A sales development rep (SDR) compensation plan that pays a single, flat rate commission on any won deals that the SDR initially generated the lead for.
Use this sample compensation plan when you want to reward your SDRs for generating a solid lead that ends in a winning deal. This commission structure includes a Single Rate Commission that’s applicable to every deal that comes from an SDR with no cap. Note: While this is an excellent plan to promote qualified leads from your SDR team and train them to be future AEs, it has its drawbacks. For instance, their variable pay under this plan relies almost fully on the efforts of the AE. Plus, if it’s a long sales cycle, that hurts the SDR and lengthens their wins. We recommend setting a commission rate much less than the AE plans. For example, an SDR might earn 3% on the deal, while the AE collects 10%. You might also consider combining this plan with the Qualified Opportunity Bonus.
We recommend a ratio of 4 to 10x
This plan includes one path with a Single Rate Commission applied to every closed/won deal that originated from an SDR lead.
If you want your BDRs to really suss out the leads before giving them to your AE team, pay them under this plan. Trust me.
Director of Business Development
Base commission rate:
Base commission rate:
Base commission rate:
As with most compensation plans, the two major components that will vary across sales teams are:
First, you need to decide the quota period. This is the frequency at which a rep is held to that sales quota.
The most common quota periods are: quarterly (45% of plans), annual (25% of plans), and monthly (25% of plans) with 5% of plans having other frequencies (weekly, bi-weekly, semi-annually, etc.).
Once you decide that, you will need to determine a quota that is both low enough to be attainable and high enough to be valuable for your business. One way to do this is by using our Quota:OTE Ratio calculator.
Next up, set your commission rate.
This plan features a single rate commission plan which is very simple to calculate for yourself. You would simply take the total variable compensation the rep is set to earn if they hit their target (for example, $30,000/year) and divide that number by their annualized quota/target from above (for example, $750,000/year).
Given those two examples, that would be $30,000/$750,000 = .04 or 4% commission.
All SDR compensation plans require the balancing of two things, SDR control of the outcomes and benefit to the company. In this plan, there is clearly a high benefit to the company: revenue. However, because the SDR isn’t the one closing the deals, they may feel they lack control over the outcome and thereby their compensation. This plan works well if you have a short sales cycle (90 days max, ideally less than 45 days) and/or your SDRs are heavily involved throughout the sales cycle.
We most commonly see commission rates for SDR comp plans between 0.5 and 4%.
Sales commissions differ from bonuses in that bonuses reward a set dollar amount that doesn’t change. Commissions, on the other hand, consist of a percentage of the total revenue from a deal that changes usually based on the annual recurring revenue (ARR) or total contract value. For example, If a rep gets 2% of every deal closed, that’s commission. If a rep earns $100 for every qualified opportunity, that’s a single rate bonus!
Other SDR comp plans include the Qualified Opportunity Bonus, which pays a rep a flat rate bonus for every qualified opportunity they give to the sales reps to close. You can also combine the Qualified Opportunity Bonus and Closed Won Commission to reward the rep with a set dollar amount on every newly opened opportunity and another amount upon the deal booking.
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 an activity and set your plan accordingly. Ultimately, we think rewarding SDRs based on qualified opportunities and/or deals won is better in the long run for your business and the development of your reps versus activities-based plans.
A sales funnel depicts and tracks the customer journey from potential lead through the actual purchasing of the product. Every sales funnel includes a series of stages as defined by the organization with the goal to move the customer through each stage until they buy. You may hear and see the words TOFU, MOFU, and BOFU to indicate top of funnel, middle of funnel, and bottom of funnel. TOFU represents the least likely to close (yet) leads that may have downloaded your organization’s whitepaper. MOFU leads are deep in their research but are not ready yet to purchase. And, BOFU leads represent ready-to-buy, red-hot leads.
We built a free Sales Funnel calculator that your SDR and sales teams can use to calculate scenarios like how many meetings they should book in order to reach their quota. Use it to experiment with different close rates, average contract values, and activity numbers to see what’s right for your business, team, and individual goals.
Of course! Our commission tracking and sales compensation software can provide real-time analytics, insights, and forecasting for SDRs, sales reps, leadership, and finance. Native integrations mean the data is accurate and up-to-date without the need to wait for nightly refreshes or manual reloads.
A sales development rep (SDR) compensation plan that pays a flat bonus on every qualified opportunity that the rep generates.
An SDR compensation plan that pays the SDR a bonus on qualified opportunities as well as a commission on closed/won deals that originated from their leads.