Question 1

What makes this a good SDR compensation plan?

Accepted Answer

This is one of our favorite compensation plans for SDRs because it accomplishes two tasks. First, it rewards SDRs for creating good opportunities, something they can control. And secondly, it rewards SDRs if those deals are good enough to become customers, which is good for the business.

Question 2

What’s a good commission rate for this SDR comp plan?

Accepted Answer

Typically, SDR commission percentages fall between .5% to 4%.

Question 3

What’s the difference between sales commissions and bonuses?

Accepted Answer

Sales commissions and bonuses both classify as variable compensation. Commissions differ from bonuses in that bonuses reward a pre-determined dollar amount that doesn’t vary. Commissions, on the other hand, consist of a percentage of the total revenue from a deal that changes most oftenly based on the annual recurring revenue (ARR) or total contract value. For example, If an SDR earns 4% of every deal that eventually closes, that’s commission. Meanwhile, if a rep earns $200 on every qualified opportunity they create, that’s a Single Rate Bonus! To see commissions and bonuses tracked automatically in QuotaPath, book a time with our team here.

Question 4

What other SDR comp plans should I consider?

Accepted Answer

In addition to commissions and bonuses from deals won and opp creation, we’ve also seen SDRs earn commissions from number of meetings booked. This type of plan is the most common for early organizations that want to fill their sales reps’ calendars with meetings. For every meeting the SDR books, they earn a bonus, which will vary based on the company’s ASP (average sales price) and demo-to-close rate. Generally, the bonus falls anywhere between $20 and $300. Other SDR comp plans include the Qualified Opportunity Bonus, which pays a rep a fixed rate bonus for every qualified opportunity they pass on to sales. Or, you can offer just the Closed Won Commissionto reward the rep a set percentage on every deal that closes from their leads. In any case, QuotaPath can track and payout these plans to make it a bit easier on your finance and revenue teams.

Question 5

What about activity-based SDR comp plans?

Accepted Answer

Like the meetings-booked sales compensation model in the question above, some companies will pay SDRs a bonus for hitting a specified amount of activities over the course of a week, month, or quarter. 'Activities' can mean anything from the number of deals made in a month to the number of meetings set or held. If you go that route, be sure to clearly define what constitutes as an activity and align your plan appropriately. In our opinion, incentivizing SDRs through qualified opportunities and/or deals won is better in the long run for your business and rep when compared to activity-based plans.

Question 6

What is a sales funnel?

Accepted Answer

A sales funnel models and tracks the customer journey from the beginning stages of the lead generation through the transition to customer. All sales funnels includes a series of stages as defined by the organization with the goal to bump the customer through the stages until the purchase. Most commonly, you’ll see TOFU, MOFU, and BOFU associated to indicate top of funnel, middle of funnel, and bottom of funnel. TOFU represents the least likely to close leads that may have downloaded a company whitepaper. MOFU leads are deep in their research but are not quite ready yet to sign. And, BOFU leads are ready to make a decision.

Question 7

How do you analyze your sales funnel?

Accepted Answer

Our free Sales Funnel calculator can be used by SDR and sales teams to calculate scenarios like how many meetings they need to book in order to reach quota. Use it to experiment with different close rates, average contract values, and activities to see what’s right for your business, team, and individual goals. Great for 1:1 meetings and comp planning.

Question 8

What is an SDR?

Accepted Answer

In sales, an SDR is an acronym for sales development representative. This role typically sits within the sales function but may also fall under marketing. Their main responsibilities involve prospecting, setting appointments, and generating qualified leads to pass along to sales. To learn more about sales compensation for SDR teams, read our blog.