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headshot of manBrian Feinstein headshot of womanCaty Rea headshot of manRoss Matican
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5.16.24
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How to build an SDR / BDR function

33 tactics from the Bessemer portfolio to recruit and retain high-performing sales reps.

We hosted best practice sharing discussions with our portfolio on how to build and maintain strong sales development (SDR) / business development representative (BDR) functions. In these conversations, Heads of Sales from our later-stage, best-in-class sales organizations shared their advice and lessons learned with our earlier stage companies. We distilled the most salient advice and insights from these conversations and compiled them in this article.

Hiring SDRs and BDRs

1. Hire “full-stack” generalists at first: Hire all-around athletes at first and specialize as the business matures. 

2. Look outside your industry: Consider nontraditional hires that demonstrate coachability and perseverance. Procore, for example, found some of its best SDR hires in former teachers and military members.  

3. Leverage your AEs in scoping the role: Early stage companies may have AEs before they have an SDR / BDR team. In that case, you should ask your AEs what ‘great’ would look like in an SDR / BDR rep and get their perspective as someone who likely executed the outbound motion earlier in their career. 

4. Take a blank sheet approach to interviews: List your key skills on a blank sheet of paper and build an interview process that focuses on testing those skills. For example, if demos are critical for your reps, have SDR / BDR candidates conduct a mock demo early in your process.

5. Hire based on GTM priorities: If volume is a priority, hire high-volume oriented SDR / BDRs who can hit high call quotas. If your TAM is constrained and thus prospect conversion is critical, hire SDR / BDRs with more industry experience.

6. Hire in pairs: At first, always hire two or more SDRs/BDRs at a time. This has a variety of benefits including a) Reducing noise around whether a specific candidate is a poor fit or the overall function needs to be improved; b) Creating efficiency in training by training multiple at a time rather than one-off; and c) Producing healthy competition between who can ramp faster and generate leads more quickly. 

7. “Slow to hire, fast to fire”: Our top performing SDR/BDR functions live by the expression and will let go of underperformers quickly to set a high bar and culture of achievement.

8. Leverage AI: Many of our companies are looking to AI to supercharge or replace SDRs / BDRs. Companies like 11x are providing SDR / BDR agents which learn to build lists, personalize outreach, conduct outreach, and book meetings for AEs. Companies like Relevance AI are creating ‘AI workforces’ which allow companies to build SDR/BDR agents, as well as Customer Support and Customer Experience reps. These ‘workers’ all learn from each other and improve accordingly. In general, these agents generally start by supplementing SDR / BDRs, but with training overtime they are fully automating SDR / BDR activities allowing companies to scale more efficiently while holding SDR / BDR headcount flat. 

Ramping SDRs and BDRs

9. Aim for a three to four month ramp period: Expect new hires to be at 50% productivity at the end of month two and 100% by month three.

10. Teach reps to self-coach: High-performing SDR / BDR functions in our portfolio had SDRs and BDRs who would review their own call recordings and transcripts, identify areas for improvement, and set their own ambitious growth goals. 

11. Focus on one pain point: The most common pitfall of early reps is trying to pitch the product across multiple pain points rather than focusing on a customer’s most pressing pain point. Encourage new reps to work on finding one customer pain point in a discovery conversation and double clicking into that. 

12. Spend time in your customer's shoes: Restaurant365 sends their new SDR / BDRs hires to work at a restaurant and learn their customer’s pain points firsthand. Similarly, Procore has new hires spend time on a construction jobsite.

Forming the team

13. Work backwards: To determine how many SDRs you need and what their target should be, work backwards from your monthly deal goal. Consider this example math:

  • Let’s say your AE monthly deal won goal is $10,000 MRR and the SDR-sourced portion will represent 25% of that. Then your SDR function has to source $2,500 MRR deal closed per month ($10,000 x 25% = $2,500).
  • Assuming AEs generally have a 30% close rate, then an SDR has to source $8,333 MRR total AE pipeline per month ($2,500 / 30% = $8,333).
  • Let’s say your average deal size is $1,000 MRR. That would mean that each SDR has to source 8.3 opportunities per month ($8,333 / $1,000 = 8.3).
  • Assuming you have 10 AEs, then your SDR function needs to source 83 opportunities total per month.
  • Depending on your industry average for opportunity generation (e.g., high volume vs. low volume), you can then back into how many SDRs are required to source 83 opportunities total per month.

14. Build pods: Group SDRs/BDRs in pods with AEs to build feedback loops and create more seamless follow-ups on no-shows after handoff. 

15. Cross pollinate your SDR/BDRs and AEs: One of our companies pairs 2 SDR/BDRs with 2 AEs and each SDR / BDR sources 50% for each AE. This can reduce noise around performance and avoid finger-pointing if someone is underperforming.

List-building 

16. Determine your TAM first: Use industry databases to gauge market size. In the US, you might use NAICS/SIC codes to size and segment your market. 

17. Use databases to build an initial list: Leverage general data sources like ZoomInfo or Dun & Bradstreet, alongside industry-specific lists like association databases to build an initial list. Compare that starter list to your overall market size from Tip 15 and continue to find new data sources to build towards that overall market size number. 

18. Build simple lists first and flesh out later: Build initial lists with the bare minimum information including company name, website, key buyer name, and key buyer contact information. Overtime you can supplement the list with additional information.  

19. Create a clean list culture: Have SDRs / BDRs continuously build, clean, and refresh target lists. This is especially important in small markets where its critical to avoid wasting or missing potential prospects. 

20. Aim for 80/20 data quality: Managers should spot check SDR lists on a regular cadence to ensure SDRs are keeping clean lists and aim for an 80% accuracy threshold.

21. Leverage AI for list building and cleaning: Use LLMs to analyze leads and identify your core ICP from the dataset. For further AI tool recommendations, see our bonus section on SDR / BDR tech stack below.

Managing SDRs and BDRs 

22. “Show me the incentives, I’ll show you the outcome”: Avoid measuring SDRs and BDRs on activity-centric goals like number of calls as this can incentivize low quality pipeline creation.

23. For SDRs, measure:

    1. Dials, hold rates, and connection rates: This will measure how many attempts it takes to reach prospects and generate high-quality leads.
    2. ‘Demo show’ rate: This will measure how effectively your SDRs / BDRs convert leads.
    3. Average talk time: This will measure if SDRs are taking up too much airtime in prospect calls. Generally aim for a 50/50 split, especially on cold calls.
    4. Meetings booked and pipeline: This will measure pipeline strength. SDRs might have ~20 meetings per month. 

24. For BDRs, measure:

    1. Time to touch: This will measure how quickly BDRs reach back out to inbound prospects. 
    2. Meetings booked and pipeline: This will measure pipeline strength. BDRs might have ~300 meetings per month. 

25. Track touches: One of our companies uses software to benchmark the rep’s touches each day against the national average and continuously improve at lowering average touches needed. As a result, their SDRs average five to seven touches vs. the national average of seven to nine touches.

26. “Show, don’t tell”: One of our companies saw a big improvement in win rates when they switched from a 60-minute demo to a shorter, more conversational 30-minute “problem discovery” call.

27. Connection rates are key: Low connection rates (e.g., can your rep get someone on the phone) can be a leading indicator of poor list quality. Similarly, connect-to-meeting rates can be a leading indicator of poor SDR / BDR closing ability.  

28. Gamify outreach: Create a point system or a leaderboard. A culture of healthy competition and recognition motivates and retains the most talented reps.

Building career paths 

29. Aim for ~80% promotion: Our best-in-class SDR / BDR functions saw up to 80% of SDRs and BDRs promoted to AEs and other sales roles.

30. Hire with an eye towards future AEs: Given the ~80% goal of promotion to AEs, you want to hire SDRs / BDRs with an eyes towards whether they could also make great AEs. Said another way, an SDR / BDR program won’t be successful if they only create great SDRs / BDRs rather than SDRs / BDRs who matriculate into being AEs. The purpose of the SDR / BDR program is both pipeline development, as well as sales talent development. 

31. Expect brief tenures: The average tenure in many of our companies of an SDR and BDR is ~14 months, though it could be as brief as six months.

32. Create coaching and career pairs: Pair SDRs with AE mentors for coaching and career guidance. Pair them by cultural fit, not performance.

33. Highlight non-AE promotion paths: Many of our companies frequently promote SDRs and BDRs to non-AE promotion paths within the organization like Customer Success and Partnerships.

Bonus: Building your tech stack

Get the fundamentals right first

Our conversations highlighted the importance of thoughtfully building your SDR and BDR function to ensure a scalable program as your company grows. Ensuring you set the right performance culture, hire well with an eye towards growth, and create scalable systems and processes are all key in a high-functioning SDR / BDR program. We hope the above high-level tips are helpful, but keep in mind that at the end of the day, what’s most important is filtering this advice through your unique business needs. If you’re a SaaS leader fundraising in the near future and looking for ways to build a strong SDR and BDR program, reach out to Brian Feinstein (Brian@bvp.com) or Caty Rea (crea@bvp.com) to learn more.

Special thanks to Megan Hardy, former Senior Manager of Sales Development at Restaurant365, and Tony Rodoni, Bessemer operating advisor with 30+ years of experience in software sales and marketing, for their input and feedback on this guide.