When we first start working with Clients there’s a lot of excitement. We’re all ready to have a successful relationship. One of the questions we often get asked at this stage is “when can we expect to start closing business from this?”
Our company is determined to make our relationship as beneficial as possible for both your company and ours. On our end, this means meeting the metrics established and surpassing your expectations. Our model is built upon a ramp up period where our employees are learning your product and how to sell it. When can you expect to start closing business from our SDR team? This an attempt to address that question by looking at the numbers.
Setting Expectations
For companies that have a good idea of their target market and value proposition, it typically takes us 3 months to hit peak performance. Which is to say when we expect to hit our Client’s definition of success of engagement quota.
For example, if the goal is 10 meetings a month, we should be around 50% in month 1, 75% in month 2, and 100% in month 3.
However, depending on your sales cycle length, this does not necessarily mean you’ll close business in month 3.
Let’s look at a hypothetical scenario. The average sales cycle is 6 months, the average deal size is $100,000, and the monthly quota is 10 meetings.
If you have an average sales cycle of 6 months, then the soonest you’ll see a closed deal is in month 6 of the engagement. A deal in month 6 would be amazing. Because our team won’t have hit peak performance until month 3, and the Client’s team could be learning how to handle SDR generated leads, it’s not out of the ordinary for the 1st deal to close between months 6-9.
Over the course of the 1st 6 months the SDR team is working to build up a consistent pipeline that will then start closing.
If the SDR team schedules 60 meetings over the course of 6 months, then the next 6 months will be spent managing & closing those deals. All while having the SDR continue to generate more opportunities. This is how the SDR team contributes to building a larger, more predictable sales pipeline.
Like most things, it takes time.
Metrics for Success
We work out the metrics by which we determine our success with our Clients ahead of time through a proforma that provides timeline and ROI estimates for the engagement. Although the exact metrics will vary from client to client, it roughly follows the pattern below.
We work out the metrics by which we determine our success with our Clients ahead of time through a proforma that provides timeline and ROI estimates for the engagement. Although the exact metrics will vary from client to client, it roughly follows the pattern below.
First, let’s input some basic metrics:
These inputs, along with the estimated ramp up time, influence the theoretical ROI model of an engagement in Year 1. This is reflected by the first closes happening around Month 7, and the Total Revenue peaking around Month 9.
Year 2 will look different because we don’t have to go through the learning curve or pipeline build. Assuming that no peak periods are factored in, this table reflects profits without the growth period, and is a reflection of the kind of profits to expect with our business moving forward.
As you can see from these graphs, the profit that you will see from our SDR team depends on several factors, determined largely in part by the sales cycle and our ramp up period. Simply put: if your sales cycle is six months long, expecting results four months in is unlikely. We are dedicated to achieving success for your business or product, but the profits to be gained must stem from reasonable expectations. As we work with your product and get proposals in the pipeline, the return on your investment will grow to its optimal peak.