What is the ROI of AiSDR?
In the fast-paced world of sales and marketing, maximizing budget and efficiency is paramount. The ability to optimize every resource, streamline operations, and, most importantly, maintain profitability can be the difference between thriving and surviving.
This is where the potential of an AI SDR shines brightly. However, even though AI tools are all the rage these days, companies shouldn’t fall for the glitz and glamour.
Startups, SMBs, and enterprises should do their due diligence in assessing the potential impact and Return on Investment (ROI) of sales automation software like AiSDR. Failing to do so could have expensive consequences.
Generally speaking, the higher the ROI, the better the software’s performance and impact. That’s why in this post, we’ll be exploring the returns that AiSDR has to offer.
What is ROI?
Return on Investment is a specific calculation that determines the benefit and cost of an investment. While ROI is often used with regard to stocks and business investments, the ROI formula can be applied to any situation, so long as you have an initial cost and a realized gain.
Let’s say you invested $100 into Starbucks stock before eventually selling it for $200. Your ROI would be expressed as either 100% (since you effectively doubled your initial investment) or $100 (the total amount of profit you gained).
ROI can also be used to determine cost or time savings. For instance, if automation reduces the time spent on work by 50%, then the amount of work your team can do is double what it once was.
What is AiSDR?
AiSDR is an automated sales development representative that’s powered by artificial intelligence. It will help you grow your sales pipeline, optimize costs, and run email campaigns.
For $750 per month for 1,000 emails, AiSDR will handle many time-intensive SDR tasks on auto-pilot:
- Lead scoring and qualification
- Email drafting and sending
- Automatic email follow-ups
- Answering questions
- Countering objections
- Inbound and outbound sales
- Pitches to book a meeting
In addition to SDRs, AiSDR can help marketing teams, start-ups, and any other organizations that want to scale their outreach without overinflating their headcount.
How to know you need an SDR
If you’re not sure about whether or not you need to onboard a new SDR, here are some critical signs you’ll need to watch out for:
- Follow-ups aren’t being sent
- SDRs aren’t able to reply or follow up fast enough
- Cross-selling or up-selling opportunities are going unpursued
- Cold leads are clogging your sales pipeline
- SDRs are more focused on closing than prospecting
Not only are all of these a major red flag, they also result in lost revenue. For example, as a rule of thumb, if a lead doesn’t receive a follow-up within 10 minutes, there’s a good chance that they’ll move on to the next option.
Cost of an SDR
Once you include benefits like healthcare, bonuses, on-target earnings, and 401(K) contributions, the total annual compensation for an SDR can easily reach $80,000.
However, this is a price you’ll have to bear if you want a good sales rep who can prospect, nurture, and pitch potential clients effectively. After all, you wouldn’t want to hire an SDR with this price tag.
In-house vs outsourced SDRs
There’s also the question of whether or not you should use in-house SDRs or outsourced SDRs.
In-house SDRs can become expensive very quickly due to additional “hidden” costs:
- Hiring costs
- Recruitment fees
- Vacation days
- Sick days
- Employment taxes
- Health insurance
- Dental insurance
- Sales software
- Hardware / corporate laptops
- Office space
- Office supplies / snacks / coffee
- Retirement benefits
Combined, an in-house SDR in the US can easily cost upwards of $139,000 (including salary and benefits), if not more. Keep in mind this will vary greatly depending on region, industry, and the SDR’s skills.
Here lies the appeal of outsourced SDRs. Companies aren’t obliged to provide all these benefits. All that’s required is the salary, any necessary software, and (optionally) a performance bonus like commissions or on-target earnings.
The drawback of the outsourced approach is that outsourced SDRs may be balancing sales development for multiple companies, resulting in underwhelming results.
There are time costs as well.
Before the pandemic hit, HubSpot reported that the average tenure of an SDR was 18 months, 3-4 months of which were spent on onboarding and ramping up. Although tenure increased slightly to ~22 months during the pandemic, companies still enjoy less than 1.5 years of full productivity from new SDRs.
This is partly because the role of an SDR is generally seen as being entry-level. After 1.5-2 years, successful SDRs are expected to make the next step in their career path. This includes options like jumping up to an Account Executive position or moving to a different function like marketing or customer success.
There’s a third option available for inbound and outbound sales – SDR agencies, also known as “SDR-as-a-service”. For example, an agency specializing in outbound can cost a company $42,000.
On the one hand, this is significantly less than the $139K cost incurred for an in-house SDR. On the other hand, many agencies operate based on a retainer fee without any guarantee of results or meetings booked.
They’ll likely even try to upsell you for some sort of premium service without improving service. In the end, you overpay for minimal results or unfulfilled promises.
Staying in-house or outsourcing your SDR team are both reasonable choices depending on your needs, goals, and industry. That’s why we’ll break down the potential ROI of AiSDR for each case.
AiSDR vs in-house cost
As we mentioned earlier, an in-house SDR’s total salary is $80,000 after factoring in all compensation and employee benefits. AiSDR is 88.75% less expensive than a full-time in-house sales development rep.
AiSDR is 88.75% less expensive than a full-time in-house sales development rep.
Let’s take this one step further.
After taking into account hiring costs, payroll taxes, office space, and other ‘hidden’ expenses, an in-house SDR costs $139,000. Compared to this, AiSDR is already 93.5% less expensive.
AiSDR vs outsourced cost
For simplicity, in order to estimate the ROI of AiSDR compared to an outsourced SDR, we’ll use $54,000. As a reminder, this is the average salary of an SDR before all benefits and compensation are included.
Companies often turn to outsourced SDRs because they believe it’s simpler and more cost-efficient. All they need to do is determine an acceptable hourly rate and multiply it by the expected number of work hours.
Since outsourced SDRs are usually “1099 workers”, companies aren’t on the hook for payroll taxes, nor are they obligated to provide vacation days, sick days, and other employee perks. It’s also at the company’s discretion to provide commissions or performance bonuses. In other words, if the SDR doesn’t work, they won’t get paid.
Assuming that the SDR doesn’t take a day off, they’ll earn $54K for the year. At $9,000 per year, AiSDR is still 83% less costly than hiring a full-time, outsourced SDR.
Daily workload ROI
The raw salary numbers tell just part of the story.
SDRs often spend the majority of their day sending emails, creating sequences, setting up templates, and replying to leads.
Let’s imagine your company decides to launch a massive email campaign. Generally speaking, most inboxes should send no more than 50 cold emails per day, or else their inbox reputation will plummet.
Based on that, here’s the breakdown of the math for a day’s worth of cold emails.
|Max cold emails per day||50||50||50|
|Daily “salary” (based on 20 workdays)||$333||$225||$37.50|
|Cost per email||$6.66||$4.50||$0.75|
As you can see, the cost of each email sent by AiSDR is significantly lower than by both in-house and outsourced SDRs. More importantly, this math doesn’t reflect the quality of the email copy.
Human SDRs spend on average 15-30 minutes personalizing a decent-quality email. It’s mathematically impossible for a human SDR to personalize and send 50 cold emails within a standard 8-hour workday without relying on generic or pre-made templates.
This doesn’t even reflect the time an SDR spends for lunch, coffee breaks, and any team or 1-on-1 meetings. Not only does this decrease the capacity for personalizing emails, but it increases the cost of each email. A drop in availability of just 1 hour each day will increase the cost per email.
Plus, by the end of such a long day, human SDRs will either start to feel burnt out or their emails will be prone to typos. For AiSDR, generating 50 personalized, typo-free cold emails is no challenge.
Monthly workload ROI
If we shift our focus away from a day’s worth of emails to a month of emails, the numbers remain the same. The cost of each email sent by human SDRs is significantly higher than AiSDR.
In fact, in order for human SDRs to match the cost per email of AiSDR, in-house sales reps will need to send 8,889 emails, while outsourced must send 6,000. This works out to 444 and 300 emails per day. Not only is such a high volume unrealistic, but it will need to be spread across multiple inboxes to avoid causing emails to be marked as spam.
|Number of emails per month||1,000||1,000||1,000|
|Cost per email||$6.66||$4.50||$0.75|
|Number of emails needed to match AiSDR’s cost per email||8,889||6,000||––|
Furthermore, every email sent by AiSDR is generated in less than 10 seconds and personalized for each lead using their LinkedIn data. This added step would cause an SDR to spend even longer tailoring each email, resulting in a lower volume sent.
With that being said, personalization is key for sales. That’s because personalized emails are proven to improve a company’s chances of conversion.
As a result, companies quickly pay a premium for personalization. Considering that human SDRs spend 15-30 minutes on a single personalized email, this means companies pay $7 to $14 for each email by an outsourced SDR and $10.50 to $21 for each email by an in-house SDR. In comparison, each email by AiSDR is always $0.75, and it’s created and personalized in under 10 seconds.
Additionally, human SDRs are hard-pressed to respond in under 10 minutes, which is when leads are at their most engaged. AiSDR will always respond promptly to any emails it receives, increasing the chances of converting a lead into a paying customer.
In the long run, companies hire SDRs to grow their sales pipeline, close deals, and generate revenue. For many businesses, SDRs bring in 30%-40% of new revenue. In today’s economic landscape, good SDR performance is even more important as companies across the board strive for profitability.
To become profitable, a common industry benchmark is that an SDR should generate enough leads and opportunities that the amount of revenue is equal to 3-5x of their salary. Here’s what those numbers would look like.
In the current sales environment, simply generating the $54K or $80K needed to break even on hiring an SDR is a challenge. By comparison, it’s much easier to surpass $9K. And if AiSDR helps you hit the $54K-$80K you allocated for hiring an SDR, you’ve already earned 6x-9x of your initial investment.
Secure a positive SDR ROI with AiSDR
AiSDR automates high-volume, repetitive work so that human SDRs have more time and energy for high-level strategic work. Our AI SDR also provides the opportunity for human SDRs to focus on creating extra touchpoints and building meaningful relationships with potential customers.
There are many tasks such as cold-calling and relationship management that a human SDR is much better suited for. But when it comes to cold outbound and general email outreach, AiSDR is uniquely positioned to become a key strategic sales partner by optimizing and accelerating an SDR team’s functions.
Book a demo with our sales team to discover how AiSDR can boost your SDR team’s performance.
What is AiSDR’s price?
AiSDR costs $750 per month for 1,000 emails sent. Discounts are available for clients who expect to send well over 1,000 emails.
How do you calculate the ROI for automation?
To calculate the ROI of automation, you’ll need to:
- Add up the costs of labor for all tasks you plan on automating to get your possible savings
- Subtract the cost of automation from the cost of labor
- Divide the result by the total automation investment and multiple by 100 to get a percentage
Accordingly, the formula would look like this:
ROI = ((Possible Savings – Cost of Automation) / Investment Amount) x 100.
How can automation in sales help boost your revenue?
Sales automation tools help streamline processes, send quicker follow-ups, hyper-personalize communication, and nurture leads. By handling time-intensive tasks like these, sales teams enjoy enhanced productivity, ultimately increasing sales conversions and revenue.
Why is automation important in sales?
Sales automation helps save time, standardize tasks, and send consistent follow-ups. As a result, teams are more organized and capable of ensuring timely responses to leads. This allows sales teams to focus on building relationships and closing deals.
Does automation lead to higher profits?
Generally speaking, automation makes it easier for companies to enjoy increased revenue and higher profits. This is because automation, when correctly implemented, can reduce operational costs while increasing revenue opportunities and improving resource allocation.
10% of the cost