Same Old Song and Dance
For those early-stage B2B revenue leaders who have started SDR teams, they know that the impact can be massive: many SDR teams become Top 3 sources of closed won deals for their companies. Equally true is that failing to set up an SDR team correctly can leave revenue leaders feeling too low to get under.
This series gives Revenue leaders the basics if they wanna be startin’ somethin’ with sales development. For the sake of simplicity, all references to individuals doing dedicated outbound outreach are based on the word “sales”: sales development representatives, sales dev, SDRs.
Once you’ve weighed the costs and returns and considered creating the team internally versus outsourcing (Part I), you’ll structure the role (Part II) and set your team up for success (Part III). Next, you’ll need to establish goals and incentives.
Part IV covers setting goals and tying them to variable compensation.
A Change Would Go You Good
Afraid of getting stuck in the middle when setting up sales dev? Align the following two areas to get the results you want:
- Goals: It’s important to set expectations around SDR activities and results. Activities include creating new prospects, making calls, and sending emails. Typical results are conversations, meetings set, meetings completed (show-ups), and deals created. Start with the number of deals created that you need from your SDR team (covered in Part I) and work your way back through each result and activity until you calculate the number of each you’ll need. Use reasonable conversion rates for each stage (e.g., 10% of calls will result in conversations). If you have actual numbers or close proxies, use those. The end result will be a list of activities and results with conversion rates for each stage. Do some quick math to see what the total conversion rate is from top to bottom. If the percentage makes sense, you’re good to go. If not, go back and adjust some of the stages to better align with reality.
- Variable Pay: Once you’ve figured out your goals, tie them to your SDR variable pay by breaking it down based on the desired activities and results. For example, if your SDR(s) will mainly focus on creating net new meetings and deals for your company (outbound outreach), allocate a larger portion of the total variable pay amount to that area (say, 80%). The remaining 20% can go toward processing inbound leads. Note: Yes, you need to incentivize inbound lead processing with dollars. Otherwise, SDRs will do the things that get them paid first and respond to leads last, no matter what your SLA requires them to do. After you’ve split outbound and inbound, further split out activities and results for each. Ideally, you’ll keep this simple and have one quantity-focused activity (meetings completed) and one quality-focused result (deals created). Deals created are ultimately what you want, so weigh them higher than meetings completed. When finished with this scenario, you’ll have four payout events: outbound meetings completed, outbound deals created, inbound meetings completed, and inbound deals created. Do a final check of the expected results from the goals section and the expected payout for each event. As long as it looks reasonable, you’re good to move forward. Adjust if not. And remember that you can always adjust the variable comp table in the future if it’s not producing the right results. Just be careful not to change it too often to avoid confusion within your team.
- Tip: In addition to keeping compensation simple, focusing on the results you want, and balancing quantity and quality, it’s important to tie compensation to events that an SDR can influence. Using events like meetings completed and deals created makes sense: SDRs are responsible for getting the right person to show up to a meeting (meeting completed) and doing enough research and early qualification to increase the chances of the meeting converting to an early-stage potential sale (deal created). Anything beyond that will be too far outside of an SDR’s control to be meaningful.