SDR comp plans balancing quantity and quality
There are a few popular ways to measure and compensate for SDR performance. Effective SDR comp plans will measure the quantity and quality of the value the SDR creates for the Account Executives.
In theory, it seems simple enough, but in practice, finding that balance is incredibly difficult. Let’s take a look at the most common ways to compensate SDRs and which way those comp plans lean. All but the last method will influence quantity or quality over the other in some way.
SDR comp plans that prioritize quantity more than quantity
Given the primary job of an SDR is to find prospects to meet with AEs it makes the most sense to pay an SDR for a meeting they book for an AE. In the early days of building your SDR team this is the easiest and fastest way to get started. Essentially you establish a quota for the SDR for the number of meetings booked in a given time period, typically per month. Once an SDR books a meeting and gets in on the calendar for the AE then the SDR gets quota credit and paid for the work they did. This method can drive a ton of quantity meetings but has very few parameters to ensure the quality of those meetings.
This is essentially the same thing as meetings booked but a little bit more advanced in the sense that the prospect has to accept the calendar invite, AND they have to actually show up to the meeting. Given a choice between compensating SDRs on meetings booked vs meetings completed I would choose meeting completed every time. What’s the point of paying for a booked meeting if the prospect doesn’t actually attend the meeting?
SDR comp plans that prioritize quality more than quantity
Accepted to pipeline or Sales Accepted
This one is called all sorts of things but the basic logic of it is that an AE must accept the opportunity into the sales pipeline. If the AE runs the initial meeting with the prospect and decides it is not a qualified opportunity and they disqualify it, the SDR does not get compensated for it. While this helps encourage SDRs to only send quality opportunities to the AEs this carries all sorts of problems for measuring the SDRs performance because it is very dependent on the AEs abilities and very subjective to what a qualified opportunity is based on qualification criteria and rules of engagement aka ROEs. Read more on how revops can maximize accepted leads
Dollars added to pipeline
When a SDR sources an opportunity that gets added to the pipeline the dollar amount of the opportunity becomes the measurement of the SDRs performance. The more dollars added to the pipeline the more the SDR gets paid for the opportunities they source into the pipeline. This will measure the quality of the opportunities the SDR sources but it isn’t always an accurate measurement of the performance of the SDR. The dollar value of the opportunity depends so much on the AEs ability to turn the opportunity into something more from the start.
Dollars closed won or % of Pipeline converted
In this method the SDR gets paid on the dollars that convert to closed won. While this helps encourage the SDR to create quality pipelines, this one is the furthest away from what an SDR is responsible for, can influence and/or control in their day to day. It’s also a very long feedback loop to the SDR for the work they are doing. If they source an opportunity and it takes 9 months to close, that is a very long time for an SDR to wait to get paid for sourcing it, which is what their actual job is. Paying an SDR to source and paying them on closed won, you may just want to consider hiring full sales cycle sales rep and not have specialized teams.
None of these are perfect. In fact each one is biased toward quantity or quality and most don’t actually measure something that is 100% in the SDRs control.
The SDR comp plan that balances quantity and quality
Market dollars earned
In this method, SDRs sell the opportunities they source to AEs through an internal marketplace using a fake currency called Market Dollars.
Each AE is assigned their own budget of Market Dollars they use to buy the opportunities from the SDRs who sourced them.
AEs pay the SDR who sourced an opportunity they want to add to their pipeline with Market Dollars as a way to compensate the SDR for sourcing it. Based on the AEs perception of the quality of an opportunity the AE can pay a different amount of Market Dollars for each one.
Measuring SDRs on Market Dollars they earned in the given month creates an accurate measurement of the value the SDR created for the AE team.
Giving AEs the autonomy to build a pipeline chosen by and meaningful to them means they are much more motivated to work the pipeline they create.
The balance of quantity and quality happens by aligning how each SDR and AE likes to work. Some SDRs like to create a lot of new opportunities that might not be as qualified and may have a lower perceived value to the AEs, and that is OK because there are also some AEs who like to have more at bats in a given month, they will buy the lesser quality opportunities from those SDRs and they will pay less for each one.
On the flip side of that, some SDRs like to source fewer but much more qualified opportunities, and that is OK too. The AEs who have a ton of pipeline and less time to work new opportunities will source the higher qualified opportunities and they will pay more Market Dollars for them and get less of them. This model balances out the natural supply and demand along with variability in the quality of opportunities being sourced with the way each individual person prefers to work.
Want to learn more about how you can balance quantity and quality opportunities among your team and get the highest sales capacity to hit your goals? Grab a time to talk with us!
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