Why SDRs Should Be Part of Your Marketing Team Instead of Your Sales Team

We’re all familiar with the hustle culture, “rise and grind” mentality. CEOs and founders maintain that the only route to success is through 18-hour workdays and pushing oneself to physical and mental limits.

Although we know this approach is unhealthy, many of us continue to do it because we think it’s the only way to secure funding and reach that rare $1B valuation. This week’s podcast guest believes otherwise.

Matt Melymuka is the Founder and Partner of PeakSpan Capital, a growth equity firm that takes a “contra-silicon valley” approach to scaling. Matt joined the Predictable Revenue podcast to discuss what’s wrong with this revenue growth at all costs model.

The problem with prioritizing revenue growth above all else

Most of the pressure for rapid revenue growth comes from outside the company, from venture capital investors. These investors expect a certain number of their companies to go to zero, which is why they push revenue growth at any cost.

The capital loss ratio of any given venture firm is typically 35% (meaning 3.5 out of every 10 companies will go to zero). With those odds, it’s easy to see why most venture firms choose to remain generalists and push the same revenue growth goals on every company.

Although an investor may push to scale from two to 100 reps, such rapid revenue growth isn’t necessarily the healthiest choice for your company.

The risks of rapid revenue growth

When a company experiences rapid revenue growth, that $1B valuation may come with a cost. If the company hasn’t scaled sustainably, there’s an inevitable dropoff, and founders are often left without an exit plan.

If you raise a massive amount of money at a high price, not many companies can afford to acquire you. Matt often sees founders who have backed themselves into a corner by raising so much so quickly. If you choose to go that route, understand that you may need to reach $3-4B before selling.

Another drawback of raising funding early on is that you become reliant on the capital market to fund the business; you raise one round of funding only to get to the next. Companies that have to grind in their early days learn resilience and resourcefulness, and they become very capital efficient.

What to do instead

Instead of aiming for the $1B unicorn, start with a more attainable target. For example, if you’re starting at $2.5 million, focus on reaching $7 million before moving on to your next revenue goal.

This slow and steady approach will help your company reach goals in a much more aligned way, and build resilience along the way. Matt and the PeakSpan team now have three companies approaching the $1B mark, all of whom have focused on this slower revenue growth approach.

How sales fits into sustainable revenue growth

Building consistent, repeatable sales performance is key to revenue growth–but often difficult to achieve when the company begins hiring too quickly.

Before hiring more reps, Matt recommends starting with the sales infrastructure: training and onboarding programs, enablement tools, and playbooks. Hiring more reps won’t be effective if you don’t have those foundations in place.

If you need help hiring, training, or scaling your sales team for predictable revenue growth, our coaches can help. Click here to learn more about our sales coaching!

Final advice for founders looking to raise capital

Focus on growing sensibly and prioritizing capital efficiency. Don’t get pressured into massive revenue growth goals, thinking you need to do so to secure funding. No one knows your company better than you do–set ambitious but achievable goals, and then stay the course.

If you want to connect with Matt to learn more about a sustainable approach to revenue growth, reach out via LinkedIn or email matt@peakscan.com.

We’re all familiar with the hustle culture, “rise and grind” mentality. CEOs and founders maintain that the only route to success is through 18-hour workdays and pushing oneself to physical and mental limits.

Although we know this approach is unhealthy, many of us continue to do it because we think it’s the only way to secure funding and reach that rare $1B valuation. This week’s podcast guest believes otherwise.

Matt Melymuka is the Founder and Partner of PeakSpan Capital, a growth equity firm that takes a “contra-silicon valley” approach to scaling. Matt joined the Predictable Revenue podcast to discuss what’s wrong with this revenue growth at all costs model.

The problem with prioritizing revenue growth above all else

Most of the pressure for rapid revenue growth comes from outside the company, from venture capital investors. These investors expect a certain number of their companies to go to zero, which is why they push revenue growth at any cost.

The capital loss ratio of any given venture firm is typically 35% (meaning 3.5 out of every 10 companies will go to zero). With those odds, it’s easy to see why most venture firms choose to remain generalists and push the same revenue growth goals on every company.

Although an investor may push to scale from two to 100 reps, such rapid revenue growth isn’t necessarily the healthiest choice for your company.

The risks of rapid revenue growth

When a company experiences rapid revenue growth, that $1B valuation may come with a cost. If the company hasn’t scaled sustainably, there’s an inevitable dropoff, and founders are often left without an exit plan.

If you raise a massive amount of money at a high price, not many companies can afford to acquire you. Matt often sees founders who have backed themselves into a corner by raising so much so quickly. If you choose to go that route, understand that you may need to reach $3-4B before selling.

Another drawback of raising funding early on is that you become reliant on the capital market to fund the business; you raise one round of funding only to get to the next. Companies that have to grind in their early days learn resilience and resourcefulness, and they become very capital efficient.

What to do instead

Instead of aiming for the $1B unicorn, start with a more attainable target. For example, if you’re starting at $2.5 million, focus on reaching $7 million before moving on to your next revenue goal.

This slow and steady approach will help your company reach goals in a much more aligned way, and build resilience along the way. Matt and the PeakSpan team now have three companies approaching the $1B mark, all of whom have focused on this slower revenue growth approach.

How sales fits into sustainable revenue growth

Building consistent, repeatable sales performance is key to revenue growth–but often difficult to achieve when the company begins hiring too quickly.

Before hiring more reps, Matt recommends starting with the sales infrastructure: training and onboarding programs, enablement tools, and playbooks. Hiring more reps won’t be effective if you don’t have those foundations in place.

If you need help hiring, training, or scaling your sales team for predictable revenue growth, our coaches can help. Click here to learn more about our sales coaching!

Final advice for founders looking to raise capital

Focus on growing sensibly and prioritizing capital efficiency. Don’t get pressured into massive revenue growth goals, thinking you need to do so to secure funding. No one knows your company better than you do–set ambitious but achievable goals, and then stay the course.

If you want to connect with Matt to learn more about a sustainable approach to revenue growth, reach out via LinkedIn or email matt@peakscan.com.

When should the SDR role roll up into marketing?

There are certain situations where it makes sense for SDRs to join marketing and others where they’d be better off in outbound sales. 

The first thing to consider is whether the marketing leader has any interest in working with outbound sales reps. If your CMO enjoys being involved in the sales process, that’s a good sign they’re the right person to manage SDRs. 

Next, consider how outbound sales and marketing currently function within your organization. Would they be open to greater collaboration? Bringing your SDRs under marketing requires both teams to be open-minded about working together.

Benefits of outbound sales and marketing working together

Better content

At Bloobirds, Marc’s marketing team has a weekly meeting with their outbound sales counterparts, where the SDRs provide feedback on the marketing content. 

SDRs spend all day talking to prospects, which makes them a valuable resource for Voice of Customer (VOC) data and content ideas. According to Marc, some of their best marketing content comes straight from the outbound sales team.

More precise outbound sales messages

On the other side of things, the marketing team can help SDRs become more aware of what content is available. Regular meetings help keep the outbound sales team up to date on current and upcoming campaigns. 

At Bloobirds, Marc’s team sits down with their SDRs to let the reps know what kind of leads to expect, and provide advance notice to start working on messaging, pitches, and emails before the next marketing campaign. 

Better qualified leads

In the traditional scenario where SDRs operate in outbound sales, marketing qualified leads (MQLs) often go to waste. SDRs are focused on cold outreach or are unsure how to approach inbound leads. The result is that many of these warm leads slip through the cracks. 

But when SDRs belong to marketing, the two functions can work together to close those opportunities. For example, when an MQL downloads an eBook, that reveals a lot about the prospect, their problem, and their interest in solving it. The SDR now has great information to work with when they reach out.

Taking this a step further, marketing can create more content so the SDR has something helpful to send the prospect (for example, Part 2 of the eBook). This type of warm selling is much more effective than traditional cold outreach.

Bringing outbound sales and marketing together changes the dynamic

According to Marc, marketing leaders should be compensated based on closed opportunities, rather than the number of leads generated. Their actions should be directly tied to outbound sales results so that both teams work together toward the same revenue goal.

This model provides an added incentive for the marketing team to become more involved in the sales process. For example, if a marketing leader sees that an MQL was generated and hasn’t been touched since, they can follow up with the assigned SDR. 

One way to transition toward this model is to start keeping track of how many opportunities marketing influences before the meeting is booked or the deal is closed. This will provide an overview of all of marketing’s touchpoints throughout the sales process and identify any potential gaps.

Bringing SDRs under marketing also helps keep communication lines open. When reps are unhappy with the quality of leads, the marketing leader can check in on things and facilitate any necessary discussions. It’s always better to air these issues upfront.

How marketing can move a deal forward faster

Aside from the methods above, marketing can also help generate custom content for prospects that SDRs are already talking to; for example, a case study that overcomes the prospect’s specific objections. 

Check out this blog post for more on how marketing and sales messaging can work together.

What marketers can learn from outbound sales

Oftentimes, marketers fall into the trap of writing in a complex way that doesn’t resonate with customers. The problem with using industry jargon on your website goes beyond just understanding–SDRs often end up copying phrases from marketing material.

Instead, marketing copy should be inspired by outbound sales. It should be simple, conversational, and easy to understand. Working together helps keep both functions speaking the same language as their customers. 

The downside to bringing SDRs under marketing

As mentioned earlier, the ability of SDRs to function under the marketing team depends on the team lead. If the CMO is uninterested in outbound sales, that’s not a recipe for success. 

Additional problems can arise if there’s a staff change and a new leader is brought in. Managing both outbound sales reps and marketing together is a time commitment, and not every leader will be interested in taking that on.

If your SDRs are functioning well as a part of your outbound sales team, there’s no need for drastic change. You can start small by bringing marketing content into the outbound sales process or bringing on a few mid-bound reps to handle MQLs. 

If you need help with your messaging or expanding your team, click here to book a free discovery call with our coaches.

Final thoughts: Where do SDRs belong?

Whether or not you decide to restructure your entire organization, the takeaway here is that great things happen when marketing and outbound sales work together. Greater collaboration is key to better results.

If you want to connect with Marc to learn more about bringing SDRs and marketing together, reach out via LinkedIn.

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