Business Development Agent Salary
Business Development Agent Salary – What is a 10 percent increase in annual sales for your organization? According to Gartner, companies will miss at least that much in “lost opportunity” revenue. This dollar was left on the table because of ineffective processes for “defining, assigning, managing, terminating, implementing, motivating and rewarding plans.”
Compensation plans need to be developed with organizational goals and sales strategy. An effective comp program helps to drive specific sales behavior. Whether or not a change is required depends on whether the current plans are being implemented to achieve the desired performance.
Business Development Agent Salary
Have you made any adjustments to the 2019 comp plan for sales development reps? To get you started, we’ve created a guide for you: 6 Steps to a Compensation Plan for Sales Development.
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Start by understanding your local market benchmark as national averages can be very misleading. If you do not have access to a known salary database, GlassDoor should be used to look up salary information.
Table 1 shows the average salaries for the job title “Sales Development Representative” at GlassDoor in several major US metropolitan areas:
The aim of the peace mix is to split the OTE between the base and the variable exchange rate. The average score (see Table 1) appears to be 73/27. We often see all of the following: 60/40, 65/35, 70/30, 75/25; mixed 50/50 and 80/20 rare; base percentages below 50% or above 80% are very rare.
Salary mixes tend to lean toward a higher variable percentage to attract more aggressive, risk-loving candidates. You may think of this sales personality as “The Hunter.” Jobs offering a higher base salary that is more certain are filled more quickly, as most people value low risk – high reward opportunities.
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If you are only building a sales development function, choose a higher percentage base, since you do not yet have good data and it can easily end or equalize.
Consider the simplified sales funnel shown in Figure 1. An SDR focuses on closing activities, such as phone calls, emails, social contacts, etc. These actions, when effective, lead to a booked discovery (or demo). If the meeting is held and the expectation is deemed appropriate, then it becomes an opportunity. By placing the star color, he wins the task.
Actions: We do not recommend returning actions. While the volume of activity is almost completely under the control of SDR, few companies use the activity metric as a reward because (a) it places quantity over quality and prioritizing volume in activity (b) is too far removed from business results. If the SDR job required almost no skill, it would be suitable for hanging activities. It could also make sense in the volume action while capturing the SDR, but even that practice is very rare.
Booking a meeting: We also do not recommend booking meetings. If someone pays to book a meeting, SDRs lose the incentive to do what is necessary to ensure that the prospect is meeting. Without better practices in place, 20% to 30% will show no hope. With the right warnings, including rescheduling, the percentage of prospects that are completely unclear will be closer to 8%-12%.
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Meetings held: Meetings held are the first metric to consider. If the SDRs are given accounts and contacts, pay them up to 100% of the variable compensation for meetings. This keeps them busy as they lack control over what has happened to the river, or what will happen downstream. If the accounts are given, but responsible for transferring their contacts, then a judgment call is made as to whether or not to pay the elections held. If neither the accounts nor the contacts are given, they will not pay for the meetings held, as it will create too much incentive to throw garbage down the pipe.
Opportunities Created: Opportunities created, also known as qualified sales leads (SQLs) or sales qualified opportunities (SQOs), is by far the most common SDR variable compensation metric. It represents a healthy balance between the company’s performance and what SDR can control.
Note: If linking SDR opportunities, we only recommend linking to opportunity creation following the first meeting. Tying any part or part of the compensation to the promotion opportunity beyond this stage is a non-starter. This practice depresses SDRs because they do not have control over the development of the opportunity. Furthermore, a small number of opportunities are generated from a given SDR development each month. Therefore, you would have a low number that would expose the company to a wide range of compensation.
Closed-lost deals: Many companies pay SDRs on closed-lost deals – often in the neighborhood of 1.0% to 1.5% of annualized revenue (ARR). Paying in ARR aligns the SDR with company performance and creates effective incentives for SDRs to focus on “good” prospects. And the percentage of ARR is filled with the following questions:
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But we took a new approach to this. Each month I set a certain percentage of ARR and distribute ‘shares’ based on each share’s total opportunities generated. We recognize and accept that this new SDRs benefit from the work of previous SDRs more tenured (and also from SDRs promoted into new roles). This is a small price to pay. Plus, tenured SDRs got the benefit of it when they were new, so they’re all pretty. This approach encourages simple and dramatic profitable management.
What is net? For most organizations, we recommend paying 100% of variable fees in one metric: opportunities created. However, Figure 2 below provides a more complete decision-making guide. Solving a closed business is conspicuously absent from the leader’s decision, since it is a ‘nice to have’ not a ‘must have.’ If you want to open a closed business, strongly consider the approach described above.
Set targets so that ~70% of SDRs exceed the quota in any given month. This does two things:
An almost universal rule of thumb is that Outbound SDRs can set up 20 marketing conversations per month or 1 per day. Even after rescheduling no shows, I assume 10% of the prospects are dimmed, leaving 18 meetings per month.
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Creating qualified opportunities can be tricky because every company has different qualifying criteria. According to the Bridge Society’s “Sales Development 2018” report, the average number of opportunities generated is 10. That’s a pretty darn good starting quota.
For example, let’s say you have a $70K OTE and a 70/30 pay mix, or $50K base and $20K variable. Furthermore, I assume that the only compensation metric is qualified sales opportunities. During the year, each SDR should be helped to generate 120 qualified ops. Hence both opportunities $20K/120 = $166.66.
Here’s another way to come up with the 120 qualified opportunities per year goal. SDRs in equity and for ease of management, set a number to account for a period of time. Many companies offer ten days off, ten days off and five sick days. There are also about 104 weekend days. 236 That usually leaves the laboring days. If an SDR can book an average of one meeting per working day and the ratio of generated opportunities to book meetings is 50%, then they can produce 118 opportunities per year.
Calculated in either way, the quota means that you qualify for ten opportunities per month, you do not need to adjust for time, vacation, general illness, etc. (unless otherwise required by law).
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An advanced consideration is what to do in an SDR ramp. According to TOPO, the full time SDR ramp quota is three months. There are three common approaches to calculating ramp time.
Most companies want to limit compensation for underperformers and reward it for overperformers. Thresholds and accelerators, respectively, accomplish those goals.
The threshold is the minimum performance level below which no commissions are paid. The standard threshold is 40% to 50% of the quota. So, continuing with our example, if the quota is ten qualified opportunities per month, then a threshold of 4 or 5 will be appropriate. If you have good data, set the threshold in the bottom 10th or 20th percentile of performance depending on how aggressively you want to weed people out.
Accelerators are smart because they drive to the surface to perform and reward. The math behind choosing accelerators is all about knowing your desired SDR cost of sales (CCOS).
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Let’s say that each SDR, on average, is ultimately responsible for creating opportunities that lead to $700K in closed circuit ARR. With a $70K OTE, their CCOS is 10%. From the example built above, $700K in ARR came from 120 opportunities. The implicit opportunity cost is $700K/120 = $5,833.33. Hence, you could keep 10% CCOS by paying $583 per opportunity on target.
However, most organizations want to decrease their CCOS in order to increase revenues. The roof is $583. Flooring up to the number of up to $ 166 earned SDRs. The middle is beautiful. We typically see a 25% to 50% accelerator per opportunity on target. In our example, that meant paying $200 to $250 per opportunity per qualified person above the target.
Side note: SDRs often find it motivating to know how much revenue each call generates for the company. That makes 300 SDRs per week or 14,400 per year. If generating $700K from ARR,
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