Cost and Benefit Comparison of Sales Robots vs. Sales Development Representatives
“Our research says that 50% of the activities that we pay people to do can be automated by adapting currently demonstrated technologies. We think it’ll take decades, but it will happen. So there is a role for business leaders to try to understand how to redeploy talent. It’s important to think about mass redeployment instead of mass unemployment. That’s the right problem to solve.” — Michael Chiu, Partner, McKinsey Global Institute (MGI)
This article will compare the costs of hiring an SDR team versus a sales robot team. The goal is to help you evaluate alternatives to staffing your sales outreach team to accelerate your pipeline. Sales robots are a new alternative to building an inside sales team that artificial intelligence and technology have provided companies. We will seek to answer the following questions in this article:
· Are sale robots worth the price?
· What is the ROI?
· What is the average cost per lead?
· How do they compare to other marketing channels?
· Are sales robots good for my industry?
· Should I hire a real person or a robot?
Case Study for Comparing Sales Outreach Campaign Options
We must first consider a base case study to compare all options for an accurate cost and benefit comparison between selecting a sales robot outbound strategy versus an insides sales team. In this base case study, a company is trying to achieve a $10,000,000 yearly revenue goal from cold outreach. The average sales price for this company’s product is $40,000, and the sales team needs to make 21 monthly sales ($833,333) to achieve their objective.
To forecast the pipeline required to achieve 21 monthly sales, I will be using average industry numbers. Here is my initial logic on forecasting the pipeline needed to accomplish the goal of 21 monthly sales:
· 160 Qualified Opportunities Required: On average, the opportunity to win rate is between 10% and 20%, so let's say to close 21 deals, you will need to get 160 qualified opportunities that your sales team will have to close. We are using a 13% win rate for our calculation.
· 1,068 Leads Required: To get those 160 opportunities, you will need to get 1,068 leads based on a 15% lead to opportunity rate. The average lead to opportunity rate is between 10% and 20%.
· 10,684 Prospects Required: To get 1,068 leads, you will need to acquire 10,684 prospects if we assume, we can convert 10% to leads. The industry average is 5% to 10%)
· 53,419 Emails Required: On average, it takes seven interactions before a prospect purchases from your brand. So, if we schedule an initial email sequence of 5 emails sent to each prospect, we will have room for some direct follow-up outside the sequence for additional inquiry. With five emails sent per prospect, we will need to send 53,419 emails to get to our goal.
On average, sales reps send 36.2 emails per day. Email spam algorithms start sending emails to spam if any one individual starts sending more than 50, without a solid record of consistent email sends and interactions at a higher number each day. Consequently, we will assume that sales can reach out to 148 prospects each month and send out 740 emails. That would be a total of 15 leads generated per salesperson per month based on their email outreach.
You will need 72 Sales Development Reps and 3 Sales Reps - Based on our forecast. We suggest you scale your sales development team to 72 salespeople and focus their efforts on sending 53,419 emails to 10,684 prospects qualifying your prospects to get to 1,068 leads. Then with three sales reps who, on average, can reach out to 320 leads per month, you will be well-staffed to execute on your sales goal.
Sales Outreach Campaign Options
There are several options to staff a team of 72 sales development reps to achieve your forecast goal. You can hire your own sales development reps, which will be the more costly option. Otherwise, you can outsource your SDR efforts to contractors located onshore or offshore. The offshore option will be less expensive, and the onshore option will be comparable to hiring your SDR but will give you the freedom to scale. The third alternative would be to hire a sales robot team, which would be significantly less expensive.
· Hiring your own SDR costs between $107k - $147k a year - Base SDR salary is between $40k-60k with a variable bonus of $20k to $40k and average overhead costs of $47k per year.
· Hiring a contractor SDR costs between $36k - $120k a year -A contractor SDR in the Philippines will cost you at least $36k, and a high-end contractor in the United States could cost you upwards of $120k per year.
· Hiring a sales robot will cost you between $959 - $1,541 a year - You can buy sales robots in packages of 7 robots for $899 per month, 15 robots for $1,499 per month, and 30 for $2,499 per month. After thirty robots, each robot will cost you $79.99 per month.
To accomplish your goal, you will also need to hire account executives to close the sale ($177k - $247k per year), email software ($1.50 per month per rep), and prospects to outreach ($3 per contact). These costs will remain consistent across all three options.
Total Cost Comparison
Hiring 72 sales development reps, email software, and prospect contacts will cost you a total of $37,918 per month for sales robots, between $674,159 - $914,159 per month to hire your own sales team and between $248,159- $752,159 per month to outsource. For this case study, the only viable solutions are using sales robots, outsourcing, or hiring entry-level SDRs. Sales robots are the most affordable, have the highest ROI and the lowest cost per lead.
· Total cost for sales robots $37,918 per month, ROI 2,097%, and average cost per lead $35.5- Monthly sales robot costs $5,759, Email Software $108, and contacts to outreach $32,051.
· Total cost outsourcing SDR $248,159 - $752,159 per month, ROI 235% - 10%, and average cost per lead $232 - $704- Monthly SDR costs $216k - $720k, Email Software $108, and contacts to outreach $32,051.
· Total cost hiring a SDR team $674,159 - $914,159 per month, ROI 23% - (-8%), and average cost per lead $631 - $855- Monthly SDR costs $642k - $882k, Email Software $108, and contacts to outreach $32,051.
Industry Benchmark Comparisons
When comparing against the cost per lead across different industries, sales robots are a very competitive go to market strategy for all sectors; with an average cost per lead of $35.5, sales robots can do well in all industries, with a specific advantage in B2B sales.
As a marketing channel, sales robots perform very well compared to other marketing channels used for generating leads. Hiring or contracting an SDR team is an expensive channel.
Hiring or outsourcing an SDR team gives you more benefits when comparing to sales robots. An SDR can make phone calls, engage with prospects, and solve challenges. Hiring humans have many benefits, but also humans take longer to hire and train. Additionally, SDRs are known for high-turnover, are more costly, and are an expensive marketing channel.
Sales Robots cannot fully replace an SDR, but sales robots can automate tedious tasks of outreaching to prospects and waiting for prospects to engage and show interest. Robots can help accelerate the sales pipeline at significantly lower costs and higher ROI by automating these tasks. Robots can work hand-in-hand with SDRs and account executives to close more sales and help a company reach a larger number of prospects than previously possible with a human sales team.
Create Your Business Case and Sales Playbook
This article has shown how Sales Robots are a desirable go-to-market alternative for companies wanting to ramp up their sales pipeline with sales outreach efforts. The ROI and average cost per lead make sales robots a desirable channel to try.
If you are interested, the Sales Innovator sales growth team can help you create a playbook and business case to hire a sales robot team. We will customize the playbook to your goals and historic performance. Also, we will give you the spreadsheets you need to customize your own version. Visit us at https://www.salesinnovator.com/sales-playbook to schedule your free consultation.
Sun Wu, AI-Powered Sales Outreach, May 15, 2020, Strategy for Executives LLC DBA Innovatar LeadGen (May 15, 2020
Shawn Elledge, Average Cost Per Lead by Industry and Marketing Channel: Are You Overpaying? June 27, 2018, Integrated Marketing Association