Stage VP’s Startup Growth Series with Christopher Kim, Sales Leadership at Balto
Today we are starting a new series of posts at Stage Venture Partners, our Startup Growth Series. From time to time, we will interview senior team leaders at Stage VP portfolio companies to talk about the challenges and opportunities of hyper scale growth. Our goal is to surface insights valuable for the Stage VP family of companies, and for startups more generally. We will also use this series to highlight the incredible leadership beyond the founders at our portfolio companies, because we believe that great people make great contributions at all levels of a growing team.
We are pleased to start this series with a conversation with Christopher Kim, the head of the SDR Team at Stage VP portfolio company Balto. Balto is the number one platform for real-time call guidance at contact centers. Today’s interview focuses on how to effectively build and scale a team of Sales Development Representatives (SDRs).
SVP: Christopher, thanks so much for joining us today. We’re thrilled to learn more from you and your work at Balto. Why did you join Balto?
CK: Whenever a founder reaches out to you, it’s always a good idea to be open to a conversation, even if you have no intention of joining the company. Long story short, I joined the company due to the combination of Balto’s product, its validated product market fit, its absurd quarterly growth, and its founders. If you get the opportunity to join a rocket ship that’s already lifted off, you hop on that rocket ship, especially if you respect and like the people steering it.
SVP: What does the SDR team at Balto look like?
CK: The current team size is six: four sales development representatives (SDRs) and two sales support team members. The profiles of our SDRs fall under one of two categories. The first category are young professionals right out of university breaking into SAAS sales. The second are those with some professional experience, but they are looking to make a pivot in their career.
SVP: How do you evaluate potential SDRs in the hiring process?
CK: There are five primary traits we look for when evaluating SDR candidates - coachability, creativity, grit, efficiency, and initiative.
Coachability is straightforward. As an SDR, you’ll get constant feedback on your prospecting efforts. Being able to receive feedback positively, implement it swiftly and not make the same mistakes repeatedly is huge.
Regarding creativity, SDRs have a finite number of channels to conduct outbound, with the most common channels being phone, email and direct mail. Within those channels, there are an infinite number of ways to be creative to stand out from the noise. For example, a Balto SDR named August came up with the idea to send piñatas filled with candy to high-value prospects. They came with a note saying, “My mother always told me not to accept candy from strangers. Would you be open to a brief call at your convenience next week so we’re no longer strangers?” There are many different paths to reach the same destination, it’s just a matter of being creative.
Grit is an absolute prerequisite, as outbound prospecting is a grind that’s not for everyone.
For efficiency, everybody on Sales Development receives multiple team-improvement projects throughout the quarter that will streamline our processes and increase output. Of course, we want team members that are able to complete assignments in a timely fashion while ensuring it’s done right the first time around.
Initiative is vital, especially in the early stages of a company’s growth, because everything isn’t always fleshed out and there is usually no shortage of inefficiencies. Having team members ask for forgiveness rather than permission alleviates this as they solve problems on the go.
SVP: What is the process before hiring an SDR?
CK: First, an initial phone screen to vet for minimum requirements. From there, we assign candidates a role-play exercise, in which they show us how they would prospect into an ICP (ideal customer profile) account. We play the role of the customer, and the candidate plays the role of the SDR. To make it as accurate as possible, we provide candidates with the LinkedIn profile of a real person our team is currently targeting. Without giving candidates any training, we ask them to send their best prospecting email, with the goal of booking a 30-minute introductory meeting. We also role-play a cold-call to really get candidates out of their comfort zone.
Most SDRs have not been formally trained before, so these exercises are a simple way to gauge a candidate’s baseline creativity and raw sales talent. Once the exercises are complete, we’ll provide feedback on the spot, to further understand how receptive the candidate is to feedback. On our next call with the candidate, we’ll conduct the same role-play exercise to see how well the feedback has been implemented. Lastly, we’ll do culture interviews with various Baltonians before moving to the offer stage.
We want SDRs to do the job before they get the job.
SVP: What does your coaching and mentorship of SDRs look like?
CK: It depends on the SDR.
With new hires, 90% of the time is spent coaching and training to improve their craft, while 10% of the time is spent on personal learning and development, or PL&D.
As SDRs ramp up and start producing at the clip we expect, the percentage of time spent on PL&D increases. We hire SDRs that are ambitious, driven and will go on to do great things in the future. Our SDRs want to become high-caliber AEs, run departments, start their own companies, make their own dent in the universe, etc. We’ll provide as much insight and help on any topics an SDR is interested in during our regular one on one meetings.
For example, for an SDR who wants to get promoted to account executive, we’ve gone over how contract negotiations work. The best SDRs are naturally curious so they want to know how standard SAAS commercial agreements like MSAs, SLAs, SoWs and DPAs work. Other SDRs are interested in how equity and stock options work, so we’ll have a whiteboard session on that.
We coach and train consistently to ensure they hit or exceed quota, but at the same time pass on as much knowledge we can to help them many years into their career.
SVP: How do Balto’s SDRs coordinate their time and efforts?
CK: SDRs do one hundred percent outbound prospecting. At most SAAS organizations, twenty five to fifty percent of an SDR’s time is spent researching, finding, scraping and building lists of prospects. This is incredibly inefficient and significantly handicaps team potential. Fixing this in your SDR organization has numerous positive downstream effects and often provides an immediate, noticeable uptick in overall output.
We’ve built out an in-house sales operation arm to provide SDRs a consistent, steady stream of new ICP companies and contacts weekly. Our SDRs do not participate in the manual, time-intensive work building hits lists. Instead, they do what they do best, which is prospect.
Our team currently handles all inbound at this time as well. As inbound volume increases, we’ll bifurcate the team and have one division specialize in customer service & inbound.
SVP: Can you walk us through one of the sequences for communication that SDRs at Balto use?
CK: For really high-value ICP prospects, we’ll DEVVL them, which is an acronym for direct mail, email, voicemail, video message, LinkedIn InMail. Fewer than five percent of prospects get put into this sequence. This sequence is complete in two weeks and results in some of the highest yield rates, even though the current work from home environment is throwing us some obstacles.
SVP: What does the organization amongst your SDR team look like? Do you think about geographies, size of account, etc.?
CK: Geographic distribution for SDRs is archaic, unlike for AEs where it still sometimes makes sense. Our SDRs specialize by verticals, and by the size of accounts. Size of accounts is straightforward. At Balto, there are certain industries that are most conducive to us winning business like insurance, retail, collections, financial services, etc. Each SDR is assigned a vertical for a set period of time before rotation. For example, one of our SDRs may have a subset of the insurance vertical before being assigned a subset of the collections vertical at the next rotation.
Rotating verticals ensures four very important things. The first is fairness, as everyone gets an equal opportunity at the “best” accounts, which is often subjective to SDRs. The second is urgency, as there is an increasingly higher likelihood of a ICP company and contact being booked with each passing rotation. We need to get them before they’re gone. The third reason is ensuring a fresh approach to outreach, as SDRs all have a unique style of outreach. Certain prospects may be more receptive to certain SDRs. The fourth reason is the variability in SDR strength. We want all prospects to experience our best cold caller, our best personalized emailer, etc.
SVP: Balto’s product is a very new product. How does an SDR team communicate about a product that is this new and revolutionary in the industry?
CK: When evangelizing a product and creating your own market, you want to focus on the prospective customer’s pain point and inconvenience, not your product. In the beginning, everything should be about to them and not you. Too often, we see startups make the critical mistake of leading with “we do this, we do that, we’re so great because of this,” etc. No one cares.
Understanding your target market’s pain points and condensing this pain down into an extremely succinct and thought-provoking comment or question will be exponentially more effective than focusing on how great your product or service is.
SVP: How do you think about compensation for SDRs?
CK: People want to be in control of their performance. There’s no need to overthink this — at Balto, SDRs are compensated for what they do. What SDRs do is book and hold meetings with ICP prospects. We clearly define what ICP is, and their bonus structure is tied to how many of these meeting they hold. They have monthly and quarterly quotas to hit. When SDRs have control over their commission, they are much more motivated.
SVP: How do you think about growth trajectory for SDRs? What’s the most surprising role that someone from Balto’s SDR team has moved into?
CK: Of course, the traditional path is moving up within Sales Development, or moving to become an AE. However, career path options for SDRs at Balto are limitless. SDRs at Balto have previously moved into recruiting, operations, partnerships and marketing, to name a few. None of the roles that prior SDRs have moved into are surprising, as we look at our SDR team as a home-grown talent pool of future Balto leaders. All the skills you learn and muscles you develop as an SDR are transferable to other functions.
The role is very transient in nature and very rarely will you come across lifetime SDRs as cold outbound prospecting is a grind. We know this and are always on the recruiting trail.
SVP: When is the timing right to build out an SDR team and differentiate from your AE team, and when do you just want one sales team?
CK: It depends on what you’re selling.
If you’re selling mid-market and/or enterprise SAAS, you want to build out an SDR team ASAP separately from AEs, as you need that tip of the spear. At that level of annual contract value, you want SDRs prospecting and AEs closing. As soon as you can afford it, you should hire a minimum of two SDRs. Never hire just one.
If you’re selling transactional, low-dollar SMB SaaS, having your reps operate as full-cycle may make sense. The average deal size and sales cycle needs to be small and fast enough to justify it.
SVP: Chris, it’s been wonderful talking with you. Thank you very much for sharing your very well-informed perspective — we venture to guess this will be extremely helpful for many startups figuring out how best to launch and grow their SDR efforts. Best of luck to you and the Balto team in 2021.
CK: Really enjoyed chatting with you as well and thank you for your time.