The Biggest Issues with the SDR Function in 2024

This is part therapy session, part analysis of what's wrong with the repeatable revenue model, especially how it's being applied by early-stage startups and companies new to outbound sales.

I recently got fired - that's a story for another day - but it led me to chat with a ton of sales leaders about their sales development and outbound functions. This is my report based on these conversations and my own experience with the state of the industry in 2024, its problems, and hopefully, some solutions.

Just a heads up, this is geared towards enterprise B2B SaaS, which is where my experience lies.

The Bandaid Approach

Too many people view outbound and the SDR function as a desperate bandaid instead of an essential part of sales and marketing. They think, "Oh, we'll just throw some SDRs at the pipeline problem" without realizing it's a long-term commitment. It's like having a kid or adopting a dog - it's gonna suck at first because they're always shitting on the rug, but eventually, you'll love it because it loves you back and produces sustainable pipeline.

Done Outbound Before?

When I talk to people about implementing outbound, my first question is whether the leadership has ever had success with it. If you're a VC-backed company, you might sell to your college buddies or VC network for a while, maybe even hit a million in ARR. But then what?

You have to scale to people who don't know you, and there's a point of diminishing returns on ads and inbound channels. Trade shows are great if that's where your ICP hangs out, but they're not scalable unless you're selling a 6-figure ACV product. I get the impression most founders don't actually know what outbound is.

The Cold, Hard Truth

To scale, you have to go cold. This means phone calls, emails, gifting, webinars, and some social selling if your ICP is on LinkedIn. But here's the kicker: I've seen countless companies where leadership has never had success with outbound, yet they expect some junior rep to figure it out for them. Or they hire someone from big SaaS who's never built an outbound function without a massive marketing budget.

The Impossible SDR Role

Let's face it, the SDR role is basically impossible. You're hiring junior reps to cold call VPs of IT who've been building infrastructure since the rep was eating crayons, trying to get "qualified meetings." No wonder they get kicked in the teeth so often they start dreading picking up the phone.

And can you blame the VPs? What does a junior rep bring to the table in terms of product knowledge or expertise? Usually nothing. That's partly the company's fault for not enabling SDRs to be product experts, but it's also a larger issue of entitlement that we don't have time to unpack here. People just think they deserve success... Sorry but you don't.

The Relationship vs. Meeting Dilemma

The fundamental problem is asking SDRs to prioritize short-term results over long-term goals. If you're selling into IT, you might need to sell to that same VP at your next three companies. Pissing them off now is a terrible idea. The company wants "meetings," but the rep's long-term interest is to build relationships with senior leaders and become a trusted advisor.

SDRs don't get compensated for building relationships, which is a large part of enterprise sales compared to down market which is more transactional.

The Technological Challenge

The tech landscape has changed dramatically in the past five years. Spam-blocking capabilities have evolved, making it harder to reach prospects. If you don't have rotating inboxes, clean copy, and a tightly targeted list, you're going to land in spam. These challenges didn't exist even five years ago, and ten years ago, when many current sales leaders were coming up, you could blast 100 identical emails with a merge field and get meetings. Not anymore.

We've got leaders trying to build sales development functions without understanding the current tech stack or having empathy for the SDR role. I once worked for a senior director who I'm pretty sure had never made a cold call in his life, yet he was buying tooling and managing an outbound SDR team. How can you manage what you don't understand?

The Scaling Problem

A solid tech stack is crucial for scaling, but it's not more important than timing, targeting, and messaging. Many later-stage companies, maybe Series C or D, are just throwing money at outbound, churning through reps because the C-Suite is clueless about how to ROI an outbound program.

There is a common delusion amongst all founders, CEOs and even sales reps that people should care about your product or service, especially at larger companies. The truth is that no one cares about you, your product or service, only what you can solve for them. Too many reps and companies feel entitled to their prospects time. It has to be earned.

Some companies aren't even ready for an SDR team. I've seen Series C companies with incredibly leaky funnels that needed fixing before going outbound. Sometimes, there's a lot of money sitting in the CRM that needs to be found before they decide to go outbound.

The Product-Market Fit Issue

Don't get me started on early-stage companies with delusional founders who don't understand why outbound isn't getting traction. It could be a positioning and messaging problem, but often it's the product. Too many companies go into go-to-market debt hiring sales reps when they need product engineers.

I've worked at a company that had a great niche selling to SMBs that wanted to go outbound upmarket. Well we were outbounding the enterprise with an SMB product. You can imagine how well that went. Gotta know how to segment your market and be honest with yourself.

Or be willing to invest (millions) into the product to get it to where it needs to be.

The SDR Feedback Loop Failure

One of the biggest issues with SDR teams is that they're given instructions and told to execute, but they can't complain if the instructions aren't working. They can only succeed or fail based on whether their bosses know what they're talking about. The only real lever most SDRs have is volume.

This is a fundamental paradox in how the SDR function is currently implemented. They have the quickest feedback loop in the sales funnel - 1:1 phone calls with ICP prospects - yet their opinions are considered the least, if at all.

The Metrics Misalignment

Here's another big problem: using meetings as the north star metric. Any AE will tell you, most SDR-sourced meetings are bad. Why? Misalignment in compensation.

If "qualified" means they're going to buy tomorrow, the SDR gets screwed. But if qualified just means "sat," then the AEs get their time wasted with shitty meetings. It's not hard to get some non-decision-making jamoke to take a meeting off a cold call. It's much harder to get someone actually interested and with authority.

Cold Calling Sucks (If You Suck At It)

Most companies have NO process in place for cold calls. No process in place for followups, no bucketing system, no automation around what happens when someone is "interested but no meeting booked". Their SDRs, if they follow up at all, are just posting reminders on their calendar without any context.

Cold calling is not just, as most leaders think, picking up the phone and dialing. There is a funnel above the top of funnel in this regard. A programmatic system of followups and a decision tree around call dispositions that create a flow to book meetings and build awareness. Problem is that building this is way harder than programming a few dispositions, telling you reps to call and calling it a day.

A New Approach

I'm starting to believe two things:

1. The purpose of a cold call shouldn't always be to set a meeting.

2. The purpose of a meeting set by a cold call shouldn't necessarily be to sell.

The cold call should be to have a brief discussion and gauge interest. The meeting should be centered around discovery. This might sound like what people do now, but not really when you look at how they're compensated.

AEs are comped on closed revenue, and SDRs are comped on sat meetings. The result? Everyone's looking for layups instead of building a pipeline. And I mean BUILDING a pipeline, which for companies with long sales cycles might mean deals that won't close for a year or two.

The issue with outbound is that people are looking for quick wins instead of realizing they're building a pipeline. If you're selling a product with a long sales cycle, your AE team's unit economics need to make sense enough for the AE to stick around an extra six months to close that big commission deal before deciding pastures are greener elsewhere.

It's a complex problem, but understanding these issues is the first step toward building a more effective, sustainable outbound sales function.

Solutions for SDR Function Issues

Leadership Education and Experience

Problem: Leadership lacks experience with outbound sales and SDR functions.

Solution:

• Implement a "leadership immersion" program where executives spend time doing SDR work.
• Bring in experienced outbound sales consultants to train leadership.
• Encourage leaders to regularly listen to call recordings and shadow SDRs.

Redefining the SDR Role

Problem: SDRs are often junior reps tasked with impossible goals.

Solution:

• Create a tiered SDR system with different levels of experience and responsibilities.
• Pair junior SDRs with senior SDRs or AEs for mentorship and support.
• Develop a comprehensive training program focusing on product knowledge, industry expertise, and soft skills.

Aligning Compensation with Long-term Goals

Problem: SDRs are incentivized for short-term results rather than relationship building.

Solution:

• Implement a hybrid compensation model that rewards both immediate results and long-term relationship building.
• Create metrics for "positive interactions" or "relationship progress" in addition to meetings booked.
• Offer bonuses for deals that close from relationships nurtured over time.

Bridging the Gap Between SDRs and Leadership

Problem: SDRs' feedback isn't valued or incorporated into strategy.

Solution:

• Establish regular feedback sessions between SDRs and leadership.
• Create a "SDR advisory board" that rotates members to provide insights to leadership.
• Implement a system where SDRs can suggest and test new outreach strategies.

Redefining Success Metrics

Problem: "Meetings booked" is an inadequate metric for success.

Solution:

• Develop a more nuanced scoring system for leads and meetings.
• Implement metrics that measure the quality of conversations and relationships built.
• Track long-term success rates of SDR-sourced opportunities, not just initial meetings.

Improving Product-Market Fit

Problem: Some companies push outbound before they're ready.

Solution:

• Develop a checklist for "outbound readiness" that includes product maturity, market fit, and internal processes.
• Create a feedback loop between SDRs, product teams, and marketing to refine messaging and product features.
• Implement a "soft launch" phase for outbound to test and refine before scaling.

Enhancing the Cold Outreach Process

Problem: Cold calls and emails are often ineffective and frustrating.

Solution:

• Develop a multi-touch, multi-channel approach to outreach.
• Create valuable content that SDRs can share to build credibility and relationships.
• Train SDRs in consultative selling techniques to make initial conversations more valuable for prospects.

Improving SDR Retention

Problem: High SDR turnover leads to lost knowledge and inefficiency.

Solution:

• Create clear career paths for SDRs within the organization.
• Offer ongoing training and development opportunities.
• Implement a "voice of the SDR" program to address common frustrations and improve job satisfaction.

Revolutionizing the Cold Calling Process

Problem: Most companies lack a structured process for cold calls, follow-ups, and lead nurturing.

Solution:

• Develop a detailed decision tree for call dispositions, guiding SDRs on next steps based on call outcomes.

• Implement an automated follow-up system that triggers based on call dispositions. For example retarget activated leads with LinkedIn ads to their company.
• Have AI do the heavy lifting on follow-up reminders
• Implement different follow-up strategies for each bucket, ensuring personalized and relevant outreach.
• Build an AI research system that populates CRM with notes to reference on calls for things like growth, news, and hiring.

The key is to view the SDR role not as a short-term fix, but as a crucial part of a long-term, relationship-focused sales strategy.

I hope this article helped and if you found it valuable, tag someone in the comments or let me know what other topics you'd like me to cover. Thanks for reading! :)