Sales Seekers

[SS Podcast] 005 - SDRs, AEs & AMs: Unpacking the Big 3 Sales ICs
===

[00:00:00] Intro
---

Mike Bird: Hey there! Welcome to episode five of the Sales Seekers podcast. Welcome back, if this is not your first time, checking out the show we're slowly getting off the ground here. Had our first guest episode last show with Brendan Dodge. That was fun. If you're brand new to the show, thanks for coming by and checking us out. If you like what you're hearing today, go ahead, feel free to subscribe. I've got some great content coming up for the rest of this year.

Really quickly, I'm Mike Bird and I'm a career coach who supports people who are transitioning into B2B tech sales as individual contributors, or maybe they are already individual contributors in tech sales and they're looking to grow their career. I often talk about three big individual contributor roles that I support people in particular. The SDR, sales development representative position. The account executive or AE and the account manager, or AM. And these are all roles that I've held in one way or another throughout my time in tech sales. That's mainly the reason why I aim to support people who are trying to go for these roles as well.

There are a couple of other big individual contributor roles in more complex sales organizations like solution consultants or solution engineers. Some people consider CSMs, client success managers, to be part of the sales org. Sometimes not.

But I'm going to focus on these big three and actually discuss what it means to be in these three roles today. And also provide not just an overview of each role. But a sense as to one: what success looks like or how it's measured for that role? Two: where I've seen individuals struggle. And that comes from my own personal experience. That comes from knowing other folks who have held these roles. And then also, lastly, some ideas that I have around becoming more effective in each of these roles, finding success in your own way. And so we can just jump right into it.

[00:02:00] SDR: Overview
---

Mike Bird: Let's start with the SDR. SDRs often are the opening entry-level role for a lot of people to get into tech sales. They are lead generators. Lead qualifiers. They may be focused mainly on outbound lead generation where they're making phone calls. Sending emails, trying to reach out to people on social media. They may also be handling inbound leads that are coming through demo request channels, or they may be following up on people who attended webinars, events and things like that. They are usually working to support AEs, and help them strategically break into key accounts.

So oftentimes an SDR, and an AE may work together to try and get into a potential future client that's really significant. And their role is to be that first point of contact for someone who is coming inbound before handing that person off to an account executive, not everyone that's interested in buying your product is going to be a good fit. So qualifying sometimes is the role of an SDR as well.

Really quick, compensation: I'll try and touch on these at a high level for each of the positions. SDRs can expect to make somewhere between $50 K and $80 K US. Some SDRs will do better than that, but that's a typical ranch to think about when you are considering going the SDR route. And especially if you have no prior professional sales experience, the SDR position is probably a good one for you to start out in and develop your prospecting chops.

[00:03:32] SDR: How success is measured
---

Mike Bird: Success in this role is typically measured based on the number of qualified meetings with prospects that they book for an account executive. So oftentimes in the span of a month, there may be a quota or a target that the SDR has to get to 15 meetings, for example, to hand off to the AEs.

Not all of those 15 meetings will result in an opportunity sales opportunity being created. But getting those meetings on the board, having those people show up to those calls and then ideally the AE takes over from there. Those qualified meetings are the most common measurement for the SDR as to whether they're being successful or not.

[00:04:12] SDR: Where they often struggle
---

Mike Bird: Where I've often seen SDRs struggle or where I've also struggled some times in the past filling out an SDR type of position. SDRs are often fresh out of college or fresh into their first full-time business role. And oftentimes that means that a lot of folks are younger in this position. Not always, but oftentimes.

The SDR is usually onboarded with significant exposure to the company's product and its benefits, but often not so much exposure to the value of the product or the challenges that prospective buyers may be facing or what their typical priorities and challenges may be.

In other words, they can maybe talk a lot about their own stuff, their own product or service, but they can't always meet someone that they have over the phone, on a cold call, where they're at. And that's totally normal. A lot of the time SDRs are calling people who may have a lot more experience in business than they do. And it's a matter of time before they catch up and develop the confidence and messaging needed to actually reach more executive-level stakeholders and open, higher quality meetings up for an account executive.

[00:05:20] SDR: Ways to become more effective
---

Mike Bird: Gaining exposure to actual clients, actually talking to prospects. These are ways of building up real confidence that could be taken from those kinds of encounters into future cold calls, cold emails that are being put out by an SDR, listening to call recordings from SDRs that have maybe been around and have had a lot of success in your organization. Having regular contact with SDRs, who are leaders in the org, or maybe AEs who started out as SDRs and became AEs over time. Any chance that you can get as an SDR to learn from people who are a little further ahead down the road and had some success.

And this is true for, just about any role, but I think it's especially helpful for folks who are just starting out in their careers. But if you're brand new to sales or you're brand new to tech, this is a great opportunity to get your feet wet and oftentimes the goal is for a lot of SDRs to be promoted to an AE type of role within the first year.

So it's a lot of grinding. But overall the development of your confidence, your messaging, your ability to hold a conversation, have an actual voice when you reach out to people and generate qualified meetings for account executives. That's the road to success and it takes some time and practice, but it can be done.

[00:06:41] AE: Overview
---

Mike Bird: AEs are revenue generators.

So not so much lead generators, although they are often responsible for doing some of their own prospecting, like an SDR would. They are principally responsible for new business acquisition or new customer acquisition. And the AE role can be another entry point into tech sales for someone who has had previous sales experience. Maybe in another field. But the more common way that I see people becoming an AE is still through the SDR to AE route.

Day-to-day work for any account executive involves, like I said, some degree of prospecting, but a lot of work done in terms of running great discovery calls. Product demos, maybe with or without a solutions engineer. Building proposals for prospective clients, negotiating deals and closing new business at the end of the day.

There could be a lot of preparation and a lot of research that goes into doing any and all of those things effectively. So a lot of AEs will actually spend their time not in front of people that they're selling to, but getting ready to sell to them instead. There can be a wide range in terms of the volume of deals that an AE may be working.

Borrowing a little bit from folks like Sam Jacobs at Pavilion and Armand Farrokh from 30 Minutes to Presidents Club, an SMB account executive, so someone who's working with small to mid-sized businesses may have 50 deals, for example, in their active pipeline that they're working to try and close. And these are deal sizes that are usually in the low five figures, maybe four figure annual recurring revenue range.

The compensation for a position like that is usually somewhere in the low six figures. When you look at on target earnings usually is a 50-50 mix of base salary and expected commission if you're on target. For example, you might have a $60,000 base salary and a $60,000 variable compensation target as well.

If you go to the next level of an AE position you're talking about mid-market or commercial account executives, depending on the organization and the terminology that they use. These AEs are working fewer deals, but deals that are larger in size, so maybe closer to 30 deals in their active pipeline. And these are deals usually with an ARR that's somewhere between $25,000 and $100,000, sometimes, maybe a little over a hundred thousand. So these are more complex deals and so it takes a little bit more experience, a little more poise to actually close these deals, to manage a complex cycle.

And then a lot of great AEs in this position get the opportunity then to go on, to sell in enterprise or strategic AE roles. Where you're usually working a relatively small handful of active deals, maybe 10 to 20, and these could be in the range of anywhere from a $100,000, $200,000 to sometimes even over a million dollars in ARR.

So there is a range here of smaller enterprise versus larger enterprise. If you're selling something into Fortune 500 companies. If you sell for a company like IBM or Oracle, you're selling some kind of a large database product. Things like this, that will go through the entire organization and be worth millions of dollars potentially annually.

That's at the very top end of the enterprise AE game and it's usually something that takes a quite a lot of practice and time on task in order to actually get to in your career. But it is possible.

[00:10:19] AE: How success is measured
---

Mike Bird: Success as an AE often comes down to things like how many logos did you add in your quarter or year?

What percentage of your quota did you attain or how much new revenue did you generate for your company? Another important statistic for an AE to understand for themselves is their win rate. So if you had 10 deals in your pipeline. You closed 2 out of those 10 and lost the other 8 for various reasons.

Then you'd have a 20% win rate, which is usually the beginning of what's sort of an expected win rate for an AE in a more established business. That win rate could go up to as high as maybe 40%, if you're an outstanding seller. But understanding, "Hey, am I actually winning as many deals as I possibly can?" And notice how that's still a relatively small number.

[00:11:13] AE: Where they often struggle
---

Mike Bird: Most AEs don't actually close over half of their deals, which can also cause some struggles emotionally for an AE. Knowing that you're going to lose more often than win can sometimes be very punishing. But ultimately once you accept that, prioritizing accounts, understanding who you need to put your attention on and fitting in time for prospecting. These are some things where I do see AEs struggle, and I've struggled with it too.

Sometimes you'll be so busy trying to drive to a close on an account or a set of accounts that you'll let prospecting for new business, new opportunities go by the wayside. And that hurts you not immediately, but maybe three or six months out from now when you don't have pipeline ready to close at that point because you didn't prospect when you need to do.

Another area that I often see folks struggle with is just simply in terms of gaining executive engagement. So a lot of the decision makers who are going to give you a green light on a deal, to allow it to go through, they're often hard to get ahold of. They will be balancing a lot of other priorities and you need to, as an AE, know how you can support their high level strategic priorities with your product or service. And also just keep them in the loop to the point where maybe they're not the people actually driving the day-to-day sales cycle, but you need buy-in at the end of the day in order to get the deal to close.

Pursuing all of these executives is one of the biggest challenges that AE face. It's really one of the biggest challenges in all of sales.

Multithreading related to pursuing multiple executive engagement. So multithreading is the art of having relationships with different stakeholders in an account that you're selling to and working to do that so that you have maybe more than one champion in a deal. De-risking the sale for you as the seller, but then there's an aspect of de-risking the sale also for the buyer that's even more important.

[00:13:14] AE: Ways to become more effective
---

Mike Bird: As an account executive, the more people that you can get bought in on your project and initiatives that you're supporting with it, the better. The more likely your deal is to close. The more likely your implementation will be successful. All of those good things for the buyer especially to realize value from your product is critical. So multithreading is another thing that reps often struggle to do, but it's really key.

Also in terms of becoming effective, learning, like I said with the STR position, if you can learn from more experienced reps in your company or from other people in sales communities. Some AEs pursue advanced education, like an MBA since they'll often be speaking to people, executives who have an MBA of their own.

I'm not saying that you have to do that. I don't have an MBA. I'm not actively contemplating getting an MBA, but certainly, learning about business, there's so many great business books out there. The Personal MBA by Josh Kaufman is a great book to read if you are relatively new to the world of business and you want to understand how people think about their organization that you might be selling into. That's going to give you a good baseline of knowledge to then go in and lead conversations from.

Practicing communication and presentation skills. That's another couple of areas where an AE can focus on in order to just become more effective. Your job as an AE is to help a buyer understand the impact that your product or service could have on their business.

And the better you can do that, the easier it is for the buyer to make a decision, give you feedback. That's either going to be yes and that leads to a deal closing. Or no, and that gives you as the sales rep, the opportunity to prioritize other accounts that might be more inclined to buy it from you.

Another thing that's helpful to understand is just buyer psychology. Again, there's a lot of great books that are out there. The Challenger Customer is one of the great books that I've skimmed a little bit, need to actually go in and do a deeper dive on. The jolt effect is another book that I recommend, and I can put links to these in the show notes.

The last book that comes to mind is Selling Above and Below the Line by the late Skip Miller. These kinds of things will give you a sense as to how someone who is more at an executive level in an account will think about your product or service versus somebody who is maybe a manager or an assistant director, someone who is more of a functional user of your product or service, they will be thinking about things very differently.

That's a whole other topic for another day. So I'll pause there and we can go over to an account manager.

[00:15:58] AM: Overview
---

Mike Bird: Account managers work with the company's current customer base. So they are not new customer acquisition folks. They are revenue retainers, they are upsellers and cross-sellers, meaning they are trying to get clients to buy more of the solution they already have, or maybe are being tasked with selling a different solution that your company offers.

They will often oversee dozens of accounts, sometimes over a hundred, if you're addressing the smaller end of a customer base, like the SMB segment. They are usually "farmers" over "hunters", meaning they are not out there trying to find needles in the haystack of the market who will become new prospects and new clients. They are working the lay of the land of the customer base to try and surface new opportunities through relationships, through an awareness of the various changes in their client's businesses. These are what can unlock new sales opportunities within a customer base. And AMs may also be paired with CSMs, client success managers, who are working with the more functional-level buyers, again, another source of intelligence they can use to approach someone within that account to do an upsell or cross sell.

CSMs will often work more, like I said, with the functional buyers. While account managers tend to direct more of their time at executive level folks within an account. If you want to upsell and cross sell those, the folks you want to be talking to.

From a compensation perspective, AMs can also have a 50-50 split when it comes to their base salary and variable compensation that rolls up to some kind of an on-target earnings number. And that can be somewhere in the six figures for a lot of AMs. There's often, not quite as much upside as an account manager as there could be for an AE.

Sometimes though there is a larger base percentage. So instead of a 50-50 split, an AM may see a 60% or 70% base salary and have essentially a little more financial stability than an account executive. So the account executive gets more upside, in terms of their compensation. But the trade off is that there's more risk in their overall earnings. AMs can have more stability, less upside.

And for folks who maybe don't really like prospecting into brand new cold accounts. This can be a really great direction to go in with your career. If you want to get away from the AE lifestyle, but still be an effective seller.

[00:18:30] AM: How succcess is measured
---

Mike Bird: Success and measurement of the role. Basically the more high quality clients you can help retain, the better. Typically, AMs will also carry a quota that's in this case related to expansion business. So generating new revenue from current customers. They will often have some kind of a renewal based compensation. They may have a commission payout that's based off of renewal bookings, but then a larger commission that's based off of expansion. New revenue that wasn't there before.

They may also be measured against some kind of a net revenue retention, benchmark, NRR . It's a key metric that comes into play for any post-sales role or department. And NRR is basically a measure of how much a company's book of business is growing or declining over time.

So just as a simple example, If I was part of a company that had a million dollar revenue base and a year from now that revenue base grew to 1.2 million. We would say that net revenue retention number is 120%. But if it had fallen down from a million dollars to $900,000, net revenue retention would actually be 90% in that case.

Important metric to consider, AMs are largely wanting to see net revenue retention be as high as it possibly can be. Be over a hundred percent. So that the book of business of the company is growing year-over-year.

[00:19:57] AM: Where they often struggle
---

Mike Bird: AM's can sometimes struggle in the case of having to save a client account that's at risk of churning. AMs can be forced into leading very difficult conversations with customers who may not have had great success with your company's product. They may want to restructure their contract or change the scope of their solution or otherwise go against the original contract that was put in place by the AE. Like I said, these can be very difficult conversations and it's especially true in moments when there may be multiple accounts in the same situation at the same time for that same AM.

Losing an account can be pretty painful, emotionally. AEs, like I said, they're expected to have a win rate of somewhere between 20 and 30%. But if they lose a deal mid-cycle, they can always just shift their attention to other accounts or self-source new opportunities. An AM is expected to retain clients at a much higher rate and isn't going to necessarily have a brand new client that they can just work with right away that they can turn to if they lost one the day before.

[00:21:01] AM: Ways to become more effective
---

Mike Bird: Becoming effective as an account manager. It's similar to becoming great as an AE in my books. Learning to build solid candid relationships with clients, understanding their business and how your company can best support them, is one set of ways to become an effective account manager. AMs may need to work in collaboration with other internal stakeholders to successfully manage difficult accounts, come up with creative solutions to client problems and hit targets.

Working on collaboration skills could come in the form of, for example, coaching a rec sports team or volunteering for some kind of a team-based initiative. These are things that you can build soft skills through and we all know that sales is a lot about soft skills.

Building a matrix. So talking about prioritization as another challenge and becoming a really great account manager means knowing how to spend your time, if you have a matrix or at the very least a clear mindset around how you will prioritize accounts is another important step for an AM to take.

Not all accounts in a business can be treated equally. Of course they should never be let down, but knowing where to put your time on folks who may need an extra few hours from you or several hours from you, possibly, in order for them to get to where they need to be with your product or service. That's all part and parcel for what an AM has to do, not just for one account, but for dozens, a lot of the time.

The longer you're around your client base, and this is true I think for sales in general, the more opportunities you'll have to develop the kinds of relationships that keep your business in business with that customer. People will always prefer to buy from folks that they know and trust. So knowing how you can help a particular client by knowing their business, being easy to work with and true to your word, being trustworthy, that goes a long way in general in life, but also obviously in sales roles like this one.

[00:22:57] Conclusion
---

Mike Bird: Okay. So hopefully this was a good primer in terms of these big three individual contributor positions, the SDR, the AE and the AM roles. If you have any questions, feel free to reach out to me: mike@salesseekers.ca. If you have any comments on this or you feel like I missed something major, feel free to let me know.

But this is a good overview to consider if you are contemplating going to one of these roles, or going from one role to another. Choosing which role is right for you depends a lot on knowing what each role actually entails. So let me know if this is something that is interesting to you and you want to know more about how to become an AE or an AM or break into sales, maybe through an SDR path. Let me know. I'm curious to hear more from you.

Thanks for tuning in, and I will see you in a couple of weeks. Bye for now.