QuotaPath Director of Demand Generation Bret Lehnhof authored this blog post on adjusting SDR compensation for today’s technological landscape.
With the increased use of technology to identify target accounts and automate sales tasks, the role of an SDR (Sales Development Representative) has evolved.
For instance, advancements in AI have automated many of the traditional roles of an SDR such as identifying potential leads, crafting personalized email copy, and even responding to emails and scheduling meetings.
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Still, SDRs remain a critical piece of your growth engine because the technology needs an orchestrator.
More importantly, businesses will always require human relationships.
However, the introduction of AI and sales enablement technology have shifted the way we should think about compensating SDRs.
Traditionally, SDRs have followed compensation plans that pay based primarily on booking meetings for account executives. That means for any lead that they set a meeting for with their account executive, they earn a bonus. Think $200 per demo set.
But as automation has replaced some of the responsibilities that SDRs used to be in charge of, how can you re-imagine their compensation plans to fit today’s times better?
Below are three things to consider when thinking through SDR compensation plans in the age of AI:
1. Keep your eye on the revenue
Even though AI has changed (and continues to change) the game, SDRs still need to drive revenue for the business. Therefore, compensation plans that incentivize your SDRs to drive revenue remain in full effect.
Focus on plans that reward your SDRs for booking demos and giving them a piece of the pie for when the leads they pass convert to customers. Adding a “Closed-Won Commission” component to a compensation plan drives urgency for the SDR to create a very human first impression and stand out from the AI crowd to build real relationships needed to win.
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2. Reward technology adoption
AI and sales enablement tools are here to stay and are only going to improve. The SDR that stays on the frontline of tech advancements and creatively implements new practices will rise to the top.
Consider developing a SPIF that rewards the SDR with the most successful AI integration into their prospecting initiatives.
3. Incentivize efficiency
Automation has exponentially increased the speed at which an SDR can prospect into accounts. It’s also enabled SDRs to tackle an enormous amount of daily sales activities.
While tracking SDR activity levels is a leading performance indicator (view our sales funnel calculator), you should prioritize efficiency. An effective SDR compensation plan should consider sales opportunity conversion rates and how many of those opportunities move to qualified or closed-won stages.
Reward the SDR that creates meaningful conversations with prospects that are ready to buy. Consider creating a SPIF for the SDR that has the shortest closed-won sales cycle. You could also SPIF for the SDR with the highest opportunity conversion rate.
In summary, AI and sales automation are here to stay.
However, SDRs remain a crucial role in orchestrating the technology and providing human-to-human interaction necessary to drive revenue.
As tech advances, so should the way we think about compensating our SDR teams.
For additional resources to support the growth of your SDR team, check out the following blogs:
- 7 lessons we learned after building our first SDR team
- SDR compensation plans to consider for 2023
- How to set bonus and commission rates for SaaS SDRs