How to decide if SDRs should report into Sales or Marketing

Who am I writing for?
People who’re responsible for orchestrating Sales or Marketing processes in B2B SaaS startups.

The “sales pipeline” often starts at the opportunity stage, after an SDR has spoken to the lead and confirmed that they are in the market right now, they have the budget to buy, and the size & duration of the subscription plan that they want. Example, two identical prospects looking to buy a helpdesk SaaS which costs $25 per seat, per month. One has a tech support team of 10 reps, and the other has a team of 20 reps. In this case, the pipeline will reflect two potential accounts with a total pipeline value of 30 x $25 x 12 months= $9000.

In a SaaS startup where marketing is responsible for delivering MQLs to sales, it will be the Head of Sales who’ll first feel the need to hire SDRs. As the MQLs increase she’ll realize that her reps are talking to far too many unqualified leads and she’ll want her best reps to focus on the qualified leads. To resolve this, she’ll install an SDR layer to qualify MQLs provided by marketing so that only the serious ones are passed on to closers.

In a startup where marketing is measured on pipeline and not just MQLs, the Head of Marketing will figure out that:

  • she needs someone to talk to the leads to qualify them so that they can be added to the pipeline
  • figure out their buying appetite so that she can measure marketing’s pipeline contribution

and therefore she’ll push for an SDR layer to be installed in between sales and marketing.

So, in short, whoever manages pipeline will feel the need to install SDRs. If you’re measuring marketing on pipeline contribution, then the SDRs should report into marketing, and if you’re measuring marketing on leads passed to sales, then the SDRs should report into sales.

Obviously, in the end you’ll end up choosing what works best for your organization, but this is a good decision framework to start with.

Useful? Catch me on Twitter: @SiddharthDeswal