Outbound Prospecting + Inside Sales Funnel
Figure 1: Outbound Prospecting + Inside Sales Funnel Schematic
Figure 1 depicts the outbound prospecting funnel. This funnel can be used to validate a new market or it can be used to scale an existing offer (when the gross contribution allows for it).
In this funnel, an SDR (sales development representative) will mine contact data and personally reach out to at least 500 contacts per month via cold email, cold LinkedIn messaging, and cold calling.
The positive reply rate (the contact expressing interest) should be at least 3%. In some cases, when there is an extremely high market-message resonance, the lead rate can climb up to 15% +.
The SDR then qualifies the lead with a discovery call (80-90% of the outbound leads will show up for a discovery call).
Once the discovery call is completed, the SDR books the qualified lead on the calendar with a sales person (or Account Executive or Closer).
The demo-discovery rate will be between 10-40%. This rate depends on the quality of your leads, which is dependent on the initial messaging (the less personalized and specific the messaging is at the cold-email level, the lower the quality of the lead will be and the less likely the lead will be qualified).
The sales person will then demo the prospect and close the deal.
A 20%-50% close rate is standard with a properly trained rep.
The retargeting loops in this funnel “pick up the slack” or “mop up the crap” and increase the efficiency of the entire funnel.
Retargeting is achieved using advertising channels (Google Display Network and Facebook Network) and email marketing nurturing (autoresponder software like Active Campaign).
The effectivity of the outbound prospecting channel is heavily dependent on the gross contribution of the offer. The figure below compares the yield (ROI) against the gross contribution.
These calculations were found using THE BUSINESS UNIT CASE MODEL.
Figure 2 – Yield Vs. Gross Contribution Using Outbound Prospecting + Inside Sales
|Variable||Case 1||Case 2||Case 3|
|SDR Monthly Salary||3,500.00||3,500.00||3,500.00|
|Contacts Hit Per SDR Per Month||500.00||500.00||500.00|
|Cost Per Contact Hit By SDR||7.00||7.00||7.00|
|Cost Per Lead||$233.33||$233.33||$233.33|
|Cost Per Demo||$777.78||$777.78||$777.78|
|Demo Show Up Rate||90%||90%||90%|
|Demo Close Rate||20%||20%||20%|
|Sales Rep Commission (% of Gross Contribution)||15%||15%||15%|
|Gross Contribution in 7 Days (if paid monthly)||$833||$417||$4,167|
|Payback Period (months)||6.99||12.17||2.84|
Notice gross contribution affects the yield of the outbound funnel – in case 1, the gross contribution is $10,000 and yield is 71.79%, however in case 2, when gross contribution is only $5,000, yield is negative, which means that the business will break. In case 3, the gross contribution is $50,000 and the yield is 322.98%.
This shows that the outbound prospecting channel is extremely effective for high-ticket offers with high high-gross-contribution values, but not effective for lower-ticket, lower-gross contribution offers.
Based on our experience – The outbound prospecting + inside sales funnel will work (meaning yield > 0) as long as the gross contribution is greater than $6,000.
The SDR monthly salary is assumed to be $3,500 since this is the price you can pay to get someone junior to send 500 personalized emails per month.
A 3% lead rate is assumed. This is the rate at which a contact indicates interest. This lead rate is conversative and is achievable with a properly trained SDR and messaging that includes a desired transformation.
A 30% demo-lead rate (number of people who book demos/number of people who express interest) is assumed.
People who indicate interest via outbound prospecting are more likely to book demos than people who indicate interest via a mass-marketing channel like Facebook advertising.
A 90% demo-show-up rate is assumed. Based on our experience, the outbound demo-show-up rate is greater than the inbound demo-show-up rate since there is a discovery conducted between the lead and demo booking event.
A 20% close rate is assumed. This is achievable by a properly trained sales team.
Figure 3 and 4 demonstrate top of funnel metrics.
Figure 3 – Example of SDR Output, Open Rates, and Reply Rates
Notice that the open rates are greater than 25%, and the overall reply rate is greater than 13%. This is achieved by using extremely effective niche-specific messaging.
Figure 4 – Example of SDR Output (Salesprocess.io)
Figure 4 shows an example of an SDR’s monthly output. Notice that 800 leads were contacted, 2,722 emails were sent (approx 3 emails per contact over a span of 1 month), 381 replies were received (approx. 14%) and 64 demos were scheduled (8%).
Figure 5 – Show Up Rate and Close Rate Vs. Rep – Timeframe Held Constant
Figure 5 depicts the close rate for 3 reps selling the same offer over 1 month. Notice that the show-up rate is approximately 50% (this overall show up rate is a blend of outbound, inbound, and organic leads – inbound leads contribute to a lower show up rate). Notice that the close rate is approximately 27% when averaged across 3 reps.
If you need help installing the outbound prospecting + inside sales funnel, please book a call to speak to someone on our team here.