Hi listeners. There's been a lot of debate of late whether SDR (Sales Development Representative) should fall under sales, whether they should fall under marketing, whether marketing should fall under sales. I don't think there is a single right answer out there. Kyle Lacy from Lessonly made a really good point that SDRs should fall under the marketing team and not under sales. I'll let him explain why. Hope you enjoy it.
Kyle: Well Kyle, thank you so much for being on the podcast today. The topic today that we're going to cover is: why SCRs should report to marketing and not sales? And before I start challenging you because I don't agree with that at all, I'd love to get a sense for the listeners about your background and why this is a good topic for you to cover.
Kyle L: Yeah, for sure. So I've been in digital marketing for about 14 years. I started a digital agency out of college and through that led me to a company called Exact Target which was at the time, which was about 2012, the largest email marketing platform in the world. Spent over 3 years there, went through an IPO, SalesForce bought us. After that spend a couple of years at a venture capital firm in Boston called The Open View and now I lead marketing for a company called Lessonly in Indianapolis where we provide trading software for customer-facing teams: Sales and Customers service. So a lot of my background is software marketing.
Kyle: So there are definitely different types of companies in the way they sell. Some companies have SDRs for very transactional deals, or Enterprise, or something in between. When you say SDRs should report to marketing is that for Enterprise-type SDRs, mid-market SDRs or would you say all of them?
Kyle L: I believe all of them. For a lot of reasons, I believe SDRs should report to marketing.
Kyle L: Well it's the tip of the spear, right? It's the tip of the funnel. And I think that if a team is good at what they do, both from a storytelling perspective, a creative marketing perspective, field marketing and messaging, that it should live in one team and one focus. There are downsides to that like should you have a team control, 80% top of the funnel, right? But if it's working, it a good thing. So that's number one.
Number two is marketing tends to be, at least in my experience, more processed focused, project management focused, like campaign focussed, more than sales reps. If you're trying to create one spearhead in a battle, it's better to be one team and one message and we've found that it's just easier to control a lot of the creativity in a good way and control the messaging in a good way. If they live under one org.
Kyle: This is definitely a tension I found between SDRs and sales and marketing. Marketing would say here are the MQLs (Marketing Qualified Leads) we generated and sales would say that is not how we define MQLs.
Kyle L: On the marketing inbound side we do not qualify anything but a demo. So if it's an MQL it's a lead and the inbound SDRs are working that lead because they signed up for a demo request. So you have two qualified opportunities. You have a meeting that an outbound SDR set which is highly qualified because we do a good job on the targeting side. And then you have demo requests that come in via the website.
Kyle: One of the biggest hesitations is that the sales reps say: I want the SDR on my team so from an account-based marketing perspective we can work on this account together. Rather it falling under marketing where you have a mix of inbounds and outbounds. Do you feel those things can be married up, from an account-based perspective, or do you think maybe that is a situation where they should fall under sales?
Kyle L: When you move to the one to one model, where you start to do more like potting, for a lack of a better term, where you have a CX rep, an AE, and an SCR on an Enterprise account, the argument can be made that it lives under a revenue position. But a good marketing team should be revenue and brand. What we are discovering is that a lot of what we are doing right now is round robin which has worked but as you move into the more deeply focused account planning, that that group of SCRs lives under sales.
Kyle: If an SDR should report to marketing instead of sales, sales would most probably compensate on a number of demos or deals closed, etc.
Kyle L: We comp in the same way. We judge performance by demo set as well as activity level through channels but it's mostly the same.
Kyle: What percentage do you guys have that would be leads that your SDRs are working better inbound vs outbound efforts?
Kyle L: It's considerably more inbound.
Kyle: That makes more sense because from an inbound perspective if you're getting lots of those you definitely want marketing and SDRs totally aligned because those SLAs are so critical and the messaging is needs to be really tight vs the outbound one.
Kyle L: Just to be clear. We have an inbound team that only focusses on inbound. So outbound is only focussed on outbound. Enterprise works on inbound and outbound but that's because it's a volume thing.
Kyle: Do your junior reps tend to be the folks that are on inbound or outbound or is there a mix there?
Kyle L: There's a mix at Enterprise. The junior reps are inbound on our commercial team. We have 3 outbound reps that work the majority of the ___ deals.
Kyle: Did you start on day one with the SRDs working under marketing or did that evolve over time?
Kyle L: It's been an evolution over time. We moved SDRs under marketing Aug of 2018. Because we had done a ton of work figuring out the inbound side and it made sense that our next project would be the outbound model.
Kyle L: We moved everybody over.
Kyle L: Our biggest thing has been account targeting. There's a lot of pitfalls when using different vendors for account research like we've been through 3 vendors to figure out who is giving us the correct account information, the right contact information. it's just been very hard to find the right tech stack that is scalable, that works, that has a low enough error rate that it makes sense. That's number one.
Number two is it took a lot of work for us to combine the two cultures. We have a demand gen team, we have a brand team and then we have the SCR team. We took a lot of time to make sure our goals align.
Kyle: Yes, because the SDRs were kinda priming themselves for a career in sales and it would feel like a deviation when my boss is ultimately the CMO who's driving inbound. So how to do you guys solve that?
Kyle L: We still have a career performance plan so they can choose an AE route. And so they work with the sales enablement team to go through AE enablement. They're still in the marketing org but they have a dotted line to the sales side.
Kyle L: I'd say 3 months to a quarter. We had a lot of turnover. Lets rather say 6 months.
Kyle: It's tough. SDRs are kinda tough functional roles to build. I used to manage an SDR team and everything is hard. Finding talent is hard. People poach them internally. Feels like all these forces are acting internally and make it hard to keep the team staffed up.
Kyle L: We've been lucky that we haven't had a lot of churn, over the past year and a half, but now you get to a certain point where you start looking, as an SCR, for that next best thing. Because we are very conscious that they don't burn out.
Kyle: I've heard an idea been floated and I'd love to hear your perspective. Some people are saying that marketing should actually fall under revenue.
Kyle L: I'm for it as long as the brand and storytelling portion of the team maintains it's validity. And I say this because we are in a features war across the board for all software companies. I don't care if you're a Marketo or you're just a point solution. What we're finding is the story and the brand is what wins, ultimately. Everyone has the same feature set, you can build the same feature set if the story is better, Drift is a great example of that. I'm afraid if it moves under revenue you lose the intangible benefit of building a brand that wins. However, I've seen it work where revenue leaders leave the brand alone and you have a creative officer or you have a chief brand officer. But if you can combine the two, that's where there is true power.
Kyle: Yes because you have everyone pulling in the same direction. But your fear is if it taints the brand enough then you're not gonna be able to differentiate no matter how good at sales you are because that branding is going to be so critical.
Kyle L: And that's where great revenue leaders have a marketing talent and in a sales talent. They have the creativity, that personality type where they can talk a senior director at brand and they're not sounding like they just want a metric. But then they have the aggressive metric side asking questions like why is this number down etc. But that's a unicorn.
Kyle: A talented sales leader who is good at closing deals tactically, good at building a strategy and can also do branding. That feels like your paying a million bucks for that guy or girl.
Kyle L: And I think also it's different for a company that is product-led.
Kyle: So how do you think in the B2B space really building a brand that can be impactful from the sales side. Cause I came from a company that was very Enterprise outbound. Nobody knew who we were. We were trying to sell these million-dollar deals but no one had ever heard of us. So it was just the opposite. There was no branding. It was very much how can we connect to them, get them to a demo and then hopefully they close. Maybe we were pretty naive about it but the idea of being at a company where there were any inbounds is a strange concept for me generally.
Kyle L: There are two questions. The vision of the company needs to fit the messaging. Cause you have to believe in what you're bringing to market. From the beginning, Lessonly's marketing statement was: we help people do better work so they can live better lives. You can create any storyline off of that that you want. It works because it's very emotional, high emotional intelligence, human acknowledgments, right? It works.
The second thing is you've got to be able to decide if you're a startup and you don't have a brand you have to decide if you want to join a category and send the money on getting onto a category. I can talk a while on why I dislike the analyst role, the Gardners and Foresters of the world. But the G2s of the world, Trust Radius... This idea of category creation is becoming more scalable and you've got to figure out where you want to fit. So if you don't have the customer base, Lessonly is lucky enough that we have 850 customers so we use that community to further that story and that's what sells but if I was starting it from the ground up, it would be what category do we want to be in, how do we get 1 or 2 companies in that category and start building more of a storyline how we help that category.
Kyle L: I think you have to have a lot of money to define a new category. And this world is changing now with G2 where it's now the customer at the center and not the analyst. So many people trying to create a category, I think it will work but in the long run, if you're talking 2 or 3 years, I think the model is going to break. So for Lessonly, we don't necessarily fit into a category. Sometimes it's corporate MLS, sometimes it's sales engagement, sometimes it's sales enablement, sometimes it's training. So we just tell a story that works across all the categories, and we're loud enough, to when Gardner is doing a market guide we're put into it because our customers are talking about it. It's peer selling. Now I think that changes depending on what Enterprises you are going after.
Kyle: My background is in sales and operations and the scale set seems so different like when you talk about a sales leader who knows this whole concept it just seems impossible to find.
Kyle L: And smart CROs hire really good brand VPs of marketing. I think you can figure it out with your starting 5 but it's not an easy thing to overcome for sure for a Chief Revenue Officer because they're usually more sales orientated.
Kyle: If we can talk about that branding piece again. You spoke that this is the culture of the company and also pervades your sales and product and customer success. How do you get from, we've got an idea that this could be our branding or messaging to, we're gonna actually spread it across everything we do in the business and to all our customers and throughout the internet?
Kyle L: That is a great question. Number one, you've got to take risks. You have to be okay with failing. Number two, you're gonna get a little lucky. Our mission statement was we help people do better work so they can live better lives. Our CEO was writing a book and one of our contacts randomly said, you should call it: do better work. And then we developed a do better work method and maturity model for services and now our front page says do better work on our website. So we kinda fell into that type of messaging and branding. It's got to start at the founders and their core ideas have to scaleable. If the message comes from marketing and the rest of the internal team has not bought into it, it will fail. I believe putting SDRs under marketing forced alignment between sales and marketing.
A great example is we give a golden lama out to an employee every quarter someone that exhibits the values of the company. We mass-produced little golden lama's that we use in direct mail. We sent them to customers and the card said: give this to an employee that exhibits the value of your company. And it is our best performing direct mail piece. But if marketing had been severed from sales, and we didn't have that cultural aspect of the golden lama that would have never happened so what we have happened is a branding piece that has nothing to do with our platform, is performing better than anything that has to do with our feature set.
And everybody celebrates the golden lama internally, so it's very easy for the sales rep to be passionate about the golden lama when they send it out. Even though it's a three-inch spray painted one.
Kyle: I can imagine when you're interviewing people this has got to be in the interview process like this is part of our culture. And you feel finding people who are bought into it or not is pretty easy to do? And people brought in that hasn't bought into the vision could become a drag?
Kyle L: I think we have a pretty good interview process in order to vet that. One thing I do on the marketing side is whenever hiring committees are put in place to hire this person, everyone has to be unanimous on whether they want to hire them or not. Now, this won't work if I'm hiring 70 people over 2 years as you did. But if I'm hiring 2 or 3 SCRs a quarter, it's fairly easy to have that or even the marketing team like everyone has to give a thumbs up and that way, the people that have already bought into the culture understand that we are judging on the values of the company and in the interview we give questions that have to do with each value statement, and then they will report on it.
Kyle L: We don't have a specific person. We have a Talent team that talks about culture. Our Brand team talks about culture constantly. We're about 150 employees and we're mostly all in one building, and 5 or 6 remotely, so it's still maintainable. In two years time from now, I might have a completely different answer to that. Culture lives in everyone. If you find a company with a strong culture, and a good product, hold onto it.
Kyle: I used to be in the military, unit called the Rangers, and there's this concept called the Ranger creed. There's like 6 stanzas to it. To be a Ranger you have to write it a hundred times and say it over and over and memorize it. It is very pervasive across the culture and if you see someone not upholding the standards of the Ranger creed you'll call them out on it they'll like get booted out and I never associated that with business.
Kyle L: On the marketing side, and we do this a lot, we use Predictive Index for personality profiling. Now the personality test does not make you get or lose the job. It's just a way to look at how you would fit in the team because then you can map it with the entire teams PI. And then from the marketing side, we bring everybody in and then they'll do a presentation. That gives us a lot of information on whether or not they would fit. It's the questions around the values, like how are we framing those questions and what the answers were and then we look at the PI of course. And how does your personality profile fit in the team dynamic and how does it fit for the role we're hiring for?
Kyle L: I think there's a couple of ways. There's churn on a team. And we do quarterly employee surveys and if we see things drop or satisfaction is dropping, you can relate that to your hiring mentality. It's not necessarily related to PI but PI is one component of it. For Lessonly it's how we look at it. Those are just two components of a very large system we have.
Kyle: We used to do panel interviews with 2 senior people and 2 new people so that they could learn the ropes of interviewing. But we realized that we tended to hire people that were just like us. And this diminished our diversity. How do steer clear of this?
Kyle L: We have a lot of things. It has to do with the Greenhouse Application Process where we removed some things that had to do with diversity right? So it's not like a conscious bias. We have a diversity inclusion committee that spends a lot of time talking about how can we be more diverse etc. We're not perfect. We have a long way to go. I would recommend having a diversity inclusion committee for any company because it has kept it in front of mind for everyone.
Kyle: Back to the SDR piece.
Kyle L: This is one of the lessons learned. In the first phase of moving over, marketing wrote a lot of the cadences and since then we haven't touched them. Because we allowed the SDRs to be as human as possible. When they were reading the cadences that we wrote it sounded terrible. It's really about spending time on personalization, understanding who the contact is and then getting them on the hook to let them talk about what their problems are. And that is not marketing speak on how great we are.
Another reason why SDRs should report to marketing is that a good marketing team is focused on continuous improvement. A lot of that has to do with click rate optimization tests that they are running all of the time. I don't think that comes to salespeople naturally. So when we are running 5 or 6 CRO tests in a month, it's really easy for us to shift pretty quickly on: sh*t that didn't work. We must just change everything and shift to a model that works for you and we can do that pretty quickly. And I think that's why it's worked so well cause I'm okay in saying: alright, that was a terrible idea, let's move on.
A lot of people talk about the science behind sales and SCR process is very science orientated but there's a creative science to it. A board game might work for one account and a golden lama for another. And you've got to train people to think like that because salespeople are trained to be process orientated and marketing is also process-orientated but we change so quickly it's more of a creative process.
Kyle: I was pretty hesitant about SDRs rolling up into marketing but the idea of using that concept of creativity and being dynamic and also data-driven, where sales seem to be: I wing it or I have a ton of experience...
Kyle L: The only reason it works is alignment. Anybody that is thinking of doing this or actually anyone in marketing sales, you should have one, 1-hour meeting a week operations, sales, marketing, and CX leaders in the room talking about the funnel and pipeline. Because, if you have alignment, it really doesn't really matter where they live. It's just you are all going towards the same goal and if you are communicating effectively and if you have alignment on what objectives you have quarterly then who cares who they report to? It's just a matter of reaching that goal.
Kyle: As an SDR you often have to make a decision about how to respond to a person but I can't go ask my boss's, boss's, boss, how I should respond to it. The culture that I have been taught I'll have to apply it in the situation so the internal leader should be implying, broadly how to solve these problems or broadly be communicating to customers, so you have this alignment, and then trust that your people are going to execute on it and make it happen.
Kyle L: This is how we frame it with our customers and internally. There are two components of a high performable team. There's relational excellence and operational excellence. Relational excellence is emotional intelligence. It's being human. The operational is the process and how you get to where you want to go. If you can figure how to meld those two together you will make it and have a high-performing team.
Thanks so much for having me.
Kyle: Yeah thanks, Kyle.