SellingSherpa

B2B Sales Best Practices

SDR Pod versus Pool

TL;DR:

Pooling SDRs is superior to forming pods in almost every context.

 

A Brief Introduction to Pods and Pools

With pods, sometimes referred to as ‘pairing’ or ‘partnering,’ SDRs are linked to one or a few specific account executives. Occasionally, companies build holistic pods composed of SDRs, AEs, and customer success managers/account managers (CSMs/AMs).

With pools, sometimes referred to as the ‘factory model,’ SDR capacity is spread more or less evenly across account executives.  The most common approach for equitable utilization is round-robin.

The question of how may SDRs you need, expressed as a SDR:AE ratio, is independent of the pod vs pool decision.  By way of example: (also see this from Kyle @ Dogpatch Advisors)

  • Assume each AE has a new business quota of $800K per year
  • With an average annual deal size of $40K, each AE needs to close 20 deals per year
  • If 10% of qualified opportunities close, then they need 200 qualified opportunities per year
  • With a discovery/demo meeting to qualified opportunity ratio of 50%, each AE needs 400 disco/demo meetings.
  • If each AE is responsible for generating 50% of her pipeline, then she needs her SDR(s) to deliver 200 disco/demo meetings.
  • We need to be realistic about how many held disco/demo meetings an SDR can generate per year. Fully ramped, an SDR can generate 20 meetings per month. However, they need ramp time, they take PTO, and not all months are good months for prospecting. Hence, let’s assume one SDR can generate 200 disco/demo meetings per year, or between 16-17 per month. In this case, the SDR:AE ratio is 1:1.

The question of who manages SDRs is also more or less independent of podding versus pooling. If you pod SDRs, then you can, and arguably should, have dedicated first-line sales development managers (FLSDMs) as opposed to having the SDRs report to an AE, pod captain, or first-line sales manager (FLSM).  If you pool SDRs, then you’ll almost certainly have the SDRs report to dedicated FLSDMs.

 

Inbound MQLs: Winner = Pool

Conventional wisdom (backed by this semi-scientific study and this too) asserts that one’s odds of qualifying an inbound lead decay exponentially with time. This makes sense since the prospect is by definition interested and available the moment after they reach your marketing qualified lead (MQL) scoring threshold. In addition, the prospect is probably also gathering information from your competitors so you want to be the first to make contact.

When minutes, if not seconds, matter, route inbound MQLs to the first available SDRs. Moreover, SDRs who receive inbound leads should be not only expert at the task of responding rapidly but also unencumbered by other responsibilities such as account-mapping, research, etc.  Hence, hire a dedicated inbound SDR as soon as you have enough inbound volume to fill their day; then hire more into the pool as your inbound volume grows.

A common question: How should one route an inbound lead associated with an account that is already assigned to an outbound SDR?  As long as speed trumps deep SDR knowledge of the account, which it almost always does, then route the lead to the inbound team.

 

SDR Motion Complexity: Winner = Pool (marginally)

At first glance, you might think that the pod versus pool decision depends on the complexity of the sale; for instance, that pods, with direct AE-SDR linkages, are better than pools for relationship-centric sales characterized by large deal sizes and long sales cycles. However, the complexity of the SDR motion rather than the complexity of the sale is what truly matters.

If the SDR’s sole responsibility is booking meetings with qualified prospects, then pooling is fine for 99 out of 100 organizations. For those ’99 organizations,’ SDRs can personalize outreach with just enough language and content to get the job done.  The exception, the ‘100th organization’ if you will, is when your odds of booking a meeting are highly dependent upon deep knowledge of either the prospect segment or their company; in this case, a pod structure may work better.

In their “Sales Development 2018” report, The Bridge Group reveals (on page 12) that 1/3 of SDRs are chartered with passing fully qualified opportunities.  (This strikes me as high; I suspect that ‘fully qualified’ does not entail deep discovery.)  If SDRs conduct deep discovery and AEs are specialized (by prospect role, vertical, etc.), then pods are better since they improve knowledge transfer from the AE to the SDR.

 

SDR Performance: Winner = Pool

Pooling extends its lead over podding when one considers SDR performance management. Tito Bohrt’s excellent treatise on this topic stresses that the best way to get accurate data to compare individual SDR effectiveness is by pooling to eliminate biases caused by variability in AE effectiveness and variability in territory potential.  In addition, pooling increases the sample sizes for A/B testing and allows best practices to spread more rapidly.

 

SDR Advancement: Winner = Pod (marginally)

Most organizations have a goal of promoting SDRs into (junior) account executive positions.  In theory, an SDR in a pod with an AE should get more thorough mentorship and guidance. However, anecdotally speaking, I have not seen a major difference in the promotability of SDRs coming from pools versus pods. The reason is that most learning comes on-the-job by listening to and participating on discovery calls.  That should happen routinely for any organization that wants to promote its SDRs.

 

Odd Jobs: Winner = Pod

If your SDRs have highly non-standardized jobs, i.e. they are serving as ‘sales assistants’, then pods are better than pools since AEs have full visibility into the loading of their SDRs. However, the generalized ‘sales assistant’ role is rapidly going the way of the dinosaurs due to low efficiency.

 

Dealing With Turnover, Leave, & Vacation: Winner = Pool

Being an SDR is a grueling job, often held by early career professionals. Consequently, the role has high regretted and unregretted turnover.  Imagine you have 10 SDRs and 10 AEs. If you have 1:1 pods, then the ‘air’ to one AE gets completely cut off when her SDR leaves. In contrast, if you pool SDRs, then each AE merely needs to pick up 10% of the slack until the SDR is replaced. Smart managers will even have a bit of extra SDR capacity so that departures never drop meeting generation below a critical threshold/SLA.  While the overall impact on the business might be the same in the short term, the AE’s performance impact and AE’s stress level is much higher in the pod scenario which will, in turn, lead to higher AE turnover.

The problem exists in reverse too. If an AE leaves a 1:1 pod, then the SDR is ‘stranded’ until reassigned.

The negative impact of volatility from leaves-of-absence and vacation is also reduced by pooling versus podding.

 

A Few Final Words on Scaling

If you are tiny and have just one or two SDRs, then they are going to be Jacks-and-Jills-of-all-trades. They will handle inbound and outbound.

As mentioned above, as soon as you have enough inbound volume to feed a dedicated inbound SDR, do it. Then hire more, building out teams of inbound SDRs with dedicated inbound FLSDMs.

With outbound, the same sort of thing goes.

Things get interesting when you are big enough to have multiple teams of inbound or outbound SDRs. Even though you’ll have multiple FLSDMs, you can load-balance across the teams using round-robin account assignment (for outbound) and lead assignment (for inbound).  When you have truly large numbers of SDRs, consider having separate pools dedicated to specific segments. Again, that is only strictly necessary if the effectiveness of the SDR motions is significantly enhanced by specializing in prospect role, industry, etc.

 

A Few Good Resources

 

 

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