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Annual incentive plan vs. monthly/quarterly: which drives better results? 10 Ways to Improve Sales Performance Short vs. Long sales cycle: Benefits & Comparison

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    An sdr commission plan is a powerful tool to align your sales development representatives (SDRs) with your company’s revenue goals. It incentivizes SDRs to focus on generating qualified leads, booking meetings, and contributing to the sales team’s overall success. Building an effective commission plan requires understanding the role of SDRs, defining clear metrics, and ensuring the plan motivates while being achievable.

    Understanding the role of SDRs

    Sales development representatives play a pivotal role in the sales process. They are often the first point of contact for potential customers and focus on booking meetings and identifying qualified leads. While they do not typically close deals, their contributions drive revenue generation by creating a pipeline of opportunities for account executives.

    To ensure SDRs remain motivated, companies often include a mix of base salary and variable pay in their sdr commission plans. Striking the right balance between fixed and performance-based compensation is critical for long-term success.

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    Key components of an SDR commission plan

    1. Base salary and variable pay split: SDRs usually receive a base salary to provide financial stability, complemented by variable pay linked to performance. A common split is 60% base and 40% variable, but this can vary depending on industry and market conditions.
    2. Clear performance metrics: Metrics such as the number of meetings booked, qualified leads generated, and conversion rates are often included. For example, an SDR might earn $50 per meeting booked and an additional $100 for every qualified lead passed to the sales team.
    3. Quota setting: Setting realistic quotas is crucial. A typical quota might require an SDR to book 20 meetings per month or generate 10 qualified leads. Aligning quotas with the sales cycles and market conditions ensures they remain achievable and motivating.
    4. Accelerators and bonuses: Adding accelerators for surpassing quotas boosts motivation. For instance, an SDR earning $50 per meeting booked might see that rate increase to $75 once they exceed 25 meetings in a month. Bonuses for achieving key milestones, such as generating leads that result in closed won deals, can further incentivize performance.

    Examples of effective SDR commission plans

    1. Meeting-focused plan: This plan rewards SDRs based on the number of meetings booked. For example:
      • $50 per meeting booked.
      • $75 per meeting for exceeding 25 meetings in a month.
      • $500 bonus for every 10 meetings that convert into closed won deals.

        This structure motivates SDRs to focus on the top of the funnel and book quality meetings that lead to revenue generation.
    2. Qualified lead plan: Here, SDRs earn commissions based on the quality of leads passed to account executives:
      • $100 per qualified lead.
      • $150 per lead when exceeding 15 leads in a month.
      • $1,000 bonus for leads that result in deals worth over $50,000.

        This approach aligns the SDR’s efforts with conversion rates and revenue impact.
    3. Hybrid plan: A combination of meeting and lead-based incentives ensures balanced performance:
      • $50 per meeting booked.
      • $100 per qualified lead.
      • $250 bonus for exceeding both quotas.

        The hybrid model provides flexibility and keeps the sdr team motivated across various performance areas.

    Tips for optimizing SDR commission plans

    1. Regularly review performance metrics: Use real-time data to adjust quotas and commission rates. SDRs should feel their efforts directly impact their compensation and the company’s revenue generation.
    2. Keep it simple: Avoid overly complex commission structures. Clear and transparent compensation plans ensure SDRs understand how their performance translates to earnings.
    3. Incorporate gamification: Introducing gamified elements such as leaderboards and rewards for top performers fosters friendly competition within the sdr team.
    4. Ensure fairness: Consistently evaluate whether the sdr commission plan aligns with market trends and industry benchmarks. Fair plans retain top talent and attract high-performing sales development reps.
    5. Align with company goals: Ensure the commission plan supports broader objectives, such as increasing conversion rates or reducing sales cycles. When SDRs see how their contributions drive the company’s success, their motivation and productivity increase.

    How Remuner simplifies SDR commission plans

    Creating and managing effective sdr commission plans can be challenging, but platforms like Remuner make the process seamless. Remuner offers state-of-the-art sales commission software designed to automate, track, and optimize every aspect of your commission strategy. Here’s how Remuner supports your SDR team:

    1. Commission tracking software: Remuner’s commission tracker software provides real-time visibility into SDR performance. SDRs can monitor their earnings, understand how their actions impact compensation, and stay motivated to exceed targets.
    2. Sales performance management software: With powerful analytics, Remuner helps sales leaders design data-driven compensation plans that align with company goals. Leaders can analyze trends, identify high performers, and fine-tune quotas to maximize revenue.
    3. Sales coaching software: Remuner’s AI-powered coaching tools provide SDRs with personalized insights to improve sales performance. From tips on booking more meetings to strategies for increasing conversion rates, the software empowers SDRs to achieve their goals.
    4. Full integration with your systems: Remuner connects effortlessly with CRMs, ERPs, and other sales tools, ensuring seamless data flow. This integration reduces manual tasks and enhances the accuracy of your commission plan calculations.
    5. Gamification and motivation: The platform’s gamified dashboards encourage friendly competition among SDRs. By highlighting top performers and celebrating milestones, Remuner keeps your sdr team engaged and driven.

    Real-world example: leveraging Remuner for sdr success

    A mid-sized SaaS company implemented Remuner to revamp their sdr compensation plan. They designed a hybrid structure that rewarded SDRs for meetings booked and qualified leads generated. Using Remuner’s commission tracking software, SDRs gained real-time insights into their performance. 

    Sales leaders used sales performance management software to adjust quotas based on trends, while SDRs received tailored coaching through the platform’s AI tools.

    Within six months, the company saw a 20% increase in sales performance and a significant boost in SDR retention.

    Start with your SDR plan

    Designing an effective sdr commission plan requires balancing clarity, fairness, and motivation. By setting clear metrics, incorporating accelerators, and aligning with company goals, businesses can drive sales performance while retaining top SDR talent. Platforms like Remuner simplify the process by providing cutting-edge tools for commission tracking, coaching, and performance management. Whether focusing on meetings, qualified leads, or a hybrid approach, a well-crafted commission structure ensures that your sales development representatives stay motivated and contribute to sustainable revenue growth.