How to calculate cost effectiveness of SDR tenures


Hiring and retaining sales reps is a major investment, and it’s only increasing. Companies now spend between $6,000 and $7,000 per SDR yearly just on tech tools, a jump from the $2,000 to $5,000 range we saw in 2023.*
With those rising costs, evaluating the total investment in hiring, training, and compensating sales reps against their contribution to pipeline growth and revenue is crucial. Additionally, you need to understand how sales turnover affects your bottom line.
In this guide, we’ll show you how to calculate your SDR team's cost-effectiveness using simple metrics. You’ll also discover actionable tips on reducing turnover, improving team stability, and maximizing sales performance.
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*Orum’s State of Sales Development Report, 2024
Understanding SDR costs
The term sales turnover can have two different meanings:
- The total amount of products or services a company sells within a certain period
- The rate at which SDRs leave your organization (i.e., employee turnover within the sales team)
In this article, we’ll focus on the second meaning. By analyzing the full range of costs—from recruitment to retention—you can control expenses and make smarter decisions for your sales team.
There are two main categories to consider when analyzing the cost-effectiveness of your company’s sales team.
Initial acquisition costs
Hiring SDRs comes with upfront costs that can add up quickly. The most common ones include:
- Recruitment expenses: Job postings, agency fees, and interview processes.
- Onboarding costs: Training programs, materials, and the time other sales team members spend getting new hires up to speed.
Ongoing costs
A new sales rep’s employment comes along with certain costs, such as:
- Salary and benefits: Fixed compensation and additional benefits like health insurance and retirement contributions.
- Tools and technology: CRM tools, dialing software, equipment, and other tech stack expenses necessary to support their daily work.
- Performance incentives: Bonuses, commissions, and other financial rewards for hitting targets.
Opportunities and intangible costs are also harder to quantify. For example, when sales reps underperform, the company may lose out on potential deals. This will negatively impact your pipeline, while it might be challenging to pinpoint at the time.
Learn how to build an efficient sales plan with our guide on optimizing the cost of sales.
💡Good to know
According to our latest State of Sales Development report, 70% of respondents cite an average SDR tenure of at least 12 months, with 40% stating that their sales reps have been in the roles for over two years.
Estimating SDR training and ramp-up time
The time it takes to train and get a sales rep fully up to speed matters. The faster they learn the ropes, the quicker they’ll start meaningfully contributing to your pipeline.
Training duration
The time investment in training varies depending on the complexity of your product and the SDR's prior experience.
- Standard training time frames: Most SDRs undergo four to six weeks of initial training. However, a SaaS company with a complex product, for example, may require additional time to cover product knowledge and sales techniques.
- Variability based on the sales rep’s background: Training may require an additional time investment if the new sales team member lacks previous experience in your industry or niche. For instance, if someone comes from a non-tech background and you’re offering a SaaS solution, you must account for that discrepancy in your training plan.
Discover additional insights on SDR training and continuous learning.
Ramp-up period
The time it takes for a sales rep to settle in after their initial training can depend on several factors.
- Typical ramp-up time: Depending on the industry and sales cycle, SDRs often take three to six months to reach full productivity. Some organizations may use automation to decrease ramp-up time so that this metric can vary quite a bit based on available resources.
- Factors affecting ramp-up: Industry knowledge, access to mentorship, and internal resources like sales enablement tools affect how quickly an SDR becomes fully effective.
Now, let’s examine sales turnover costs, especially their impact on team morale.
The impact of sales turnover on SDR tenures
A high sales turnover rate won’t just affect your business’s bottom line. It’ll impact the entire team’s morale and performance. Indeed, it can cause a negative ripple effect on your organization.
When SDRs leave their roles frequently, it can create instability, which trickles down into day-to-day operations. You need to fight SDR burnout and be mindful of their stress levels.
Maintaining a stable, positive, and supportive work environment is key to keeping energy and motivation high in a role that involves making cold calls and handling rejection. It’s what helps salespeople perform better.
Remember, retention boosts performance. Experienced sales reps hit their sales quotas more consistently, build stronger relationships with prospects, and steadily increase total sales.
How to calculate minimum SDR tenure
There’s no one way to calculate the minimum amount of time an SDR needs to spend with your business to be cost-effective. The simplest way to do so is by considering these key metrics:
- Length of the total ramp-up period: This is usually between three and six months. It should include the sales rep’s hiring, onboarding benchmarks, and initial training time.
- Time to quota attainment: Once a new SDR finishes the initial ramp-up period, they won’t instantly perform at the same level as their more experienced colleagues. So, this metric measures approximately how long it takes for a new sales rep to consistently meet or exceed their sales quotes. It’s usually between six and twelve months.
So, here’s the simple formula to help you gauge the minimum SDR tenure for reps to make meaningful contributions to your business.
Minimum SDR tenure = [Length of the total ramp-up period] + [Time to quota attainment]
So, for example, if you’ve got a new sales rep who you estimate will require a five-month ramp-up period and a ten-month quota attainment period, their minimum SDR tenure should be at least 15 months.
Depending on the specifics of your business and industry, you may want to add additional variables into this formula to account for factors like average deal size, average sale cycle length, and time to promotion.
Want help with revenue forecasting? Use our Math of Sales Calculator to get a clearer idea of the targets you need to hit.
How to determine optimal SDR tenure
The optimal SDR tenure is when a sales rep covers their initial costs and continues to provide increasing value to the company (e.g., positively impacts total sales).
Longer sales reps’ tenures usually lead to better performance. As salespeople gain experience, build relationships, and understand company processes on a deeper level, their ability to hit targets and contribute to revenue growth improves.
While there isn't an exact formula to determine optimal SDR tenure, these are the main factors that influence it:
- Skill development: New sales team members improve with time, closing more deals as they refine their skills and abilities.
- Customer relationships: Building trust with prospects leads to higher conversions, bigger deals, and even referrals.
- Cultural fit: Sales reps who adapt to your company’s culture tend to perform better in the long term.
Once you understand these factors, you’ll be in a good position to adjust sales onboarding and training programs based on what you feel your team needs most.
Evaluating SDR performance over time
As a sales manager, you must track and evaluate SDR performance over certain periods. This will help you identify their strengths, benchmark their sales performance against the company’s sales numbers, and calculate the cost-effectiveness of their tenure.
Key Performance Indicators (KPIs)
What KPIs should your new SDR be accountable for? How should you track progress? Here are some of the most common:
- Number of meetings set: The volume of meetings scheduled is a core metric for measuring SDR performance.
- Conversion rates: The number of meetings that turned into qualified leads or opportunities.
- Lead quality assessments: Evaluating the quality of leads brought in is how you ensure your SDRs are targeting the right prospects.
💫 Get inspired
LevelUp Leads, a fully remote organization, relies on Orum’s Virtual Salesfloor to foster a strong calling culture and enable real-time coaching.
Sales managers and reps regularly listen to spotlight calls to improve objection handling and access the call library for on-demand playback.
Orum’s Analytics also helps managers create customized training, identify common objections, and track call progress to continuously upskill reps.
Tools for tracking performance
You need the right tools, like Orum’s useful Call Library and Analytics features, to track sales performance efficiently.
The Call Library gives your sales team a centralized place to grow. It organizes all your sales call data within a library, allowing reps to listen to audio files and read AI-generated transcripts. You can also organize your calls with tags and create shared or private playlists.
For instance, you might introduce a “Great enterprise sales call” tag so that sales reps can navigate the data more easily, or use common labels such as “Connected,” “Pitch,” or “Qualification”:

Orum’s Analytics tool also lets you view key metrics, track seller performance, and enable your team to do their best work. With the sales rep performance dashboard, you can easily identify areas of improvement and properly support your newly hired salespeople.
Other key tools for tracking performance include:
- CRM insights: Track lead progression, meetings, and conversions directly within your CRM.
- Performance dashboards: Use dashboards to monitor key KPIs, performance trends, and trends within different time periods.
Reduce sales turnover with Orum
A high turnover rate can disrupt your sales team's performance in a big way. New hires take time to onboard and get up to speed, which slows down deal cycles and decreases overall productivity. And then if new team members decide to leave, it can feel like your time and resource investment was all for nothing.
This impacts team morale, creates inconsistency in customer interactions, and increases recruitment and training costs. All of this hurts your company’s ability to hit sales targets.
Orum helps sales teams improve performance and decrease employee turnover. Our valuable insights into successful call patterns and rep performance can equip you with the knowledge you need to effectively train and support your SDRs.
Likewise, we can provide you with a centralized place for your sales intel, which helps build a culture of ownership. Indeed, sales reps can learn what works and what doesn’t on their own, with little to no help from coaches.
One last thing to remember: SDRs stay longer when they feel supported and can see clear paths for growth, which helps you build a more stable, high-performing team.
Decrease your employee turnover rate with Orum
Give your team a centralized place to skill up and start crushing their quota.
Request a demo
Frequently asked questions about sales turnover
What does SDR turnover rate mean?
SDR turnover rate refers to the percentage of sales development representatives who leave a company within a certain period, typically a year. High turnover rates can negatively impact revenue and team stability, while low turnover can help you build a more experienced, high-performing sales team.
What's an example of a cost-effective SDR tenure?
A cost-effective SDR tenure occurs when a rep stays long enough to recoup the investment that was made in their hiring, onboarding, and training. Typically, this takes 12-18 months, after which the rep should consistently contribute to pipeline growth and sales.