Designing a Sales Compensation Plan for SDRs and BDRs
All sales reps are not created equal. Distinctions must be noted in role, experience, and expertise. As such, no one-size-fits-all compensation plan will treat everyone fairly and get the most from a diverse sales team. While the goal of any comp plan should be to encourage and reward the behaviors that lead to success, what works for a 20-year enterprise veteran may not be best for rookie Sales Development Reps (SDRs) or Business Development Reps (BDRs). Generally, SDRs focus on inbound leads while BDRs seek prospects. They are often less experienced than other types of sales professionals, and their comp plans should strike a balance between security and incentive, with an eye on long-term reward and growth. With that, here are some tips for designing a compensation plan specific for SDRs and BDRs:
- Base Salary vs. Variable Earnings
One of the most important considerations is the type of compensation, such as one with either a solid base salary or more aggressive variable earnings. While a base provides security, it does not necessarily drive incentive, and a commission-only pay structure can leave reps vulnerable during slumps or slow times. A balance between the two is optimal. On average, a 60/40 split is most common. Too low a base could lead to high attrition, and too high can foster complacency. Of course, everyone needs to earn a living, but be wary of making young sales pros too comfortable. A little hunger can inspire drive and be a great motivator for burgeoning careers.
- Keep Competitive
With any comp plan, organizations must be aware what their competitors pay for similar roles. Remember, the best talent wants the most compensation, and young sales pros often see dollar signs before other considerations. This does not necessarily mean you must outbid your competition, but you need to be aware of the types of incentives you can offer that make your organization most attractive. Also, things like geographical region can influence a plan. Areas with a higher cost of living can make a difference in your base/variable salary percentages. In addition, an organization’s products and services may affect the length of your sales cycle, which is another factor when designing a plan.
- Activities to Track
Salary and comp plans for SDRs and BDRs are often structured to reward activity above all else. Some examples of lagging and leading activity KPIs that can contribute to the comp plan include:
Efficiency and number of prospects engaged, via:
Effectiveness, such as:
- Meetings scheduled
- Meetings completed
- Pipeline generated/Opportunities created
For any compensation plan to work, reps need to know what is expected of them within specific timeframes, be it daily, weekly, monthly, or quarterly. In addition, managers should set a schedule for coaching during these periods, so the reps know if they are meeting their goals or where they are falling short. As SDRs and BDRs are often inexperienced, organizations must be vigilant in tracking and measuring performance. This instills a drive to learn and grow with an organization. Vague or inconsistent comp plans breed discontent, which will drive away talent and increase the costs of attrition.
When it comes to comp plans, honesty and transparency should be paramount. Just as the best sales reps are honest, open, and straightforward with customers and clients, the best organizations should be equally forthright with their sales team. Organizations should design comp plans they can be proud of, that attract the best talent and stand as models for their industry. Also, they should discuss any changes or updates, explain how market conditions may necessitate adjustments, and show how the plan invests in their reps’ success as it benefits the organization. Set up reports and dashboards within your CRM that gives the reps visibility into their efforts and progress.
By their nature, compensation plans can be boring. At the very least, they’re not high on anyone’s must-read list. While yours does not need to be a page turner, organizations should adopt a rule: the more complicated a compensation plan, the less effective it will be. Sales representatives should not hesitate to readily review their compensation and address any concerns with their managers. In addition, organizations should personalize the explanation of their plans with face-to-face meetings rather than merely distributing documents. Reps need to see how they can maximize the plan and what to focus on.
While many people find it intimidating to discuss money, such as asking about salary in job interviews or approaching bosses about a raise, compensation is a prime consideration of employee engagement and satisfaction. As such, it is too important to neglect or treat like a dirty word. This is especially true with SDRs and BDRs. Organizations should remember that a fair and transparent comp plan serves as these reps’ introduction to sales and primes them for a lucrative and rewarding career in the industry.
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