Last year, Buffer introduced its concept of “Open Salaries” in a blog post with a full list of employees, their role, start date and salary. That action sparked a ton of conversation around numbers and competitive compensation.
For us in Sales, we know a lot about numbers—the old adage that Sales is a numbers game exists for a reason. We’re constantly surrounded by numbers: quota, deal size, salary and OTE (compensation). While not every company is jumping on board with Buffer’s “Open Salaries” concept, it does bring up a question for us in Sales—how important is compensation to Sales and in particular for newer roles like Sales Development?
Why the emphasis on Sales Development? According to research firm TOPO, “Sales Development is one of the most important processes an organization can build to deliver a seamless, efficient revenue machine.” A quick Google searches shows that there’s not much out there in terms of what SDR compensation looks like. The closest thing we could find was a Quora question, “How are SDR bonus plans typically constructed?” But what about a full compensation plan that encompasses total compensation?
The Bridge Group put together an SDR Compensation Calculator and a slew of eBooks on SDR compensation and Inside Sales compensation, but we want to take the conversation further and dive into why competitive compensation is more than just a number.
1. Compensation Impacts Company Revenue
For a relatively new role like an SDR, where there aren’t a lot of data points around compensation—it’s difficult to know where to set your company’s benchmarks. Or, if you’re an SDR candidate, to know what’s the right ballpark for your compensation.
Pro-Tip: Create a compensation plan that fits your business and revenue goals.
A common mistake that CEOs and Sales leaders make is they simply overlook compensation and try to find one that best fits their budget at the time. Compensation plans should adhere to revenue goals, but that doesn’t mean that they shouldn’t align with potential performance—which directly impacts company revenue.
2. Compensation Ensures an Increase in Qualified Leads
Attracting and retaining top talent, whether it’s an SDR or an SDR Manager, it’s no cakewalk. The key to maintaining a high-performing Sales Development team relies on competitive compensation for the entire team.
Think about the activities that an SDR is tasked with: setting appointments and generating pipeline with qualified leads. SDRs have the daunting task of emailing, calling and reaching out via social media to prospects with no pre-established relationship. An SDR has to break down the “no” response and ultimately get a “yes” for a meeting. So, paying SDRs competitively is paramount. The way that SDRs conduct themselves and achieve outbound prospecting outcomes is often a reflection of the company’s compensation plan.
If a total compensation is too low, SDRs aren’t intrinsically motivated to set appointments with qualified leads or to exceed their quota. If compensation is to high, it creates a question environment that often leads to disengaged reps.
3. The Key Elements to Every SDR Compensation Plan
We’ve discussed why a competitive compensation plan is important for SDRs, it’s time to break down the key elements of a competitive compensation plan:
- Base Salary: What an SDR will make just by walking through the door
- Commission Rate: A moving variable that fluctuates monthly, based on performance of outbound prospecting activities
- Accelerators: Incentivizes reps to exceed their quota and earn more commission (i.e. uncapped commission)
- Ramp Rep Time: It’s important to keep goals aligned and realistic with a rep’s ramp time.
Whether you’re hiring or a job seeker, if you want the upper hand against your competition and an optimal compensation—you have to approach compensation strategically. While not every company might not be as transparent about salary as Buffer, it’s important for companies and job seekers to have benchmarks for SDR compensation.
For more information on building Sales Development teams, download our eBook The Definitive Guide to Building an SDR Team.