The ‘Golden Ratio’: Key to SDR Success

In our marketing department, we’re focused on stats: amount of prospects engaged per SDR, number of conversations per day, percentage of opportunities won and lost…we use this valuable info to optimize every cog in our revenue machine.

Since we’re in the process of training three amazing new hires for our SDR team, we decided to really look into our recent stats to establish benchmarks to track onboarding progress. Our results led us to some interesting insights about our outbound techniques, as well as reaffirming our ‘golden rule’ averages – the metrics we use to measure each SDR’s performance.

 

The SDR Golden Ratios

A bit like Fibonacci’s spiral, we use ‘golden ratios’ determined by our top performing SDRs to assess our ramp up process for new hires.

 

SDRs – Worth Their Weight in Gold

 

The first challenge with assessing onboarding performance is to determine just what exactly we would like to assess – that is, what measurable qualities are valued in an SDR.  Tenacity is certainly one – we all know that reaching out to a high volume of decision-makers will bolster your pipeline.  But since Account Executives’ time is valuable, evaluating sheer numbers isn’t the right way to measure success – a good SDR must also deftly qualify a project, only passing on to Sales leads she or he thinks have the right BANT.  Otherwise, AEs might feel their time is being wasted with low quality prospects.

 

Metric 1: Conversation to MQL ratio

 

A great metric to measure how well an SDR qualifies a lead is the conversation to MQL ratio.  At IKO, the marketing department is charged with qualifying leads through inbound and outbound strategies to produce a maximum of MQLs – marketing qualified leads, or leads whose BANT criteria make them likely to become opportunities.

The conversation to MQL ratio therefore lets us determine how deftly an SDR qualifies a lead.  We used recent stats from our senior SDRs to determine this ideal ratio – for us, it is approximately 3:1 – three conversations should produce one MQL.  This simple metric already helps enormously in our onboarding process.  We now have a way of determining how well a new SDR is progressing.  If their ratio is higher than this, we may need to work on their ability to persuade a good lead to take an intro call, or perhaps to better target their outbound prospects.

 

Metric 2: MQL to SQL ratio

 

Once an MQL is established, it is passed sales side, where an Account Exec will decide if, yes or no, they detect an opportunity.  If their opinion is favorable, an MQL becomes an SQL.  The MQL to SQL ratio serves to measure marketing and sales alignment – are both sides on the same page as to what constitutes a good lead?  Again, we used our internal employee stats to come up with our golden ratio of 2:3 (or 73%) – around 2 out of 3 MQLs should indeed be turned into SQLs.  Again, if this ratio is askew, something might be wrong with training, either on the marketing or sales side.  Are SDRs being too restrictive, or not restrictive enough?  Is there a part of the BANT that is systematically poorly qualified?

 

Golden ratio for SDRs

 

Beware the Red Herring

 

When reviewing our data to establish these  ‘golden ratios’, we noticed that one of our relatively new SDRs had a 5:1 ratio of conversations to MQLs – moderately below our ideal.  Our first instinct was to jump to the conclusion that she wasn’t qualifying aggressively enough, and wasn’t enticing or convincing enough in her conversation.  However, once we took a second to think about it, we realized that this particular SDR was often working with outbound leads who had not agreed to have a conversation by email beforehand, and were naturally more challenging to convince of the value of an intro call with an AE.  Since our ‘golden ratio’ had been determined based on stats where prospects usually agreed to a call first before getting on the phone, it’s normal that this SDR’s numbers were a bit below average, since she was engaging with prospects that were much ‘colder’ than most.

But when we took a closer look at our second metric for her, MQL to SQL conversion, we realized that this number seemed inflated – 88% of MQLs were transformed into SQLs, instead of the golden 73%.  Though it might seem like a good thing – more opportunities detected! – this might actually mean that our SDR was being too restrictive in the leads she passed on to sales; there may have been hidden decision-makers in the conversations she was having that were being blocked from demos, that could have been potentially interesting if given the green light for a sales call.  This was brought up as a point of improvement for her, and something we wouldn’t have picked up on had we not been able to benchmark performance with a ‘golden ratio’.

 

When To Put These Stats to Good Use

 

Establishing ‘golden metrics’ to use as benchmarks for performance – if they are intelligently analyzed – can be a great way to keep tabs on marketing / sales alignment, identify potential problems in training and ramp up, and zoom in on points of improvement for more seasoned employees.  Revising these stats is also essential at other critical moments of a business’s life, like when changing a pitch, value proposition or pricing model.

 

The Takeaway

 

Every company’s revenue chain has key points that should be quantified and regularly monitored.  For IKO, our SDRs’ conversation to MQL ratio, as well as the MQL to SQL ratio (marketing/sales alignment) is where we can accurately and easily measure our teams’ efficiency.  These ‘golden ratios’ should be revisited during key moments of a business’s life, and used intelligently to measure performance and offer constructive points for improvement.