The Bridge Group Sales Development Report for 2023 has been released.
In my opinion it gives us the best view into the state of sales development for B2B SaaS companies.
They release it once every 2 years (and have done so since 2008) so we’ve got a great body of data now that allows us to see the trends in this space for the past 14 years. This isn’t a report that slapped together, they’ve surveyed executives at 365 B2B Saas companies to collect this data.
If you haven’t read it yet - go download it here.
What I want to walk you through today are four interesting things I noticed in the report and explore why these trends might be occurring.
The things that stood out to me were:
The decline in connect rates every year
The increase in activity levels
The increase in contact attempts per sequence
Let's jump into it.
Decline in connect rates every year
The chart above shows the number of quality conversations SDRs have every day. A quality conversation is defined as an interaction with a prospect that yields at least one piece of qualifying or disqualifying information.
The trend in this chart is abysmal. It shows a 55% decrease from 2014 to 2022 and a 18% decrease in the last 2 years alone.
There is no other way to cut this. Reps are significantly less efficient every year. In two years time it’s likely this number will be below 3 conversations per day.
The Increase In Activity Levels
As discussed above we can see an increase in the number of daily activities by reps. In 2010 the number was 65 in 2022 this has swelled to 104. A 60% increase.
When we combine this trend with the decreasing connect rates we identified above we see a worrying statistic. Reps need to execute 4X as many activities today to get into a conversation when compared to 2012.
Increase In Contact Attempts Per Sequence
The other trend we noticed is the continued increase in contact attempts per sequence. Generally in sales development reps will follow a pre-designed playbook that determines when they execute activity against a prospect and how many times they do so before giving up. This is called a sequence or cadence.
The number of contact attempts per sequence has increased from 7.3 to 11.3 in 8 years. A 55% increase. This increase in activity per prospect doesn’t seem to be resulting in the desired outcome.
The outcome Reps want is more conversations with the prospects they’re targeting. We can see the increase in activity per prospect correlating directly with a decrease in the number of conversations a rep has per day.
What does all of this tell us?
I have a theory here (that can be backed up from data in other parts of the report). I believe companies are focusing too much on pulling the activity lever of the sales development equation.
Activity X Connect Rate X Conversion Rate = Meetings booked
Looking at this equation it seems straightforward that if we want more meetings we just do more activity.
The problem with this approach is that often more of the same activity - leads to lower connect rates. It’s difficult to pull the activity lever without negatively impacting the connect rate lever (for reasons I’ve touched on before here).
The sales development playbook that is adopted is highly consistent across the market. Everyone is implementing some narrow version of Aaron Ross’ predictable revenue formula. This sameness in approach naturally leads to decreasing cut-through and saturation that yields lower results.
Higher activity levels lead to lower connection rates and conversion rates (as a percentage of activity) so we demand higher activity rates and the cycle continues.
This is proven out by other metrics from the Bridge group reports. Firstly in 2007 one SDR could support 4 Account Executives. This is down to 2.3 AEs in 2022.
Secondly the investment in sales enablement technology has increased as well. In 2018 only 36% of SDR teams used 5 or more enablement tools. That is up to 57% in 2022.
We also see a massive decline in real levels of compensation for SDRs. OTE for SDRs in 2007 was $74,000. Fast forward to 2022 and that has increased 8% to 80,000. But bear in mind inflation has reduced the purchasing power of a dollar by 44% since 2007. A massive reduction in real earnings for reps.
We’re trying to squeeze more juice from the activity lever fruit but it’s running dry.
In our view teams need to switch their focus to the other factors in the Sales Development Equation. Namely, how can they improve connect rates and conversion rates at the top of the funnel.
The companies that figure this out will lead the charge moving forward. The current funding environment for SaaS companies will likely lead to more creative problem solving and we’re excited to see how these developments take shape over the coming years.
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