sales compensation: tips and tricks to building a powerful plan
TRANSCRIPT
The Profile of a Successful BDR or SDR Hire
0-2 Years of Experience Coachable Genuine
CuriosityTrack Record of Winning
Hungry Eager to Make Impact
Goals and Results Driven
Ultimate Stalker
Elements of a Comp PlanBase: What you see in your paycheck not including any bonuses, benefits, or perks associated with the job.
Bonus: Additional compensation awarded to an employee for achieving specific goals or metrics.
Kicker: Any additional spiff or bonus outside of a reps bonus that is tied to closed/won deals or competition.
Potential Bonus: $1K monthly pay outGoals: 16 Appointments, 8 Opportunities
Pay out:Appointments Set ($25 each)Opportunities Created ($75 each)
***As always, we recommend that this number be uncapped***
Example Comp Structure
Tying It All TogetherDesigning a comp plan is like closing a deal:
– Remember your target audience– Know what you want them to do– Show them how to get there– Tell them what the results are– Be consistent in your delivery
Reports on current accounts to identify the ideal account profile
• Accounts with the largest transactions • Accounts with the highest lifetime value • Accounts that buy most often • Accounts with the lowest activities from MQL to SQL • Accounts with the least number of activities from SQL to close • Accounts with the lowest average time from MQL to SQL • Accounts with the lowest average time from SQL to close • Accounts with the highest % of MQL to SQL • Accounts with the highest % of SQL to close
Ideal Customer Profile (Accounts)
“75 percent of the customer information held by most enterprises is inaccurate, out-of-date or ineffective.” (Gartner)
• Geography • Industry • Employee size • Revenue • Investment Capital • Free cash flow (optional)
Ideal Customer Profile (Accounts)
• Best buyer market segments (segment top 20%) o Industry, employees, revenue, geography, other proprietary metrics
• Average deal size per segment
• Total number of potential accounts per segment (mapping markets)
• What percentage of leads should convert to customers
• Number of activities it takes to close an account
• Goal for how long it should take for you team to work through each market segment
B2B Sales Comp Plan Metrics
• 25000 potential accounts
• 3 key contacts per account (75,000 contacts)
• 8 activities per contact on avg (24 activities per account)
• 600,000 total activities to exhaust the list
• New reps can accomplish about 600 activities per week
• 600,000/600 = 1000 weeks
• If the goal of the company is to exhaust the list in 12 months, it will take ~18 sales people (1000/56 = 17.85)
Sample Target Segment Analysis
Top 3 best buyer segments for example company: 1. Technology companies in USA have an average deal size of $10000 and
close at about 5%. (Assuming 600 combined call/email activities completed per rep, per week.)
2. Manufacturing companies in USA have an average deal size of $3000 and close at about 10%. (Assuming 600 call/email activities completed per rep, per week)
3. Banks in USA have an average deal size of $20000, close at about a 4% clip (Assuming 600 call/email activities completed per rep, per week)
Example of Compensation Calculation
You can calculate your annual revenue per rep with a clear understanding of your avg deal size and close rate. 1. (5% closed) = 1250 new accounts * $10K avg deal = $12,500,000
• $694,444 revenue per rep • $104,000 - $208,000 (comfortable salary + commission range)
2. (10% closed) = 2500 new accounts * $3K avg deal = $7,500,000 • $416,666 revenue per rep • $62,500 - $125,000 (comfortable salary + commission range)
3. (4% closed) 1000 new accounts * $20K avg deal = $20,000,000 • $1,111,111 revenue per rep • $166,666 - $333,333 (comfortable salary + commission range)
Example of Compensation Calculation
Business Data Report Card
Forecasting D
Customer Service F
Sales Efficiency C-
Productivity D-
Client Renewals D
CRM User Adoption F
6 out of 10 SaaS companies
now use SDRs to create
opportunities for account executives
Source: Bridge Group, 2015