At High Alpha, we believe founder sales is the fastest way to achieve Go-to-Market fit. In case you missed it, I’ve touched on the importance of founder-led sales for new software-as-a-service (SaaS) businesses in my previous posts here and here.
Founders are intimately connected to their business in ways that even senior team members cannot be. Elite selling founders intake large amounts of unstructured data from prospects and translate that data into product, customer acquisition, and customer success learnings, ultimately guiding the business to Go-to-Market fit.
To create maximum leverage for their business, the best founders focus on finding balance in the areas they work on and intensely prioritize their time. Few priorities at a new SaaS company are more important than enabling and speeding up their ability to sell.
Of course, a founder can’t focus solely on selling. It is one of usually three core areas where top founders spend time: selling, recruiting, and product.
With so much to do and so little time, new founders must understand what can come off their plate so they can focus on the big levers and advance the business.
How To Turbo Boost Founder Sales
Many mundane, time-consuming, and yet critical tasks within founder sales can be easily outsourced to a capable and hungry Sales Development Representative (SDR or sometimes called BDR, MDR, ADR, the list goes on).
It baffles me that more companies don’t prioritize this role immediately. The relative price to value, especially early in a business, is unmatched. An SDR (or two) serves as the right hand to a founder when selling.
For the SDR, working directly with a founder is a fantastic opportunity! Imagine an ambitious go-getter earning the chance to jump on board with a new company, work directly with a CEO, and help shape the Go-to-Market motion. There isn’t an abundance of win-wins in life, but this has to be one of them.
So, what are the benefits of adding an SDR to the roster so early? Why is it a worthwhile investment? And what can a company do with this person moving forward?
Let’s dig in.
The Advantages of Hiring an SDR Early
There are many benefits to adding an SDR or two to the Go-to-Market team early in a company’s life. They serve as a secret weapon and the right hand to the founder’s selling motion. Below is an outline of three distinct advantages, though this list is not exhaustive.
1) SDRs solve the “lumpy” demand paradox
When a founder is getting a business off the ground, there is no such thing as too much demand. So, what is the lumpy demand paradox?
It occurs when a founder focuses on closing deals then shifts to outbound efforts rather than balancing closing and prospecting simultaneously. Once they close a deal, they go back through the pipeline, and there are no new deals since they were too focused on closing. This creates lumpy lulls in demand.
Along with everything a founder must accomplish, it simply requires superhuman strength to prospect effectively and manage an active pipeline. The paradox is that the more successful you are at prospecting, the less time you have to do it.
SDRs are dedicated demand generation resources. They help to offset the lumpy demand paradox. Since SDRs aren’t focused on closing, they continue to build a steady pipeline while the founder focuses on closing deals and directing prospecting energy towards more strategic accounts.
This leads to more customer conversations, and the more conversations, the better. Conversations lead to sales opportunities, sales opportunities lead to ARR, and ARR solves many problems: working capital, fundraising, recruiting, credibility, and new sales.
2) SDRs pull founders out of the database weeds
One of the most consistent complaints I get from CEOs is that they don’t have time to observe good CRM hygiene. Database management feels menial. It almost always drops to the bottom of the to-do list, yet it is critically important to maintain a healthy CRM.
Without clean contact and account data, reporting becomes a nightmare. Meanwhile, up-to-date deal records and detailed utilization of tasks can drastically improve sales effectiveness. Founders should expect learning-ready SDRs to handle some or a lot of the database work.
A good SDR will jump at the opportunity to get more involved with follow-up and deals because it will put them in a better position to learn skills needed for future account executive (AE) roles.
As a result, founders will love being able to stay focused on closing and strategic prospecting rather than data hygiene and database maintenance.
Future GTM hires in marketing, sales and operations will benefit greatly from the robust and accurate reporting capabilities and accurate cataloging of early sales opportunities.
3) SDRs teams are research and experimentation powerhouses
Not sold on the first two benefits? I may have saved the best for the last.
We all know that rapid research and experimentation accelerate Go-to-Market fit. There are many tools at our disposal to uncover hidden gems about a target market, buyer persona, messaging position, etc.
There’s a compelling argument to be made that there is no greater center of learning in an enterprise SaaS business than an SDR team.
SDRs offer the ability to build and iterate on highly targeted experiments quickly. Coupled with quantitative feedback (open rate, reply rate, meeting acceptance rate) and qualitative feedback (garnered from a steady flow of sales conversations), SDRs strike the perfect balance of speed and quality.
Without fail, the introduction of even a single SDR rapidly increases the speed of learning in a new company. Learnings that would otherwise take weeks or even months are uncovered often within days. And as the learnings stabilize, the demand generation playbook starts to take shape. All that’s left from there is to double down and buckle up.
Are SDRs Right For Your Company?
Now that we know the benefits, you may be asking yourself, “Should I hire an SDR?”
The addition of early-stage SDRs make the most sense in a sales-led business, which is capable of commanding a healthy ACV (I recommend using an aspirational ACV, as this number is no doubt in flux).
If the product will struggle to sell for more than $10k, the unit economics may not be right for SDRs. High win rates coupled with high meeting acceptance rates could make 10k or less feasible.
Many product-led companies shy away from SDRs though many would benefit greatly from this role. The relative low friction of an ask to sign up for a free trial or freemium product means SDRs can drive a high throughput of meetings. A healthy ACV means the financial model could tolerate SDRs.
Budgets are tight. Cash out is always top of mind.
It’s not easy to justify net new headcount. Every position needs to be evaluated and weighed against a multitude of competing priorities.
At the end of the day, there’s an immeasurable value of dedicated resources putting all their energy into connecting with your market. The learnings, demand, and ultimate sales will mitigate costly mistakes and accelerate Go-to-Market fit.
SDRs are typically junior resources, they aren’t expensive, and a large chunk of comp is based on performance.
And if you find outbound marketing is not a viable channel, SDRs are easily repurposed into other GTM roles. And, by the way, they’ve just spent the last six months on the phone with your buyers. Potentially a useful training exercise, eh?
The SDR role is a launchpad into sales, marketing, customer success, and the list goes on.
My last piece of advice is this — an SDR, even a team of SDRs, should not replace founder prospecting and networking. Some of your best and biggest deals will undoubtedly be sourced by founder-led or executive team prospecting. And while much of the knowledge and learning will transfer from the SDR team to you, there is no substitute for doing some of that work yourself. The primary goal of the first SDRs is to supplement, support, and speed up founder sales, not to replace founder-led prospecting.
I’ll leave you with that. Happy hunting!