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The digitization of the world’s economy has accelerated in recent years. The changes brought about by the information age have revolutionized marketing and advertising. A crucial aspect of the sophisticated sales pipeline structures used by modern businesses is sales development. Pipelines are instrumental to a company’s growth, and my guest today has a record of building SDR teams that maximize pipeline potential.
With over 25 years of sales and operations experience in the technology sector, Lars Nilsson is a global leader in enterprise software and selling solutions.
Currently, he is VP of Global Sales Development at Snowflake and CEO of Sales Source, a premier consulting firm specializing in industry-leading best practices and advisory for optimizing sales teams. Lars is also a Sales Advisor for early-stage venture capital firm True Ventures.
Before his time at Snowflake, Lars was VP of Global Inside Sales at Cloudera. Together with his team, they developed the sales methodology known as Account-Based Sales Development (ABSD). It has transformed how many businesses approach their high-value targets. Lars has also worked in sales executive roles at ArcSight/Hewlett Packard, Riverbed Technology, and Portal Software.
Listen to today’s show, where I spoke with Lars about his successful building sales development teams.This episode of the @GoModernSelling podcast dives into how #SDR Teams drive growth in a company. Listen to the insightful conversion between @M_3Jr and his guest @LarsNilsson65 of @SnowflakeDB. #sales #leadership Click To Tweet
Sales Development Versus Business Development
Sales and business development sometimes seem like they can mean the same thing. I asked Lars whether he distinguishes the two.
He told me that some companies would choose to have hybrid teams, but more mature teams will segment them.
“If you’re just starting, the odds are your SDR is doing both inbound and outbound,” he said.
Lars pointed to Salesforce.com as an example of a company that has segmented business development and sales development. Their sales development team are newer hires and handle inbound leads from internal channels. They can later graduate into business development. There, they take outbound cold prospecting.
As a minor operation, our reps get market development by mixing in some closing experience as part of their daily routine.
When sales development reps have two roles to fill, they can naturally lean toward one or the other and need to be managed more closely.
Lars mentioned that he thinks sales development positions should have a clear progression path into carrying a quota.
Listen to our entire episode to hear all of his thoughts on balancing the two functions.#SalesDevelopment vs Business Development. @LarsNilsson65 of @SnowflakeDB says some companies would choose to have hybrid teams, but more mature teams will segment them. Learn more on this ep. of the @GoModernSelling #podcast! Click To Tweet
Optimizing Density Coverage
Sales development’s role is to find opportunities for their quota-carrying counterparts. They want meetings with the right people at the right time.
But how do you find the correct ratio of SDRs to AEs?
Lars recalled his time working with Portal Software. His manager, Bernie Scomra, realized that his reps would need to prospect and close to support the pipeline they had started. He asked Lars to design a team so that his salespeople would not have to prospect.
That was in 1997, and at the time, the ratio was one sales development rep to every five account executives.
“Imagine one SDR managing the personalities and the schedules of five AEs. You don’t get the efficiency,” he said.
There are now 20 years of data and studies on different companies’ SDR. Lars says one SDR per three AEs is a good standard for mid-market enterprises.
A one-to-one ratio is generous, but the payoff is more pipeline than you would ever imagine at one-to-three. Procore is an example of a company that turned its pipeline growth around by going even further. For a time, they had two sales development representatives for every one account executive.
Tune in to the podcast to hear more about our experiences fine-tuning SDR to AE density within our teams.
The Role of SDR Managers
What kind of coaching and training should the frontline manager focus on? The onboarding programs that sales development reps have to absorb at the entry-level are denser than in the past. SDR managers often bear responsibility for supporting the process.
Lars said there needs to be support networks outside of the SDR manager for efficient frontline operations.
“In my opinion, you need a lot more dedicated ops for SDRs than you do for account execs.”
The frontline SDR manager shouldn’t need to serve as much of a training and onboarding function. More room for them to work together on the line with new hires is more efficient. They need time to lean in and give some over-the-shoulder coaching.
SDR teams supported by reliable operations are what Lars calls the most lethal pipeline generators.
Hear what Lars had to say about what he looks for as the best predictor for future success in a new hire by listening to the whole discussion.SDR teams supported by reliable operations are what @LarsNilsson65 of @SnowflakeDB calls the most lethal pipeline generators. #Sales Development Managers shouldn't miss this episode of the @GoModernSelling #podcast. Listen now! Click To Tweet
SDR Marketing Integration
I was surprised to learn that at Snowflake, Lars’ SDR team also works closely on the company’s marketing model. The company uses what is called Account Based Marketing. That means that they focus and segment their salesforce into groups that target specific accounts as a company. A dedicated function works to develop innovative campaigns that reach out to targeted personas and companies globally.
By tying sales and marketing together more closely, their campaigns are more efficient and avoid common mistakes that are simply the result of sales and marketing teams adopting principles independently of one another.
“I think that’s probably one of the bigger disconnects. When I look back at my career at all the dysfunction that happened… teams didn’t spend a lot of time together,” he said.
I asked Lars if the new approach had led to any change in compensation design at Snowflake.
He said there were no compensation changes for the sales development team but that the marketing organization had pipeline generation goals.
Check out the complete audio and hear more about how Snowflake uses a shared CRO to tie its sales and market teams together.
Performance Targets for SDR Teams
In April of this year, Vengreso conducted a survey asking sales professionals what the most challenging part of selling was and 69% answered prospecting.
With our team, we’ve been evaluating who we assign the prospecting role to and are closely watching how our compensation plan ties our MDMs’ performance to a revenue number for their region.
Lars and I spoke about what model Snowflake uses to set performance targets. They primarily look at the number of meetings and how many wind up as qualified opportunities in the pipeline.
While their metrics are weighted toward the number of meetings, it’s better to base them on meetings alone supplemented by spiffs for opportunities and closed deals.
“Tying comp and reaching quota to something that you have very little control over or no control over is a pain point,” he said.
“It’s still at the end of the day up to the account executives whether or not they’re going to put it into their pipeline.”
I asked him what the compensation is per meeting at Snowflake. He estimates that their plan yields sales development reps approximately $150 to $200 and is based on a monthly quota with a range between 12 and 22 meetings.
Play the entire episode to hear everything Lars says about Snowflake’s growth strategy and what strategies he’s employing to grow his global sales development team.