Personal update: Katie is back (katie@keyplay.io). Please consider asking her how proven ICP principles + Keyplay = your best accounts for outbound & ABM. 🎯🔑

Ok, now that I fired myself from the sales team, this newsletter is about the SDR in 2024...

The SDR/AE model has been the standard for B2B sales teams.

Since Aaron Ross published the playbook in 2011, SaaS leaders have studied and practiced the "Predictable Revenue" model from seed to scale.

But, only 9% of our 479 survey respondents think that model will continue in its current form.

So what do the other 91% expect?

• 53% think the future is AE + SDR + AI – aka co-pilots.
• 32% say it’s AE + AI – i.e. automated
• 6% say AI replaces both sales roles.

I expect the true answer is “all of the above” and we’ll see a lot of experimentation and evolution quickly.

Overall, our data suggests that change will start with younger/smaller companies. We can already point to case studies, new approaches, and emerging technologies gaining adoption.

To help frame the current state, let’s dig into some benchmarks and analysis of SDR orgs in 2024...

Understanding the current state should help us monitor changes.

SDR is the standard, but not ubiquitous

About half of B2B SaaS companies have an SDR team. That’s lower than I would have expected. But as you get into the 250+ and 1000+ employee segments, we can see it becomes a dominant model. 82% of 1000+ companies have an SDR function.

Looking at this data, we can assume the more mature companies are the most entrenched with the status quo and will be the hardest to move into a new paradigm.

The hiring activity bar is also interesting. We can see that a large percentage of Growth and Scale orgs are actively recruiting more SDRs today (i.e. not fully replacing them with AI).

This roughly lines up with a poll I ran on LinkedIn recently. It's good to remember that the SDR is not the only way. Plenty of companies will grow with marketing generated pipeline & inbound, others have full-cycle AEs prospecting their own deals, and some will chose to outsource prospecting. These SDR-free environments may have the "easiest" path to test new models.

Note: Our benchmark data is based on a sample of 4K B2B Software companies from the PeerSignal B2B Software Index. We looked at orgs with at least 1 AE and then looked at how many of those orgs have a dedicated, in-house SDR function (at least 1 headcount).

SDR:AE ratios get more attractive as you grow

There is good reason that more mature orgs are continuing to lean into the SDR model. Many of these companies have proven playbooks and the ratios seem to get better over time.

I suspect these bigger orgs with the model “working” will be the slowest to adopt AI-drive approaches.

There is a wide variance in approach

Like many GTM strategies, there is a wide variance in how orgs actually implement the SDR model. This goes for all aspects of the strategy, but it shows up clearer in the team size ratios.

Even though the average is ~6.5 SDRs per AE, there is a super wide variance. And when we plot companies on a scatter plot, we can see that ratios vary at every size.

You might find two growing companies with 100 AEs – one could be successful with 70 SDRs while the other has 7. There are lots of ways to make this work and lots of nuances depending on business model, ACVs, success of other channels, geography, and more.

Why younger companies will lead the charge with AI

We’ve shown that the SDR model is less entrenched in smaller companies. It's a similar story when we cut the data by year founded. Only 29% of SaaS companies founded after 2021, regardless of size, have an SDR function. We can see the big drop off in this chart:

This makes sense generally as younger companies have more of a “blank slate,” less to lose, and fewer sacred cows to overcome.

It also makes sense in the context of today’s environment – they are born in the AI era, operating with post-ZIRP economics.

This is where I expect to see the most rapid change.

Wrap up

Clearly people are expecting changes, but only time will tell what emerges as the "new way." Understanding the current state of SDR teams helps us monitor where and how things change going forward. There are some places that the "Predictable Revenue" model is deeply entrenched. Other areas appear receptive to explore emerging models with AI.

The classic Bill Gates quote likely applies to this space:

I'm excited to watch this space and be part of the next evolution.

If you're experimenting with (or scaling) new forms of AI-driven outbound, I'd love to hear about the strategies, ideas, and tools that you're exploring. What's working so far? What's next?

Reply here or leave a comment on LinkedIn with any of your lessons or predictions.

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Best,
Adam

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