, that is, sign a contract. After this, the order fulfillment department handles the deal.

Sales development representatives (SDRs) are critical to the success of a startup's sales function. By generating quality leads, building and nurturing relationships, and accelerating sales cycles, they contribute to the growth and sustainability of the organization.

To succeed in this role, SDRs must have a unique set of skills, including excellent communication skills, resilience, adaptability, and the ability to plan and manage their work time and organizational abilities. As startups continue to compete in an increasingly crowded marketplace, the importance of having a skilled and efficient SDR team cannot be overstated.

Sales development representatives are the backbone of a startup's sales function, creating the foundation for long-term customer relationships and sustainable income. By investing in the development and support of a strong SDR team, startups can build a strong competitive position and achieve commercial success. It is their work that determines how full the sales pipeline is with high-quality potential deals.

SDRs are the first line of communication for potential clients. They are responsible for building the sales pipeline by identifying, qualifying and attracting potential customers. The SDR is also responsible for building relationships with prospects, which is vital to successful sales. They help establish trust between the company and the client and establish brand recognition. SDRs build these relationships through communication, messaging, and demonstrating a deep understanding of prospects' needs and pain points.

A well-functioning SDR team can significantly shorten the sales cycle by effectively managing the initial stages of the process. By quickly identifying and engaging high-quality leads, SDRs can help reduce the time it takes to move leads through the pipeline, resulting in faster revenue generation and faster business growth.

While building the sales pipeline is often viewed as a marketing area, Sales Development Representatives (SDRs) can be responsible for more than 60% of its content.

To sum it up, SDRs are an important part of a company's pipeline and therefore its success. Despite this, the organization and management of this function is often given insufficient attention, including in the field of organization and management methodology. The sales development function is often viewed and managed on a residual basis. And if staff reductions are necessary, they get rid of it first. Business management textbooks tend to limit themselves to basic function parameters such as the number of calls and the need for vertical specialization of SDRs. They don't address the tough questions, like where to find an SDR or how to make the organization highly effective.

One of the most common questions that comes up when building a sales development function is whether to outsource it or create an in-house SDR team. It's tempting to outsource SDR since building an in-house team requires a lot of time, resources, and effort. In addition, problems arise with dismissal and reduction of the team when unfavorable economic circumstances occur or in the case when the startup cannot achieve its goals and is forced to cease to exist. Agencies promise stable work of “ready to work” SDRs that do not require long-term commitments, the availability of the necessary infrastructure to organize their work and a database through which they can search for potential clients.

However, creating an internal SDR organization, especially in an early stage company, is often more effective. First, outsourcing service providers can rarely explain the nuances and key benefits of your solution, especially for high-tech products. Additionally, marketing and demand development in the early stages of a startup is largely about learning and experimentation. At this stage of development, the company, in addition to sales development, also faces questions such as “What messages resonate with our target customers?” or “Are we really targeting the right customer base?” If you outsource, you may get leads, but you certainly won't get training and answers to such questions.

In many cases, outsourcing vendors will spam large lists of leads to achieve conversion targets. There is a danger that this could damage your brand. You only get one chance to make a first impression, and burning leads by annoying prospects can have serious negative consequences. You may also find that the agency will bring in a lot of potential leads that don't fit your ideal client profile, which will then create unnecessary stress on your product development, sales, and customer service departments.

As a result, it makes sense to consider creating your own sales development function, even if it has a minimal number of employees. What is the best way to do this to get an effective function? You can use the services of companies that help select and train sales development representatives. You can also turn to modern platforms that help automate the sales pipeline management process, including CRM systems and automation tools for managing tasks such as prospecting, mailing monitoring, call center functions, analytics, and workflow management.

It should be noted that creating a sales development function by recruiting an SDR team and providing it with the appropriate tools and infrastructure is not limited. To be effective, SDRs need the right motivation.

SDR compensation should be based on achieving metrics that reflect the purpose of their function and align with company objectives. If you use the wrong metrics, you may get suboptimal results. For example, if you reward SDRs based on the number of calls or meetings scheduled, you will see growth in those areas. But they do not at all guarantee sales growth. Likewise, you should not include too many indicators in your metrics. This can cause incentives to become diluted and weakened, leaving employees confused about what they should prioritize.

It is best to define no more than two criteria for SDR incentive programs. In this case, the main weight should be given to either the number of leads or the probability-weighted volume of them accepted by the sales team for further work (i.e., a lead that, in the opinion of your sales team, deserves further development).

It should be taken into account that in the early stages of startup development, the effectiveness of SDRs does not always depend only on their efforts. An important factor is whether the product or service matches the requirements and preferences of the market. Thus, the incentive model may not be entirely fair. Therefore, along with the SDR motivation system, it is necessary to carefully monitor feedback from potential and existing clients to ensure that the product or service meets their needs. Hiring SDRs in pairs for the same client sector also helps control this factor. If poor performance is related to product quality, then their performance will reflect this at the same time.

It is very important that your SDRs, as well as other employees, work not only for money, but also see opportunities for training, professional development and career growth. It is good practice to clearly define the criteria and timing of promotions, and create an organizational structure to ensure development before promotion.

In my experience, SDRs are an excellent source of addition to a sales team that is always in need of new hires. And moving an SDR into a sales rep position is often better than hiring an outsider. The advantage is his knowledge of the company’s products and services, relationships with the team and the company’s familiarity with his personality and competencies. This reduces the risks that come with hiring unfamiliar employees.

A good base of potential customers is one of the few areas that is truly worth investing in in the early stages of a startup going to market. Such investments have a much higher return on investment than advertising costs. In addition, a high-quality lead base also significantly increases the productivity of the SDR team. In this case, business development representatives do not have to waste time on irrelevant calls and contacts.

Pay special attention to the list size that the SDR must work on. It should be limited to a reasonable number of contacts. There is no point in burdening a specialist with huge lists with which he is guaranteed not to be able to work effectively. Particularly for B2B sales, the number of prospects on the target list depends on the average deal size and the target organization. The larger this value, the more difficult the sale usually is. Qualifying a deal and establishing a relationship with a client, all other things being equal, requires more time and effort: sometimes setting up a meeting or arranging a demo for a large client requires communicating with several employees on its side. Thus, the size of an individual SDR target list should take these circumstances into account and be optimal.

When a company decides to create a sales development function and place it between marketing and sales, it is very common to hire fresh graduates with little or no experience and provide them with (at best) basic training. And then they get the opportunity to do their job to the best of their talent without proper guidance and support. This is the most common case. As a result, companies often become frustrated with this feature due to unsatisfactory results. And no wonder. Meanwhile, the efficiency of the SDR only on the 20% depends on its competence and on the 80% on how its work is organized.

I would like to warn against simplifying this role. In order for a potential client to become interested in a product and want to listen to a presentation or watch a demonstration, on average, 10-15 interactions are required. These interactions are often the first (and only) exposure a potential customer will see to a company's product or solution. Business development representatives need close and proper integration with both the marketing and sales teams. This allows them to increase the efficiency of their work and “straighten” the customer’s path from the moment when he simply wants to receive information about the product to the desire to conclude a deal. While integration with marketing is usually easily achieved through regular meetings between the marketing and SDR departments, during which information about programs and their results is exchanged, the situation with the sales department is more complex.

Companies often make the mistake of leaving it up to sales representatives to push “small” deals through to contract completion. Very often, such deals can be the precursor to larger projects, and then it becomes necessary to transfer the deal and all relationships with the client from the SDR to the sales representative. I have witnessed epic internal conflicts with this distribution of responsibilities and my recommendation is to avoid them in every possible way. It is best to clearly define the SDR's responsibilities by educating customers about product or service features, organizing demonstrations and meetings, and encouraging partnerships between the SDR and sales representatives.

To summarize, generating a sales pipeline in startups at an early stage of development often costs more and takes more time than the sales process itself. Nevertheless, it largely guarantees the stability and success of the business. Therefore, devoting sufficient attention and resources to creating a sales development function is probably the most important thing startup founders can do for their business.