The True Cost of Hiring an SDR
Salary and commission are only the beginning of the costs associated with this role. When you think about the true cost, you have to consider things like management time, tech stack, churn, recruitment etc.
Run effectively, a Sales Development function is the quickest possible route to predictable revenue. Hyper-growth Silicon Valley brands leverage this function really well and hire Sales Development Representatives (SDRs) at scale to drive leads for their Account Executives (AEs) to close. Once the engine is in place, it is a pure profit centre as they consistently create pipeline for their AEs.
Unfortunately, unless a team with a dedicated manager can be hired, economies of scale are difficult to reach and the customer acquisition cost associated with these leads is too high. More often than not, this makes the function an unviable option for SMEs and startups who cannot justify hiring a team of reps and a dedicated manager.
The Challenge For SMEs
SDR Steve's salary is only the start of his cost to you as a business. When you factor in commission, infrastructure, taxes, benefits, perks and tech subscriptions, this junior role will cost you $7,000 per month. Unfortunately, this is not where it stops either as the average tenure for the role is only 14.2 months (3.8 months of which will be a ramp period with reduced output) so recruitment and attrition costs need to be considered, along with the opportunity cost as they ramp. Similarly, as it is a junior role, your management time is a very real cost which needs to be considered.
Total Monthly Cost For SDR Steve: $10,000
You will also be paying SDR Steve for a lot of time which is completely unrelated to outbound sales. He will have 22 annual leave days (fewer in USA), 8 public holiday days, approx. 5 sick / personal days, approx. 2 training days and an average of 12 meeting days per year (2 hours per week). This adds up to 54 days annually (4.5 days per month) where you are absorbing all of these costs without production. Thinking about actual production time vs cost, you will get 140 hours from SDR Steve each month at $71 per hour.
Even after you have absorbed all of these costs, SDR Steve only has a 65% chance of hitting his quota every month.
Outsourcing: A Viable Approach
At Leadable, we specialise in opening doors for SMEs and startups with senior decision-makers in large organizations. We understand that your pool of potential prospects is not infinite so, rather than adopting a 'spray and pray' approach to your entire market, we practice quality over quantity and run low volume, personalized multichannel campaigns across email, calling, LinkedIn, video and direct mail to niche groups which are pre-approved by you. We do extensive research on each prospect and then target them with hyper-personalized messaging before passing warm leads to your sales team to pitch once they have been qualified.
Leadable plans start from $4,500 per month with 0 paid days without production so the cost to a business to hire one SDR is approximately 2x the cost of hiring a team of specialists from Leadable and it comes without the headaches of ramp periods and attrition.
Want To Create Pipeline Without These Fixed Costs?
Consistently filling a pipeline with prospects who fit your Ideal Customer Profile leads to predictable revenue. Contact Leadable today to give your sales team a consistent pipeline from the type of accounts that will move your business forward.