I recently met the VP of sales of a technology services company. She wanted to get my take on the results of her fledgling sales development effort.
Over the previous 12 months, she had launched a team and grown it to four outbound reps. “All in, I think I have spent about $600,000 on the group so far. We have good forward-looking pipeline. But to date, the group has only sourced $750,000 in net new business,” she shared. She then inquired what I thought of the return.
I replied, “You said your sales cycle is roughly 120 days. I bet you’ve closed the majority of that revenue in the last four to six months. Am I right?” She said I was. I continued, “And for the six months prior, how much business did your account executives source from net new customers?” She thought for half a beat, smiled, and replied, “Well, about half that, and they cost me a hell of a lot more.” We agreed the group was off to a good start and in six months the return would be rock solid.
Setting expectations as you build and grow sales development is critical. Communicating up to the executive level, across to peers, and down to team members takes forethought and planning. Not every sales leader is willing to take the long view, like the one we met above, and consider “compared to what?”
It has been my experience that many executives view sales development as a sort of chemical reaction: Hire a team, add one part customer relationship management (CRM) to two parts leads and list, and POOF! Instant revenue. Sadly, it’s not quite that simple.
It’s a big investment to have a sales development team, an investment of both time and money. Of course, the end game is to get to repeatable pipeline and revenue growth as quickly as possible. But if you have a complex solution or one that requires that your account executives educate the market, you have to think long term.
I find that too many organizations aren’t realistic in setting expectations. They don’t take into account the time it takes to ramp up a team or properly account for the length of their sales cycle. They want results now.
A good sales development team adds value from day one. It is up to you to understand the value of the conversations they’re having, to quantify that pre-pipeline value, and to communicate it across your organization. What did they cost? And what did they yield? These are important questions. But they are not the end-all for fledgling groups. Sales development is an investment, not a cost center. Embrace that fact, and you are well on your way to setting realistic expectations.