Ask: BDR Compensation
A recent question posted on the AA-ISP Ask An Expert hit on a topic I hear a lot: how to compensate your SDR team.
| Question: |
| Question regarding Comp Plans. My department is made up of lead development reps that whose current focus is to set appointments for field sales (the closers). Their incentive plan is as follows: a very small $ amount when an appointment is set, a slightly higher $$ amount when the lead turns into a sales opportunity and the majority of the payout $$$ when it closes. We work in a very niche market with a long (12 mo) sales cycle. We have had challenges with motivation in the past. The company would like to drive behavior towards closed new business and wants to assign the lead development reps a revenue goal. I am struggling with this as my team does not go any further in the sales cycle then needs analysis and setting the first appointment for their partner out in the field (the closer). They have targets on the number of their leads that should close, but no dollar amounts attached to. Does any have any experience with this or suggestions? |
The question is how to compensate your BDR (or SDR) team, but the underlying problem is that motivation is a problem. And isn’t that what compensation is supposed to do?
There are three reasons why many compensation plans go awry.
1. Poorly designed incentives / bad levers
To motivate behavior, rewards need to be closely tied to the desired action. In a long sales cycle environment like is described here, it’s very challenging to tie SDR compensation to closed business and expect it to drive team behavior. Why make a call now if I need to wait 12 months before the reward?
I’m not surprised to hear there is an issue with motivation as the rewards are too far away from the action. Find ways to tie monetary and non-monetary rewards to immediate actions. Daily and weekly contests for most calls, best performance in a training role play, or most appointments set. Mix up the rewards (lunch with the VP, work from home day) and ask the team what would excite them. The answers may surprise you, which brings me to…
2. Team responds to well-designed incentives in unexpected ways
People are funny. Daniel Pink’s Drive is a great example of just how funny they are, and why they sometimes respond to incentives in unexpected (and seemingly irrational ways). If you think you have a good set of incentives but you still aren’t getting results, pick up a copy of this book.
Sometimes adding material prizes and rewards causes people to start rationalizing whether the reward is worth the effort. A rep determines they have a low chance of winning and give up on the effort. If you see this, try mixing it up with things like group contests. For example, if our team sets 50 appointments this week, everyone gets $100 regardless of individual contribution toward the goal. Let social pressure be your motivator. That said, many companies find cash isn’t always the best reward because…
3. Millenials
Let’s face it, most BDR teams have a lot of Millenials. And if you manage them with the same old sales tools, you will fail. This generation gets a bad rep as people interpret them as lazy for not responding fully to the dogmatic “coin-operated” approach. The reality is, research shows they are looking for different things from their career, and those who accept that and cultivate it can get a highly motivated team.