Best Practices for SDR Compensation Plans

“Let’s only comp the SDR Team on qualified opportunities and closed revenue! Yeah!”. Last I checked I cannot remember the last time an SDR Manager/ Director said, “Hey, you know how we should comp me and my team? Let’s do it on SQLs or SAL’s for which we have no real clear criteria that avoid someone’s judgment of others to ‘accept the lead’.” So, buckle up butter cups. I am saying the quiet part out loud about SDR compensation plans.

And, YES I AM YELLING at all you Founders and C-Levels making this suggestion. Feel free to pretend this entire post is in ALL CAPS just for you.

Every time I hear this request there are a whole bunch of questions that need to be answered.

1. Who is making this request specifically? I want to know titles and I want to know roles. 
   1. What is their rationale? And they need to get real specific (we are missing the goal, we need more goodness in the funnel).
   2. Oh, and if you have never been an SDR, please stay in your lane. Yes, you can still approve the SDR compensation plan, but you are not entitled to write it.
2. What is the use case-specific rationale they are thinking about to make this request?
   1. 1. Is the sales team missing a quota?
      2. Does someone think SDRs are overpaid?
         1. BTW, if you think your SDRs are going to bankrupt your company, sorry, that’s not really the issue.
      3. Is someone simply trying to reduce costs in general?
3. Why have the poor-performing sales reps not been fired sooner?
   1. This is what got us here in the first place in most cases.
   2. We tend to hang onto sales reps 3-6 months longer because of the PIP process. 
   3. A PIP does not require paperwork for At-Will states, no matter what HR says. It merely needs to be a documented conversation. That document can be an email IMO.
4. Is the AE compensation plan going to be adjusted to require them to source a % of their own leads?
   1. Why not?
   2. If not, then the answer to their request is a HARD M’FING NO!
   3. If an AE is not hitting goal, and not prospecting a % of their own business, and they have not been fired, then see #3.2
5. If the sales team is not hitting the goal:
   1. If less than 70% of your team is not hitting their quota, it’s a goal issue and not an SDR problem to solve on their own.
   2. What training and coaching, and I mean specific, down to hours of training and hours of coaching per rep is happening?
      1. And no, reviewing Gong calls is not enough because nobody is listening to the entire Gong call for every rep, and then spending 10-15 minutes coaching them at a minimum on every call.
6. Is EVERY VP and C-Level required to set 2-3 qualified meetings per quarter themselves for the team?
   1. If the answer is no, why not?
      • And please don’t come back with the foolish reply of, “Uhh…well, that’s not the job I signed up for.” News flash, EVERYONE IS IN SALES!
   2. I don’t care what department that C-Level is in. 
      • Marketing, welcome to sales! 
      • Engineering, welcome to sales! 
      • HR, welcome to sales! 
   3. You have the title, use it for something other than looking down upon the people are doing the hard work. Remember you are asking SDRs and BDRs to make you millionaires and billionaires. 
7. How much budget is going to be allocated for BDR prospecting and sales training? 
   1. They are different things.
   2. You have to choose both, if you choose just one you are accelerating the suck.
8. Will the SDR Management to SDR Ratio be reduced?
   1. Managers now have to coach on prospecting skills (cold calling, email, LinkedIn) AND sales skills.
   2. How much time is being spent coaching now? 
   3. How will the current leadership team create time to coach on these new skills?
   4. Or is leadership smoking hope-i-um thinking they can just create a multiverse around the space-time continuum?
   5. The ideal SDR Manager to Rep Ratio is 1:6, 1:7 at most.
9. What is your AE to SDR ratio?
   1. If you have more AE’s than SDRs, it’s clear you do not understand cash flow. 
   2. At a minimum, it should be 1:1.
   3. The best SDR to AE ratio is 2 SDRs for each AE.

(Pause for 30-second deep breathing exercise)

Now, if you’re an SDR leader or BDR manager and you have been told this is the way its going to be and to come up with a plan. Go to Claude (way better than ChatGPT), have it build the plan, and then ask it to update your resume. If more than 20% of my above statements are true, it’s time to find leaders who will own accountability.

Feel free to include this post as a part of your resignation letter or better yet, don’t write one and just give them this post.

(Pause for 30 seconds to enjoy the laughter of “Oh, Richard, if only I could”).

BDR’s compensation should only be based what the BDR can control.

• Right person, right company.
• Need based on minimum requirements. 
  • SDRs do Qual Calls (QC means qualified person, not qualified opportunity).
  • AE’s do Disco Calls AE’s (DC means a qualified opportunity).
• Meetings Booked.
• Show Up Rates.
• Sitting in on ___ first and second calls per month (learning).
• No judgments by others to determine if it’s a “good lead”.
• If you want to provide a bonus, give them 1% on closed revenue, that’s a great thing to do.

SDR’s compensation cannot be compensated on something the SDR cannot control. 

• Timeline (meaning a project is planned).
• Budget (oh please, no 20-something is gonna pull that number from a decision maker, plus it’s too soon).
• Someone else’s opinion of it being “qualified”.

There you have it. Be sure to tip your wait-staff if you like this. And certainly, you’re welcome to stick around for the 2nd show when I go off on people who think there’s something called a Buyer’s Journey. There is no such thing, only a Buyer’s Experience through the Seller’s Journey.

Need help with your SDR compensation plan? Contact me here.