Not long ago, we showed you an example of a great compensation plan for your outbound sales development reps (SDRs). But what about inbound SDRs? Inbound SDRs, sometimes called marketing qualification reps (MQRs) or lead response reps, are a vital part of any inside sales team. They’re tasked with following up with leads that come in from a variety of marketing channels including content downloads, web forms, webinars and more.
In this post, I’ll detail some best practices for rolling out a comp plan for inbound SDRs that keeps them focused on sourcing high-quality opportunities for your account executives (AEs).
How to Structure a Comp Plan
Just like your outbound SDRs, inbound reps are likely to be millennials with less than three years of experience. That being the case, we recommend keeping your comp plans simple. In fact, comp plans for outbound and inbound SDRs should look basically the same:
- Base– This is the amount that you pay a rep each month no matter what
- Bonus– This amount depends on meeting specified goals
Sales is a precarious occupation by nature. But since your inbound SDRs are likely early-career, they’re looking for some amount of security. That being said, their base should be enough so that if they miss their goals while they’re ramping up, they won’t be out on the street. We recommend that an inbound rep’s on-target earnings (OTE) should be at least 65% base salary.
I have heard of companies that only pay inbound SDRs an hourly wage without bonuses. However, I think this is a bad practice. A bonus is the best way to motivate reps to peak potential, no matter the sales role.
Calculating a Bonus
So what factors determine an inbound SDR’s bonus? There can be many. But there are three main factors to look at when structuring inbound SDRs’ bonuses.
An inbound rep’s primary job is to qualify leads. Therefore, I think that reps should be compensated primarily based on accepted opportunities.
You might choose to tie bonuses to revenue that actually closes from opportunities they source. This rewards reps for kicking awesome opportunities to sales.
Another factor I recommend including in sales compensation plans is an activity quotas. At many companies these are called service-level agreements (SLAs). For an inbound rep, this could include responding to all inbound leads within 5 minutes, following up with leads a certain amount of times and other activity goals. Younger reps do well with structure. So if you’re going to require SLAs, why not reward reps for meeting those goals?
Inbound SDR Comp Plan Example
So let’s walk through a sample compensation plan for an inbound SDR.
OTE: The Bridge Group reports that an average SDRs salary is $72k.
Base Salary: According to the Bridge Group, The average base salary for SDRs is $46K. Let’s use that as a benchmark. That leaves $26K for a bonus.
Opportunity Quota: Let’s tie 65% of the bonus to opportunities accepted by sales. So $16,900 (or $1,408 per month) should be earned from hitting an opportunity quota. I can’t tell you what that opportunity quota should be since it will vary greatly based on what you’re selling, overall lead quality, how much you’re spending on marketing and a host of other factors. I will caution to never put a cap on the bonus. More accepted opportunities should virtually always mean a bigger bonus.
Revenue from Opportunities: I like to reward inbound reps for revenue that actually closes. I think somewhere around 25% of their bonus could be tied to opportunity revenue. As an example scenario, say that you expect that reps will source 20 accepted opportunities per month and that 20% of those opportunities will close. That’s 4 opportunities per month. Now let’s say that your average annual contract value is $15K (standard for a B2B tech company). That means that in one year, an inbound rep should source $720,000 in revenue. So if you reward your inbound SDR 1% of total revenue closed, that’s $7,200 a year (about 27% of their bonus and exactly 10% of their OTE). The hotter opps they source, the more they take home. This keeps your reps motivated to source quality opportunities for your AEs.
Activity Goals: That leads activity goals. I believe about 10% of an inbound SDR’s bonus should be tied to hitting the goals in their SLA. In this example scenario, 2,600 (around $216 a month) should be paid off when all these goals are met. For an early career rep, an extra 216 a month is going to matter! If possible, pay out activity-based bonuses weekly or biweekly. It offers a good opportunity to keep tabs on whether reps are meeting their goals. If not, it allows you ample time to coach reps to ensure that these goals are being met. And of course, RingDNA’s call analytics dashboards can help you gain a real-time view of how reps are stacking up against their goals.
For tips on how to build the perfect comp plan for outbound reps and account executives, check out our ultimate guide to sales compensation.