You’ll discover that compensation plans for a sales development representative team will vary from one to the next. Here at Bloobirds, we have cut through the fog of details to outline the five essential elements you’ll need to consider for creating a revenue-boosting SDR comp plan.
An SDR compensation plan fosters a proactive company culture and aligns both company and employee objectives. Given that the role of SDR tends to be entry-level, a concrete plan of action can help employees envision themselves in more senior positions such as AE, Sales Manager, or CRO. The level of transparency and objectivity conveyed through a plan can reassure SDR that achieving targets is both attainable and fair.
Ready to see how you can maximize employee retention, encourage strong practices, and scale growth starting today? Let’s dive into those essential points and get you winning:
Before you can establish your performance variables, first you must define what SAL, SQL, and opportunity mean for your company. A clear understanding of these concepts will support SDRs (and indirectly your revenues) as they focus on nurturing relationships where fruitful opportunities can arise.
Once you’ve done that, you can then consider the performance variables on which to base your SDR’s incentives. Your company’s needs and its current objectives will determine the variables that will best complement your SDR comp plan. Inside the outbound sales pipeline, variables range from activity-based, the number of meetings booked, meetings held, opportunities created, and deals closed.
Activity-based performance metrics typically incur low-quality results and are not recommended. In contrast, qualified meeting (opp created) is the ideal performance variable in high-precision outbound sales. Opportunities strike a balance between company goals and an SDR’s skills and are qualified to bring account executives to the brink of a revenue-bursting deal.
Compensation plans for inbound, outbound and new SDRs can be challenging to define, given that processes and professional experience vary among all three groups. However, we suggest that low-intention MQLs are valued the same as those generated from outbound leads. Consider customizing inbound vs. outbound lead qualification to your team’s needs and preferences. Doing just that will help you to incentivize accordingly.
Likewise, for those new to the team, compensate for the average ramp-up period of three months with the same payout per meeting with a lower target percentage. This specific adjustment can bolster the SDR’s confidence and encourage future excellence within their role.
Any strong SDR compensation plan must take goal progression and ratcheting into account if the company is to boost and scale growth. The target pay mix, a combination of base and variable compensation, supports the points above. We recommend that an SDR hit 70% of their quota before any incentives are paid out. A minimum performance level will keep representatives motivated, regardless if it has been a bad month or after a quota ratchet.
Of course, as your company and its team are unique, you’ll have to experiment a bit before you hit that sweet spot. A compensation plan must balance motivational components as well. Quarterly performance or overachievement bonuses, may help high, low, and average performers stay engaged throughout the year.
Communication is critical when it comes to implementing an incentive-oriented SDR comp plan. This includes definitions of concepts and goals, the anticipation of challenges and their solutions, as well as an outlined plan itself with targeted goals. (Psst: we’ve made a personalized template in our e-book to give you a head-start!)
When an SDR knows what is expected of them from the get-go, both of you are on the same page and can focus efforts on what matters most — achieving monthly targets with pride and glory.
The final component worth considering for an SDR comp plan is motivation. What will you do differently to boost individual morale and ensure that all SDRs continuously work towards closing deals? Words of encouragement will always be welcome. However, accelerators can make that difference from meetings pushed back to next month to new revenue coming in today.
Clock-race or incentive-based accelerators are just two that can help drive your SDR across the finish line. With the former, you won’t need to increase payroll spend. With the latter, both you and the SDR will see an increase in earnings and revenue. Each option comes with its cost, so it’s important to look into which accelerators are ideal for your SDR team. (Explore various accelerator options in detail here.)
Want to deepen your knowledge about performance variables, accelerators, and goal progression? Check out our e-book below. With real-case data about SDR compensation plans, you’ll uncover nifty tricks to create a plan that works for you and your team. There’s also a personalized SDR compensation template included.