In-House vs. Outsourcing vs. Automation: Navigating the SDR/BDR Landscape
Modern SDR & BDR Management
The sales development representative (SDR) and business development representative (BDR) functions are crucial for driving revenue growth.
However, building and maintaining an effective in-house team can be challenging. This has led many organizations to explore outsourcing and automation options.
But what's the right approach for SDR/BDR management?
As someone who has been working in the B2B SaaS industry for over a decade, I've seen firsthand the importance of the SDR/BDR role in driving revenue growth.
However, I've also seen how challenging it can be to build and maintain an effective in-house team.
I'm writing this blog post to share my insights on the future of the SDR role and to explore the pros and cons of outsourcing and automation options, based on real-world experimentation and insights.
I believe that by understanding the different options available, businesses can make the best decision for their specific needs.
Need a more customized answer? I can provide a deeper recommendation to help you make the best decision for your organization after a quick call.
In-House SDR/BDR: The Gold Standard
In-house sales development representatives (SDRs) and business development representatives (BDRs) are employees of a company who are responsible for generating and qualifying sales leads.
They work closely with the sales team to identify potential customers, build relationships with them, and nurture them until they are ready to make a purchase.
In-house SDRs and BDRs have a deep understanding of the company's messaging, products, and services.
They act as nuanced demand and account qualifiers, who are able to effectively communicate the product’s value to potential customers while evaluating their fit. If confirmed, the prospective customers are handed off to another seller (typically an AE) for further qualification and opportunity creation.
In-House SDR/BDR Pros
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In-house SDRs excel by exceeding expectations, driven by their work ethic and dedication. Their ability to work independently and collaboratively enables effective adaptation. They embrace challenges, seek improvement, and deliver superior performance, contributing to organizational success.
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In-house SDRs and BDRs are more agile and adaptable than outsourced teams due to their ability to embrace change, learn new skills, identify problems, and adjust strategies to drive sales and contribute to organizational success.
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In-house BDRs and SDRs share knowledge and provide mentorship within the organization, fostering continuous learning and development. Senior BDRs and SDRs mentor junior team members, enhancing individual performance and contributing to sales team success.
In-House SDR/BDR Cons
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In-house BDRs or SDRs are typically employed by the company they work for, which means that the company is responsible for providing them with a salary, benefits, and other forms of compensation. This can make them more expensive than outsourced BDRs or SDRs, who are typically paid on a commission basis and do not receive benefits from their employers.
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In-house BDRs or SDRs often have higher turnover rates than outsourced BDRs or SDRs due to their career progression aspirations. Many BDRs and SDRs view their roles as stepping stones to more senior sales positions within the company. When they are not able to progress to the next level within a reasonable amount of time, they may become frustrated and leave the company to seek opportunities elsewhere.
““Make the investment in an in-house SDR/BDR team if you can afford it.””
Recommendations with In-House SDR/BDRs
In-house SDR/BDR teams consistently surpass the performance of outsourced or automated alternatives.
Their close proximity to account executives (AEs) fosters an environment of collaboration, enabling them to learn from experienced sellers, swiftly adapt messaging, and promptly pivot strategies.
Make the investment in an in-house SDR/BDR team if you can afford it. You'll gain a team of driven, knowledgeable, and typically young professionals eager to apply their product knowledge to advance within your organization.
I've witnessed top-performing BDRs evolve into influential sales leaders, customer advocates, and product managers who play a crucial role in the future success of certain products.
There are, however, additional cost-saving options available today.
Let's delve further into these possibilities.
Outsourced SDR/BDR Agencies
An outsourced SDR/BDR agency is a third-party company that provides sales development and business development services to businesses on a contract basis.
These agencies specialize in generating leads, qualifying prospects, and scheduling appointments for their clients.
By outsourcing these tasks to an experienced agency, businesses can benefit from cost savings, access to specialized expertise, and increased flexibility.
Outsourced SDR/BDR Agencies Pros
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Outsourcing SDR or BDR functions can help businesses save money in several ways. First, outsourced agencies often have lower overhead costs than in-house teams, as they do not need to provide benefits or office space for their employees. Second, outsourced agencies can often offer more flexible pricing options than in-house teams, allowing businesses to scale their SDR or BDR efforts up or down as needed. Finally, outsourced agencies can help businesses avoid the costs associated with turnover, as they can quickly and easily replace SDRs or BDRs who leave the company.
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Outsourced SDR or BDR agencies have a team of experienced professionals who specialize in generating leads and qualifying prospects. This means that businesses can access a higher level of expertise than they could by hiring and training an in-house team. Outsourced agencies also have access to the latest tools and technologies, which can help them generate more leads and close more deals.
Outsourced SDR/BDR Agencies Cons
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Outsourcing BDR or SDR services means that the agency will need to be onboarded and trained on your company's products, services, and sales process. This can be a time-consuming process, especially if the agency does not have prior experience in your industry. During this time, the agency's performance may be lower than that of an in-house team that is already familiar with your company and its offerings.
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Even after the onboarding and training process is complete, it is likely that the outsourced agency's performance will initially lag behind that of an in-house team. This is because the agency will need time to ramp up its operations and build a pipeline of qualified leads. In the meantime, your company may lose out on potential sales opportunities. You will need to supplement your forecasted deal and meeting volume with an in-house team while you ramp the outsourced team up.
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When you outsource BDR or SDR services, you are essentially giving up control over the team that is responsible for generating leads for your company. This can make it difficult to ensure that the agency is following your company's sales process and meeting your expectations. Additionally, if the agency does not perform well, it can be difficult to terminate the contract and find a new provider.
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When you outsource BDR or SDR services to a company that is located in a different country or culture, there is the potential for communication and cultural issues. This can make it difficult to build a strong working relationship with the agency and can lead to misunderstandings and miscommunication.
Outsourced SDR/BDR Agencies Recommendations
““You may find that outsourcing works best for specific segments or targets of your audience.””
Outsourcing your SDR/BDR functions to agencies can be highly effective, but thorough vetting and a gradual ramp-up period are essential. Top-quality agencies take time to grasp your product, market, and ideal customer profile.
Here's how to ensure a successful outsourcing partnership:
Conduct Rigorous Due Diligence: Select an agency with a proven track record and guaranteed results.
Secret Caller Spot Test: Engage your board, colleagues, and target accounts to make calls during the pilot period. Their direct feedback is crucial to assess quality.
A/B Testing: Test different agencies with varying lead types. This allows you to benchmark their effectiveness and provides an easy exit if performance falls short.
Set Realistic Expectations: Recognize that peak performance takes at least two months to achieve. During this time, provide extensive directional feedback to shape the partnership.
Following these steps can significantly scale your SDR/BDR department while saving costs.
However, you may find that outsourcing works best for specific segments or targets of your audience. In such cases, consider supplementing with in-house SDRs or alternative formats.
Automated SDR/BDR Programs
An automated SDR/BDR program utilizes artificial intelligence (AI) chatbots and dialers to streamline the sales and marketing processes.
It automates repetitive tasks such as lead generation, lead qualification, and lead nurturing, enabling businesses to reach a larger audience cost-effectively.
Automated SDR/BDR programs offer data-driven insights, allowing businesses to test different marketing strategies and improve their overall sales performance.
Automated SDR/BDR Programs Pros
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Automated SDR/BDR programs offer a cost-effective alternative to hiring and training a team of human SDRs/BDRs. Businesses can reach a larger audience for their sales and marketing efforts without exceeding their budget, streamlining the sales and marketing processes.
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Automated SDR/BDR programs allow businesses to customize messaging for specific audiences and nurture leads through email campaigns. This helps qualify leads for sales conversations, saving time and resources by ensuring that only the most promising leads are passed on to the sales team.
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Automated SDR/BDR programs are scalable, allowing businesses to adjust their outreach efforts based on their needs. This flexibility helps businesses grow without the burden of hiring and training additional staff, enhancing the customer experience with personalized and responsive interactions.
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Automated SDR/BDR programs provide valuable data-driven insights, enabling businesses to test advertising in various markets, launch new products, explore multiple marketing channels, and validate new messaging. This information helps improve sales and marketing strategies across various channels, including email, phone, and social media.
Automated SDR/BDR Programs Cons
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AI chatbots and dialers are not currently capable of handling all types of customer interactions. For example, they may not be able to resolve complex customer issues or provide personalized advice. As a result, carefully consider the specific use cases for which you plan to deploy automation, such as testing with new products or older Marketing Qualified Leads (MQLs) or Sales Accepted Leads (SALs).
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AI chatbots are not a replacement for human interaction in complex sales cycles. In these situations, customers often need to interact with a human salesperson to get the information and support they need to make a purchase decision. AI chatbots and dialers can be a helpful tool for qualifying leads and providing basic information, but they should not be relied upon to close deals.
Automated SDR/BDR Programs Recommendations
I’ve used the automated SDR/BDR approach with success for two specific use cases – waking the dead, and testing new messaging:
For older leads to see if we could “wake the dead” with leads that are underworked
Identify older leads who have been in your database for a while but haven't yet converted.
Use automation to send these leads targeted emails or nurture them with educational content.
Qualify these leads to determine which ones are most likely to convert.
If performance exceeds your in-house team, gradually expand their scope to net new leads.
Monitor the performance of your automated lead generation solution.
If it is exceeding the results of your in-house team, consider expanding its scope to include net new leads.
Targeting a small number of new leads to test different pitches and product messaging or positioning
Ensure brand safety by tailoring the automated pitch to your company's voice and values.
Work with product marketing to develop an automated pitch that is consistent with your company's voice and values, and most importantly the value proposition
Ensure that the pitch is relevant to the interests of your target audience – get narrow here on the exact segment of net new leads that you’ll be testing with
Treat the test as sort of an A/B/C test to see what is working for them, and if you
You can also be transparent here, and just say, “yes – you’re talking to an automated agent. We’re testing to see if this will work for us, did you get your questions answered?” You’d be surprised at how many people are okay with this and want to move forward.
Conclusion
Selecting the right approach for your organization's lead generation depends on crucial factors like budget, sales cycle, and team capabilities. If you're aiming for peak performance, an in-house SDR/BDR team is the ideal choice. However, if your resources are limited or you need to expand rapidly, outsourcing or automation may be more suitable.
From my experience with all three approaches, I've found that a hybrid approach is exceptionally effective when you have substantial demand generation and need leads or accounts to be consistently and swiftly processed. Dedicate your in-house BDRs to high-touch ABM accounts and outreach, while agencies and automation can handle aging SALs and new inbound leads that require some nurturing before engaging with sellers.
If cost is a significant constraint, a hybrid approach may not be feasible. In that case, I suggest utilizing your senior sales talent for outbound efforts while initially outsourcing the BDR/SDR function. As your revenue goals are achieved, you can gradually transition to an in-house team.
Remember, today's BDR/SDR has the potential to become tomorrow's sales director or customer success manager. Invest in their development and provide them with opportunities for growth.
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