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Is outbound dead? And if not, what are the biggest mistakes we've seen?
That's exactly what we get into today
***
That's exactly what we get into today
- (00:00) - Introduction
- (01:37) - "Outbound is dead? Bullshit."
- (05:46) - Can you even run outbound?
- (09:35) - What's changed?
- (12:28) - Mistake 1: Outsourcing
- (16:39) - Mistake 2: Not knowing the ideal talent profile
- (20:43) - Mistake 3: Scaling at the wrong pace
- (24:36) - Mistake 4: Not getting the balance right
***
This episode is brought to you by Growblocks. Finding and fixing problems in your GTM shouldn't take weeks. It should happen instantly.
That's why Growblocks built the first RevOps platform that shows you your entire funnel, split by motions, segments and more - so you can find problems, the root-cause and identify solutions fast, all in the same platform.
***
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Creators & Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Mikkel Plaehn, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
[00:00:00] Toni: Hi everyone. This is Toni Hohlbein from Growblocks. You are listening to the Revenue Formula with Mikkel and Toni.
[00:00:06] In today's episode, we are discussing the four outbound mistakes you should absolutely avoid. Enjoy.
[00:00:15] Mikkel: So
[00:00:20] we were just in Sweden.
[00:00:22] Toni: That's right, and we were there to meet a good old friend.
[00:00:30] Mikkel: Who also shares our lack of hair.
[00:00:33] Toni: Let's just say we have, we have the same hard dress, hairdresser.
[00:00:36] Mikkel: Yeah.
[00:00:38] Toni: It's
[00:00:38] Mikkel: It's called
[00:00:39] a trimmer. No, that was good. And it kind of reminded me of the episode we did with, uh, you remember Thomas from Amplitude on Hey, I'm here. You should hit the road more, meet folks, talk, connect, like getting away from the screen. Immense value, immense value.
[00:00:58] Toni: And he's totally right about it.
[00:01:00] Mikkel: So hopefully you're sitting on the train right now listening to this, going somewhere to meet someone.
[00:01:05] Toni: I'm hearing a lot of people are listening to this while they're either like race biking or running or taking the dog out for a
[00:01:14] walk.
[00:01:15] Mikkel: upbeat,
[00:01:16] Toni: Yeah. That's, that's it.
[00:01:17] Mikkel: we get the people going And today I Guess we're gonna talk about some things that aren't gonna get people
[00:01:26] Toni: going.
[00:01:26] That's right.
[00:01:28] Mikkel: some things to avoid
[00:01:30] And, I think the prelude is Outbound is not really dead, is it?
[00:01:37] Toni: So, I'm actually more and more getting pissed off with this whole outbound is dead bullshit.
[00:01:41] Mikkel: Yeah, especially because we did an episode while it was popular and now it's not popular anymore.
[00:01:46] Toni: no, but it's also this, you know, you see this on LinkedIn and a lot of people are really kind of happy about bashing outbound all the time.
[00:01:54] And, um, the issue that I have with it is while it's still going on very successfully in so many places, And the other issue is, which is more like a early stage issue. So not, not everyone here might appreciate that, but, well, if you, if you're a young company, how do you want to get the word out? You don't, you don't have five years to build up a blog to start bringing people inbound.
[00:02:20] It's just not, you don't have time for that. Right. And then the other thing. Um, and I see this fairly often actually, is people have been using one motion to maybe get to 20 million. Let's just say it was Google ads. Maybe that was the thing. Uh, Google ads plus upsell, you know, got them to 20 million. Um, and now they're sitting there at 20 million and, you know, what, what should we do now?
[00:02:43] You know, where should we go? And, you know, one of the, one of the answers could be while you could be thinking about doing outbound. and I think that. That option for many people, it feels almost like, ah, we shouldn't do it because LinkedIn. Um, and I think that's a shame. I think it's simply, it's a shame.
[00:03:00] And so many times when you sit there as an executive and yes, you, you know, that outbound is going to be, you know, maybe less efficient, maybe for a while and blah, blah, blah. but at the same time, it's also like, okay, cool.
[00:03:13] But where else is, is the money gonna come from? Where else, where, how, how are we going to grow?
[00:03:18] Does someone please have another idea? And many times there, there are no other ideas actually, right? So it's like, um, I think it's one of those, uh, love hate channels that, um, Incredibly difficult to master. Don't get me wrong. And you can burn a lot of cash there. FYI. You can do this in any other motion as well.
[00:03:39] If you do it wrong.
[00:03:41] Mikkel: I think it's also funny, like, the comparison I have to this is, there was this trend of ungating all your content, killing forms, like, away with it all. And it was like, we went from one extreme, to the other extreme.
[00:03:54] Everything was gated, forms everywhere, to like, okay, zero. And I think it's the same here, it's like, you have to realize what kind of business you're running, and whether this is a motion that fits into your business. And then you have to determine, can you make it work, right?
[00:04:10] Toni: And I mean, we, we even, so we have a couple of gated pieces now as well. Right. So just, and, um, And really the, the thought process on our side was like, well, it's almost like you need to figure out what the tactic is for the micro motion that sits behind it, right?
[00:04:25] So if you have, and maybe this is completely off topic, sorry, sorry, everyone, we might not
[00:04:29] Mikkel: Hey, I thought this was a sales episode.
[00:04:31] Now you're sequoying into marketing.
[00:04:32] Toni: marketing. Go,
[00:04:33] Mikkel: Go, go, go, go.
[00:04:34] Toni: Everyone's like throwing the earbuds
[00:04:36] Mikkel: No, I like this
[00:04:36] Toni: I like this cover. It's, um, you know, for example, when you go on, on LinkedIn to kind of have something, you know, spread virally, which is like, it's not going to be, um, the, uh, you know, buying comparison that, that is really bottom funnel for you that you maybe kind of want to spread like this, right?
[00:04:56] Maybe it's something else that's going to work out. That's going to be completely top funnel, but you know, a bunch of people see this and now what? What, what's the follow up now with all of these people? I haven't seen that. Well, you need to kind of figure out, you know, what is the purpose for that, right?
[00:05:10] Maybe gaining followers, maybe doing something else. And then the next step is eventually, well, you want to build up your, what is it called? The owned audience email list. You want to build up your email list, in order to stay in contact with these folks. Right. And, um, that then requires maybe another tactic, which sometimes includes a gated offer.
[00:05:29] And, and that's how this works.
[00:05:30] Mikkel: Yeah. So let's bring it back to sales. Like it is a thing. A lot of companies have sales folks. They're still being hiring done. Lots of successful companies built on the back of that. Let's just get that away. It's not going anywhere. It's going to change. It has changed. And that's just a fact of life.
[00:05:46] But before we get into that part, let's just quickly help the listener here. What kind of ACV and even maybe CAC Payback, maybe that's too far, but what kind of composition of the business should they have in order to even consider such a motion? Because it, it does require payroll and a phone, you know.
[00:06:04] Toni: you, if you, if you add another person to a process, costs for this thing at least double if not triple.
[00:06:12] That's almost how you need to think about this. And, it even gets a little bit more nitty gritty once you realize the different motions and so forth. But ultimately, I think, You want to be, ideally, to make it easy, you want to be north of 15, 000 euros ACV
[00:06:28] Mikkel: ACV
[00:06:29] Toni: to consider doing an outbound. Now, why is this not the, you know, end all be all answer to this?
[00:06:37] Well, if you are incredibly efficient in, you know, generating those outbounds, um, and converting them, then in fact you could have a different ACV you're shooting for, right? And the, and the way almost need to think about it, many times you have maybe those are old benchmarks by now. And, you know, some of the things have changed when we talk about this and the same, but 10 opportunities per month, they generate 10 opportunities as an S1, S2 as a meeting booked, meeting held, I don't know, something like that.
[00:07:06] Right. In that range. Out of those 10, because it's outbound and everyone is going to be in an active buying cycle, you're going to have worse conversion rates than, than for inbound. So probably you're going to be 10, 15%, right? So really you're looking for, you know, one deal per month per SDR that are getting out of this.
[00:07:23] Um, and you know, for this to make sense, you want to have that at 15K, I would say. However, and we have seen this in our customer base, Some folks are able to book 15 meetings, converting them at 20%. Now, if you can do that, with 15K, fantastic, because then every SDR brings in 45K per month, great, buy more of that, please, immediately.
[00:07:48] but it actually then also works with like, well, you know, maybe of a 5K ACV. But you bring in three deals of that which gets you per SDR an output of 15k and that suddenly works again So that's why it's it's not an easy. Hey, it's this ACV and that's it there's some math behind it that you need to think about and that's how you arrive at the ACV level and the The completely neglected part of this is also salaries.
[00:08:17] If you, if you SDR sitting downtown Manhattan, which no one is anymore
[00:08:21] anyway.
[00:08:22] Not sure if this is funny actually. then, you know, you will need to pay that person about 120 K or something like this by now, because otherwise they simply cannot survive.
[00:08:31] Mikkel: Yeah, they can't stay in the city.
[00:08:32] Toni: But if you are, um, having that same person sit in Berlin,
[00:08:37] like very, you know, Germany, very, very different cost of living, very different salaries.
[00:08:42] Uh, and maybe you can get this done with 60K. and suddenly all of that shifts, right? And we have some folks that even have considered putting, uh, the SDR team into Mexico, um, or into India or doing all kinds of kind of tricks with that, which basically, you know, if this works out or not, it's a different conversation, but basically it changes the.
[00:09:04] Uh, efficiency equation on the cost side rather than on the input
[00:09:08] Mikkel: Yeah. So it's really unit economics you need to use here to assess whether it works out. And, uh, you can play a lot of things to kind of tune that thing. I also just want to point out that even if you're at 20, 30, 40, 50, million ARR right now, this episode is still going to be for you because some of the mistakes we're going to get into, they also happened, happened at established businesses, right?
[00:09:29] So I think maybe we should hop into, a couple of the mistakes, unless you have something on your heart,
[00:09:35] Toni: I have something on my heart, which is, well, what has changed? Like what's, what's the change, right? Because five, six, seven years ago, we were all like, let's do outbound. That's the playbook. Aaron Ross wrote it. We all just need to execute it. Easy peasy. And now suddenly it's not working like that anymore.
[00:09:53] And everyone is blaming the motion. It's like saying, Oh, um, I don't know. MySpace ads don't work anymore. Fuck marketing, you know, we don't, we don't need marketing anymore because MySpace ads don't work anymore.
[00:10:06] It's like, no, you know, you need to just change your tactic a little bit around. And I think the same thing is also happening with outbound, right?
[00:10:12] The, uh, the, the spray and pray the, some people call it like the war of attrition, like we're kind of just throw more bodies at the problem, more calls. That, that, that play probably ran its course
[00:10:25] Mikkel: Yeah.
[00:10:25] Toni: I do believe though. with the right person you're calling, it might still work. You know, if you, if you're thinking about trying to call Mr.
[00:10:34] Super sophisticated or Mrs. Super sophisticated VP of marketing in a, in a tech startup, cold calling five times and sending 10 emails. No, that's probably not going to work. But if you're thinking about, someone running a restaurant, if you're thinking about, I don't know, someone running construction sites, someone even lawyers, as it's not about IQ, even lawyers, offices and stuff.
[00:10:55] That tactic might actually still work. Right. Um, and, uh, then if you're thinking about the super sophisticated VP marketing, cold calling her is probably not going to work out well anymore. You need to kind of do something else, right? Whether that's video, whether or not that's like an all bound kind of motion, near bound, whatever the new thing is right now, which is really just a different packaging combination of tactics.
[00:11:19] Um, then you need to deploy that. And, and the only way you're going to get there is by. Trying to understand how that person could be reached, and then engineering a way to reach that person. And that might very well be outbound. I
[00:11:34] Mikkel: Yeah, I think we also know it's, it's become way harder to book meetings in the first place.
[00:11:40] place And on the other side of the equation, what's happened to salaries?
[00:11:44] Nothing. They're probably at the
[00:11:46] Toni: Now this, I mean, so at least in the last couple of years, there may be more flat and kind of go down, but the crazy thing is in SaaS specifically, you know, when you give someone a pay raise and it's only 5%, it's like, 5%. Come on, kind of, you, you, you must be joking.
[00:12:03] My, again, my, my wife works in a very big pharmaceutical here in Denmark. She got a three point raise or something like this, which is hands down Top shelf
[00:12:13] Mikkel: Yeah, yeah,
[00:12:13] Toni: you know, can't get any more. She was over the moon, happy. Three points.
[00:12:17] Mikkel: Yeah. Yeah, yeah. , that's how it is.
[00:12:18] Toni: it's, you know, it's there, there's also like a little bit of a reality check that has to happen eventually.
[00:12:23] Mikkel: So let's run, not run down that rabbit hole and actually hop into one of the first problems here. Yes.
[00:12:28] Toni: So what a lot of people have been doing, I've rarely 10 times. is outsourcing the SDR team, like thinking about like, ah, you know, all of those folks, we could kind of get it cheaper by outsourcing it to someone else. Let's kind of cut this away. My thesis is that this works with simple stuff.
[00:12:52] If you're selling simple stuff, this thing might actually work. If you're selling something that requires context, understanding, explanation, in other words, probably your SaaS product, um, it probably is not going to work, right? So where I've seen this work is, um, Someone's selling, tickets for an event.
[00:13:13] So let's just say you have an industry event. Let's just say you're hosting your SaaS company event. and you need to make sure that gets full, right? You're going to spend lots of ads on LinkedIn and try and kind of do that. But you can actually, for that thing, because it's also, it's seasonal. It's just once a year, right?
[00:13:28] You don't want to have an SDR team with it. Once a year, what do you then have, you know, do is you have that outsourced SDR team calling the ICP and just pitching, Hey, do you want to go to this event? Uh, those are the speakers who want to come. And it's a much, much different conversation than to talk about, Oh, you know, this problem that you don't know you have right now.
[00:13:47] And, and maybe we can help you with that. This is, this is a thing where the outsourced SDR stuff has just a hard time.
[00:13:53] Mikkel: But you know what? I think there's also something in the approach here. So I've run it actually myself, outsourced SDRs and it didn't really work out. Unit economics wise, but I think one of the problems is you think you just hire them and then they go, here's the account, go, go, go, go.
[00:14:08] But when you think about the alternative would be to hire SDRs for your team, they will go through training, onboarding, there will be ramp time. And here you're just paying maybe for 20 SDRs that needs to ramp over a period of time and get your world and what you're doing. Even if it's not the simplest product, it could be just a step up.
[00:14:27] Um, and you think, yeah, that could, you know, it is fairly simple because we do this thing here, right?
[00:14:32] There's still Ramp time to it to actually get it up and running and training and like there's all kinds of things around
[00:14:38] Toni: I think for especially new comp, new teams, new companies, so let's, or new motions, doing this is actually pretty silly because you're trying to kind of, a person that is removed, that you don't have direct access to, you're trying to teach them something and learn from them to iterate on a problem that you haven't solved yet.
[00:14:55] So that. First of all, I don't, I don't believe that makes sense. And then the other thing aside, where you want to augment the team, where you have something that works and you want to augment this, or you want to, Reduce your team size, increase it outsourced. there's a lot of other friction pieces that are super similar to you just hiring that person actually, because there's the ramp up, as you can talk about, they also have turnover, by the way, um, and in many cases, they will be selling different products on the same day right?
[00:15:22] They will not only be pushing you as they will, you know, and it's like, there's
[00:15:25] Mikkel: And we haven't even gotten into the whole stuff like, do they care about what they're selling? How are they incentivized? There's like a million things surrounding this issue. So let's just sum it down and say, it rarely works.
[00:15:36] Toni: rarely works.
[00:15:37] It works for simple, straightforward stuff, but otherwise I don't think it's a
[00:15:41] Mikkel: And I think there's two scenarios. If you have an outbound motion that works, why change the composition of how you're doing it by outsourcing it? If it's not working, do you really think bringing out external help as in more people calling is going to help?
[00:15:54] No, probably
[00:15:55] not.
[00:15:55] Toni: But you know what, actually, I kind of think the root cause for this is also in believing that the problem is a volume problem.
[00:16:02] Mikkel: Yeah. Right.
[00:16:03] Toni: I think the problem in many cases is an approach problem, not how many calls. Don't, don't get me wrong. I'm like a hard nosed guy and I'm like, Hey, these SDRs need to be fucking busy. Like they need to work. Right. And one of the ways to figure out if they're working hard is yes, activity stats. Um, so, you know, it's not, it's not for me like, oh, we shouldn't be looking at that, but I'm trying to say it's like, well, maybe this activity isn't the right one, maybe what they're saying here isn't the right thing to say and so forth.
[00:16:29] And, and, you know, once you realize that it's not about, um, more volume, but rather about the how. Then I think you realize maybe the outsourcing isn't the right thing.
[00:16:38] Mikkel: Exactly.
[00:16:39] And I think one of the things we kind of hovered over here, which brings us to the next one, is the people. Yes. Right? And I, and I think one of the things, we've at least picked up on from some of the folks we had, Jeremy Donovan on the show, and he talked a bit about this one, which is, what does a great candidate even look like?
[00:16:56] Toni: Yeah.
[00:16:57] And, um, I think this is also something that Mark Roberge is like, Sales Acceleration Formula talked about, Mark Roberge's approach was actually, uh, interviewing a bunch of people on the exact same questions, based on those answers, then deciding who should join, but basically looking at the answers to those questions and then, you know, uh, three months later, see who answered how, Yeah.
[00:17:21] And then seeing like, okay, we're actually seeing people that answer like this to question one, two, and three that are top performers. So now next, the next batch that comes in, they can actually use this now in order to be like, okay, you know what? we don't know why the machine works like the machine works, but apparently if in one, two, and three, you say something else, you're not good for us.
[00:17:41] Mikkel: Yeah.
[00:17:41] Toni: Kind of that's one approach that he took. Actually, uh, Jeremy took line of, uh, Uh, more of a like one level up approach as like, let's look at our high and top performers and let's, you know, run them through, you know, like a scroller through crawler through LinkedIn
[00:17:58] Mikkel: Yeah. Yeah.
[00:17:59] Toni: To figure out, okay, you know, what, what are their thing?
[00:18:02] What are their signals? It's really like an ICP basically. It's an ideal, uh, a talent, uh, profile basically.
[00:18:09] Mikkel: Heard it here first.
[00:18:11] Toni: Right. Um, ITP, and, uh, okay. This is how an ideal talent for us looks like, and let's look more for people that look like that, right. And then reach out to them and try and hire them. Kind of, those were the two, the two approaches.
[00:18:24] Mikkel: And you know, I probably hate the example, but I also don't hate it because it's so perfect. Think Moneyball. They were able to boil down the players to acquire based on a very few set of metrics in terms of how they were performing. I get it. It's different because they had performance data, but it's the same thing we're talking about here.
[00:18:40] There is a science to it. And by the way, I think just on a basic level, a lot of folks, they make the mistake when they interview is they don't ask the same questions. So comparing the candidates Gets pretty difficult and you get knee jerked into this, do I really like this person kind of thing, which don't get me wrong.
[00:18:57] It's important that you feel like you can get on, uh, with each other at work, but you also want to know whether they can perform and who is the best one. So
[00:19:05] Toni: And I got to say, I'm going to say something a little bit unpopular and a little bit, but basically kind of, this shouldn't neglect the, you still need to do a great onboarding and training and so forth. Right? That's also extremely important. Now comes the unpopular piece. In my experience, and I think I've hired over 200 SDRs more probably, and we're part of the process.
[00:19:24] after the first two weeks, you kind of know if that person is gonna work out. You kind know.
[00:19:28] Mikkel: And that's not just for SDRs alone by the way
[00:19:31] Toni: well, that's true. Right. But um, I rarely see that, you know, managers, are, you know, you could say brutal enough to be like, dude. This is not going to work.
[00:19:42] Then just think about the sheer amount of additional information that you have, you know, compared to scanning LinkedIn and the CV, having a couple of interviews to spending two weeks with that person and seeing kind of how they're getting started already.
[00:19:57] The vast difference in information here should actually kind of help you to say like, you know what, actually, now that we have this additional data, I'm sorry, it's not going to work out. And the way this then usually works, because no one is pulling the plug after two weeks, rarely, I've rarely seen this, it's like, yeah, I know it's, you know, let's add some more enablement time and management time and try and figure this out.
[00:20:19] And then after three months and like, oh, they're out of ramp up and, oh, you know, now performance management kicks in and then five months later, they're out,
[00:20:26] I think you can, you know, many cases you can call it after two weeks.
[00:20:30] Mikkel: No, but it's also, so let's maybe not get into how much time is fair and blah, blah, blah, but let's just say. You can reduce that decision time by a month. That's kind of significant, actually. Um, so, so I agree.
[00:20:43] And I think this, this probably relates very well to the, um, the third problem, is how, like, what is the pace?
[00:20:49] How fast can you scale? And actually seeing people scale a bit too fast in some cases.
[00:20:54] Toni: So I had a conversation a couple of years ago.
[00:20:56] This was still growth at our cost time with, um, a company. And they basically were like, You know, they had two or three SDRs that worked out and I was like, why not? Um, hire 50.
[00:21:07] Mikkel: Yeah. Oh, poor HR. I can see that conversation going
[00:21:13] Toni: CAC, poor everything. and I was like, okay, yeah. So there are a couple of reasons, but once you.
[00:21:20] You know, and that's what I kind of told these guys was like, once you say 50 is okay, I looked at them, why not 200, you know, why not a thousand, right? Um, and, um, and they're, they're like so many reasons obviously for it. Well, you know, can you even talent pipeline, get it done? know, can you, do you have enough managers to kind of onboard these people to specific enablement people to help you know, all of these different things, um, how is.
[00:21:48] If, if you had two, uh, SDRs previously and you know, the rest of the company, you know, I don't know, a hundred people, 150 people is like normal, non SDRs. if you suddenly have 50 of those, what's going to happen is everyone else in the organization will feel a little bit like, wow, we've become a ruthless organization because you're going to fire these SDRs they're going to leave.
[00:22:09] And it's like, Everyone's going to be like, why, you know, that person wasn't let go, but they left. Why would We're a good company, right? So there's, there's a lot of cultural change that's something to happen. And you actually, if you do that, you know, quickly or not so quickly, you need to kind of, uh, what is like, uh, brace the organization a little bit.
[00:22:28] And, and there's some funny stories to it too. It's like, well, you know, those folks are going to be junior, they're going to be not only junior in experience, they're going to be young. They're going to have different problems. Then they, they will not have the problem of, I'm so tired. You know, my kids were up all night, I needed to drop the, you know, drop, you know, at the, the,
[00:22:46] Mikkel: And I need to pay the mortgage.
[00:22:48] Toni: don't have any those problems. They have a problem like, okay, um,
[00:22:52] Mikkel: to Am I going to Coachella this year
[00:22:53] Toni: or?
[00:22:53] Or
[00:22:54] is everyone smelling that? I, you know, I'm still drunk, you know, it's like, you know, okay. know, who here in the company could be a mate for me? like, those are the, those are the things going through. I mean, I'm simplifying obviously, but, from, from that perspective, you will have like a different, you know, I sometimes call it a high school.
[00:23:13] You will basically have a high school inside the company, and you'll be okay with that.
[00:23:16] Yeah.
[00:23:18] Mikkel: So I think what Mark Roberge said on this is you need to establish a pace, right? And then you need to monitor basically your indicators of performance. So that could be stuff like CAC Payback or whatever it is, but you will have some indicators of performance to make sure it actually works out.
[00:23:31] Because if, if you, in this case brought on 50 and all of them booked the completely wrong meetings, congrats, you've burned a truckload of cash really fast.
[00:23:40] Toni: And the thing is if you really want to be super fast, right, I think I would recommend something like start with five or 10, something that you can manage, something where you have maybe even overstacking on managers. Like where you have only a one to five ratio or something like this.
[00:23:53] And then you will have to check if this. Works out for a quarter, like that. You need to give this some time and then if 10 works, cool, let's do 20 next. Um, and if 20 works, cool, let's do 40 next. If that's the way you're thinking about it, by the way. But rather this than trying and front load the whole thing.
[00:24:10] And yes, in the model, it's going to look so much better to have 60 start today, versus kind of smearing this out over the year. but in reality, it's going to be so
[00:24:20] Mikkel: The thing is also, you're going to end up settling for a hire and just say, you know what? Didn't meet all the criteria, but. model says we need, know, eight SDRs.
[00:24:29] So let's just hire him. What's the worst that's going to happen? And you know, once you go down that slippery slope, it's dangerous, man, it's dangerous.
[00:24:36] And that brings us to the last, last mistake we see, and it's still happening, even though we've done a dedicated episode just on this stuff. blows my mind.
[00:24:47] It's, uh, getting a balance,
[00:24:50] Toni: um, my, my favorite question on LinkedIn is like, um, Hey, Toni, what's the, what's the correct ratio between SDRs and AEs?
[00:24:59] Like that's, the question, right? And, and, and so where's the question really coming from? where it's coming from is the CFO or someone says we need to grow 10 million, 20 million, whatever the number is. Um, and then the first thing is like, okay, from 20 million, how do we get to our AE headcount?
[00:25:16] It's like, ah, I know, we need to divide it by the quota. That's how we get to the AE headcount, which, you know, kind of, you know, makes sense. It's not completely false, but, and then the next thing is like, because of an outbound motion, it's like, ah, okay, how can we get to the SDR headcount? We need a ratio.
[00:25:33] How many SDRs do I need for the AEs, basically, right? And
[00:25:39] It just doesn't work like that, right? And I think most of the people listening to the show is like, I know, Toni, you know kind of heard before. Uh, but basically the biggest problem is supply and demand or supply and capacity. Usually it's a mix with, time delay also in there, right?
[00:25:54] Because you need to kind of realize this SDR is ramping over time. And then, you know, before these opportunities actually hit revenue, you have also the sales cycle, which is really then, you know, the opportunity close wins. That's really the timeframe where you can align this with quota expectation from the AE, et cetera, et cetera, et cetera.
[00:26:13] Right. and getting that wrong, I think it's just extremely expensive. You can get it wrong on both sides, by You can have too little capacity, which means there are too many opportunities, either inbound, outbound, wherever they're coming from for the AE team. And that usually kind of works out for a little bit, right?
[00:26:31] Because an AE is like, sure, give me another demo, give me another demo. But what you will see is that, um, the, quality that the AE is deploying to close those deals is going to go down. Because he or she needs to hit a certain number. And suddenly they only need a kind of lower conversion rate so they can start to become picky, know, choose the easy ones, discard the little bit harder ones that were maybe still closable, but would have taken a bit more work.
[00:26:57] so you don't want to have that happen, right? And then on the flip side, which has been, and I would say still is a major money pit for people is they have too many AEs and not enough opportunities. Um, and, um, that then usually kind of ends up with, uh, empty calendars, um, maybe one external meeting per day per AE.
[00:27:20] And, uh, then like, Oh, you need to do self prospecting. And then I sit there and, you know, don't know how to do it. and all of that stuff where you could actually say like, you know what, if we reduce the amount of AEs, we would actually end up with having AEs that are really busy because they get, you know, they're at capacity, supply and demand kind of levels out.
[00:27:40] And the additional money, we can either kind of put it in a bank account and just wait, or we could deploy it, to, Add more top funnel. Doesn't need to be SDRs, could be anything else, that then, you know, makes those AEs so busy that they're basically, you know, almost wanting you to add another AE.
[00:27:57] Mikkel: Yeah, that would be a wonderful scenario.
[00:27:59] Toni: That is, no, that is the way you need to go about it. The only trick here is that, you know, once an AE verbalizes that they're like, You know, laying on the floor, panting. Um, it's actually too late to add an AE because then you need to look for someone, they need to ramp up. And so, so you need to have a little bit of foresight.
[00:28:18] need to know a little bit like, Oh, you know, those two lines are crossing. going into the red now. but you want to know this maybe three months out. Right. And, and the cool thing is once you kind of crack that, what you will see is your ramp up time will go down because suddenly you have, uh, from day one, You might have, you know, five to 10 opportunities just waiting there for the AE. AE lands, gets a laptop, phone, I don't know, a Yeti cup, and 10 opportunities that are right there, right?
[00:28:48] and then they can start working. I mean, a little bit of ramp up, uh, you know, onboarding and stuff, but they can immediately start working those. They learn, they go down the learning curve faster. They, you know, they close maybe some deals in a month or two
[00:29:00] two from now, you
[00:29:01] Mikkel: So actually, you know how we do segways in the beginning? I have the perfect segway now because my, uh, younger sister basically, uh, is planning a christening. And she wrote me like, Hey, how much wine did you order for your christening? So yeah, we're crazy in Denmark, by the way. We drink wine and christenings.
[00:29:18] Don't know if everyone does that. But anyway, and I was like, well, just Google how much wine per person and you have the answer and then, and then, yeah, and then you add a little bit extra. So you end up with something for yourself after, because you don't want to run out, obviously. It's better to have stuff at the bank.
[00:29:34] And it was just so funny because it is. Kind of balancing that out and kind of guessing you don't want to have your AE sending up not having any wine to pour in the glass.
[00:29:41] Toni: I mean, that would be terrible.
[00:29:43] That would be terrible.
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[00:29:51] That's it. That's it.
[00:29:53] Thanks everyone.
[00:29:55] Take care.
[00:29:56] a good one. Bye