Why You Shouldn’t Be Hiring an SDR in 2024

I remember when I joined my first two startups back in 2019. I had the unique opportunity of working for two competitors in the same industry and as a result saw completely different GTM operations for very similar products. And while it would be interesting to compare the evolutions of the two businesses, this post is focused on the biggest mistake I saw one company make which resulted in high employee churn and a much slower growth rate.

The Life of an SDR

Imagine being hired as an SDR, you’re excited for your first tech gig and ready to hit the ground running. You’ll do whatever it takes to make your mark – including making calls to strangers for hours a day. And then you hear that closing deals and commission is only for AEs, which you have a shot at becoming in 1-3 years.

It’s laughable that executives think well-educated new grads would see this as a good opportunity. Almost every other entry-level role in industries like banking and consulting pay better and have better growth trajectories. The top new grads would never consider these roles, and the individuals that do usually are doing so as a last option.

My suggestion is not to eliminate the SDR role entirely, but to rethink it. To this day, I haven’t heard a good explanation on why work should be divided as – outreach by the SDR and closing by AEs. It just feels like an excuse to underpay and undervalue your employees. If you asked me what I believe the motivation behind this split to be, I would say it most likely has to do with more experienced sales teams members not wanting to conduct cold calls and dumping that on their SDR team,

The Paradigm Shift

I’ve always wondered who came up with the structure of the modern B2B sales org. To me, it’s unnecessarily extravagant and extremely inefficient. Typically what I’ve seen:

·      SDR

·      AE

·      Implementation/Solution Engineering

·      Customer Success

Typically an SDR handles the first portion of prospecting, AEs manage closing, SE does the implementing, and CS ensures a happy account. This makes no sense. Why are we splitting sales into two roles while keeping the others in one?

The main argument I’ve seen in response is that the SDR role is meant for new hires but this is a bad excuse. You can train someone in cold calling and prospecting, while also giving them the opportunity to close deals. And while forcing them to just do cold calling is ideal for your business, it creates a really shitty job. And that’s why in lieu of promotions, most SDRs leave companies within 1-2 years.

Hiring and parting with an employee in less than 2 years is almost always bad for your startup. Unless you invested $0 and 0 time in your employees, it is almost always net loss on the accounting books. So that begs the question, why do founders split SDRs from AEs entirely?

Usually, this workflow stems from two things:

1.    A notion that to attract good sales talent, these experienced hires shouldn’t have to do cold outreach

2.    A selfish motivation to get the lion’s share of commissions

Don’t get me wrong, I am not saying cold outreach is a bad strategy. Quite the contrary. What I find nonsensical is this workflow where an SDR does all the work to set up a prospect call, and is then forced to hand over the deal to an AE. Not only is this unfair in the eyes of the SDR, it leads to 3 very serious negative implications:

1.    The SDR receives little to no attention for their work, other than a pat on the back. If this SDR isn’t promoted within a year or two, it usually leads to employee churn.

2.    The relationship between the SDR and AE becomes 100% operational and zero-sum. The AE usually ends up seeing SDRs as a tool for them and nothing more. Even if they don’t explicitly state this. This can create a very toxic work culture.

3.    The customer has to engage multiple individuals for the sales cycle, adding friction and potentially leading to a lost deal. In the age of product-led growth, this can be the nail in the coffin for some software startups in competitive industries.

When trying to scale a startup, it’s essential that you don’t have a culture of churning employees and it’s even more important to have a straight forward sales cycle. While it’s true training a new grad or new employee on full cycle sales can take time and a lot of effort, the SDR and AE roles should be rethought and combined to make this possible.

Instead of forcing an SDR to hand over the prospect they worked so hard to find, ask a more senior AE to mentor and help them close the deal. Not only does this lead to the same revenue gains, it creates a happy employee who is less likely to churn. In my ideal world, the most important deals will be passed to more experienced sellers while the less experienced AEs are given smaller deals to close. Most importantly no one on the sales team should be above cold calling, even if less experienced individuals do more of it.

And finally, I should say, I am not advocating that all deals should be handled by the original individual who found them but the opposite shouldn’t be true as well – all deals are handed over from an SDR team to a team of AEs.