Short, transactional sales cycles
This is a great plan for short, transactional sales. Not you? Find another structure that’s better suited for longer cycles.
Short, transactional sales cycles
Promotes qualified leads
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See potential earnings based on your inputs and goal attainment progress.
Quickly assess how realistic, attainable, and healthy your OTE to quota ratio is. And, calculate the number of activities needed.
Assign the plan to your team and automate sales commission calculations. Be confident your team is being paid fairly and accurately.
To customize this plan, you will adjust these 10 variables.
OTE combines base salary with variable pay and represents
the total amount of money your reps can expect to earn if they hit 100% of their goals.
Refers to the percentage of a salesperson’s total compensation, made up of base salary, commission, and other incentives. The most common pay mix in SaaS for SDRs is 68% base and 32% variable pay.
Revenue is the total amount of income that a company generates from its primary operations. In SaaS, annual recurring revenue is one of the most important metrics.
This is the annual goal for how much revenue the company generates based on the leads created from the SDR.
This ratio calculates the multiplier increase between an SDR’s OTE and the amount of revenue the company generates based on the leads the SDR creates. The most common multiplier in SaaS is revenue 8x that of the OTE, but this will vary based on size and stage of the company.
Demos Completed plans reward reps for scheduling demos that actually occur.
A “qualified opportunity” classifies as any lead the SDR creates that meets specific criteria or parameters so that reps pass along quality leads to their AE counterparts.
These represent any deal that an AE goes on to close that originated from an SDR-sourced lead.
Often abbreviated to ACV, this number represents the average deal size that your company sells.
Your revenue period sets the frequency at which your SDR team’s revenue goal resets. In SaaS, the most common revenue period is quarterly. However, this number will vary based on your sales cycle.
All SDR compensation plans require the balancing of two things, SDR control of the outcomes and benefit to the company. In this plan, there is clearly a high benefit to the company: revenue. However, because the SDR isn’t the one closing the deals, they may feel they lack control over the outcome and thereby their compensation. This plan works well if you have a short sales cycle (90 days max, ideally less than 45 days) and/or your SDRs are heavily involved throughout the sales cycle.
We most commonly see commission rates for SDR comp plans between 0.5 and 4%.
Sales commissions differ from bonuses in that bonuses reward a set dollar amount that doesn’t change. Commissions, on the other hand, consist of a percentage of the total revenue from a deal that changes usually based on the annual recurring revenue (ARR) or total contract value. For example, If a rep gets 2% of every deal closed, that’s commission. If a rep earns $100 for every qualified opportunity, that’s a single rate bonus!
Other SDR comp plans include the Qualified Opportunity Bonus, which pays a rep a flat rate bonus for every qualified opportunity they give to the sales reps to close. You can also combine the Qualified Opportunity Bonus and Closed Won Commission to reward the rep with a set dollar amount on every newly opened opportunity and another amount upon the deal booking.
Some companies will pay SDRs a bonus for hitting a specified amount of activities over the course of a week, month, or quarter. ‘Activities’ can mean anything from the number of deals made in a month to the number of meetings set or held. If you go that route, be sure to clearly define what constitutes an activity and set your plan accordingly. Ultimately, we think rewarding SDRs based on qualified opportunities and/or deals won is better in the long run for your business and the development of your reps versus activities-based plans.
A sales funnel depicts and tracks the customer journey from potential lead through the actual purchasing of the product. Every sales funnel includes a series of stages as defined by the organization with the goal to move the customer through each stage until they buy. You may hear and see the words TOFU, MOFU, and BOFU to indicate top of funnel, middle of funnel, and bottom of funnel. TOFU represents the least likely to close (yet) leads that may have downloaded your organization’s whitepaper. MOFU leads are deep in their research but are not ready yet to purchase. And, BOFU leads represent ready-to-buy, red-hot leads.
We built a free Sales Funnel calculator that your SDR and sales teams can use to calculate scenarios like how many meetings they should book in order to reach their quota. Use it to experiment with different close rates, average contract values, and activity numbers to see what’s right for your business, team, and individual goals.
Of course! Our commission tracking and sales compensation software can provide real-time analytics, insights, and forecasting for SDRs, sales reps, leadership, and finance. Native integrations mean the data is accurate and up-to-date without the need to wait for nightly refreshes or manual reloads.
Use for long sales cycles and when you have a solid understsanding of what qualifies as an opportunity.
Our favorite SDR plan that spreads the payout across the sales funnel.
This industry agnostic commission plan is simple, straightforward, and great for your first plan.
I want the simplest plan there is. This one is very easy to understand, and you won’t spend hours analyzing it or trying to game it. This plan could be a great starting point for a lot of people.
My company is less than a year old. We're building out our sales team as we speak while changing pricing, so we're on a very fluid spectrum. Because of that, we pay a higher base to get quality enterprise reps here and pay 10% on every deal.
“I use fixed commission rate for our AE comp plan for two reasons. It’s easy for my reps to understand and it allows me to add in SPIFs or complexity later on if I need.
Deliver visibility, automation, and seamlessness across the entire compensation process.