Outbound Prospecting + Inside Sales Unit Economics Model
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How to Use: Click 'File' and 'Make a Copy' to change the inputs and tailor this model to your own business.
|Variable||Value||Note||Example||Figure 1) Outbound Prospecting + Inside Sales Schematic|
|SDR Monthly Salary||$3,916.67||The average SDR salary in the US is ~$47k.|
|Contacts Hit Per SDR Per Month||800||An SDR should be able to hit at least 200 contacts per week. Someone trained on the Salesprocess.io framework and workflows can hit 120 per day.|
|Cost Per Contact Hit By SDR||$4.90||Ads are used to retargeting folks who have hit the link in the email, visited the site, but did not take action. These retargeting pools are small, but they can be reached on Facbeook, LinkedIn and the GDN. Optimize for reach.|
|Lead Rate||3.0%||A 1-3% lead rate is achieveable with average messaging. However, with a strong message and offer that can be found and published using the Salesprocess.io framework, one can achieve an 8-30% conversion rate.||Example of SDR Results|
|Cost Per Lead||$163.19|
|Demo/Lead||40%||Discovery calls can be conducted by the SDR to qualify leads. The Salesprocess.io Discovery Call Matrix can be used to standardize this process.||Example of Discovery Call Matrix||Video sales letters and in-depth content pieces are used to warm prospects up before call.|
|Cost Per Demo||$407.99|
|Demo Show Up Rate||90%||One must account for the show up rate. Can drop during summer and holidays. Email sequences can be used to increase the show up rate and marinate the prospects before the demo.||Example of Primer Sequence|
|Demo Close Rate||20%||A high-performing inside sales team with the right script and assets will achieve close rates of over 20%. This 20% standard can achieved by a junior person with 1-3 months training on the right framework. Experienced salespeople (8 months-13 months) can achieve 50%+ conversion rates.|
|Example of Spreadsheet + Management Tracking||Example of Spreadsheet + Management Tracking|
|Example of Scripts||Example of Script|
|Sales Rep Commission (% of Gross Contribution)||10%||For a high-ticket offer, 10% is the commission rate that will keep the sales team motivated and aligned.|
|CPA (Conversion)||$800.00||Sales rep commission.|
|CPA (Total)||$3,066.59||The total cost to acquire a customer is extremely important and should be tracked at all times.|
|Annual Gross Contribution||$8,000.00||Outbound prospecting and inside sales works best for offers with gross contribution >$3k per sale.|
|Gross Contribution in 7 Days (if paid monthly)||$2,666.67||It is better to sell upfront deals to manage cash flow and recoup CPA immediately.|
|Payback Period (months)||1.1||You can make this <1 if you and your team are trained on selling upfront deals.|
Outbound Prospecting + Inside Sales [Pros, Cons & When It's Used]
|Fast to set up|
|Can reach executives|
|Easy to duplicate|
|Hard to scale|
|Expensive to scale|
|When It's Used|
When you are starting out from scratch and testing new offers
When you are selling tickets with gross contribution >$3k
When you know exactly who you are targeting
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||500||500|
|Cost Per Contact Hit By SDR||7||7||7|
|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.