Guide: Crafting the ideal Outbound SDR Compensation Plan
(That motivates SDRs AND drives business results)
Read time: 18 min
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Over the last month, one question keeps coming up in SDR leader communities:
Q: What's the best comp plan for outbound SDRs that motivates them AND drives business results?
The short answer?
There’s no perfect plan, it depends on your company’s stage, goals, and current setup.
That said, there are proven principles and components that consistently work.
(PS: I’ll cover AE comp plans later, I’m still gathering insights from CROs on things like usage-based and seat-based models.)
Today:
We’re diving deep into SDR comp plans. I’ll share real examples and practical tips from my experience to help you build a plan that motivates reps and drives business results.
On today’s menu:
The Basics of SDR Comp Plans
The 2 Goals of an SDR Comp Plan
Does variable compensation drive performance?
3 Key Components of a Successful SDR Comp Plan
Breaking Down SDR Comp: The Key Levers
Craft the ideal compensation plan
Crafting the Perfect OTE
Choose the target pay mix
Choosing the right performance measures
Real-World Examples
Alternative Comp Plans: No commissions? Points systems?
Setting Outbound SDR Quotas
Using thresholds and accelerators
Addressing Ramp-Up and comp for New SDRs
Rethinking SPIFFs
Final Thoughts and Resources
How to craft the ideal compensation plan for Outbound SDRs in 2025
The Basics of SDR Comp Plans
The 2 Goals of an SDR Comp Plan
1: Attract and retain top talent
Your compensation plan should be competitive enough to draw high-potential SDRs to your organization.
Structure the plan to reward consistent performance and encourage long-term commitment.
2: Driving Business Outcomes
Quality Metrics
Deal Size: Incentivize SDRs to pursue larger, more valuable opportunities.
Decision-Maker Involvement: Reward efforts to engage key stakeholders.
End-User Team Size: Encourage targeting accounts with broader potential impact.
Quantity Metrics: Number of Opportunities or Meeting Volume.
A great comp plan balances talent retention and business results.
Now, let’s tackle the big question:
Does variable compensation drive performance?
According to Daniel Pink in Drive (2009):
“Our carrot-and-stick approach doesn’t work anymore. Jobs should focus on:
Autonomy: Freedom to direct your own work.
Mastery: Getting better at what matters.
Purpose: Doing work that serves a bigger goal.”
Pink’s message? Motivation isn’t either/or.
It’s both intrinsic and extrinsic.
The science backs it up:
Intrinsic motivation alone explains 7.3% of performance.
Add extrinsic rewards, and that jumps to 9%.
Together, intrinsic + extrinsic motivation explain 18% of performance.
Key takeaway?
Extrinsic incentives = more output.
Intrinsic motivation = better quality.
So, while variable pay is important, designing roles that offer autonomy, mastery, and purpose is crucial.
3 Key Components of a Successful SDR Comp Plan
1️⃣ Clarity:
Keep it Simple: If you can’t explain it on a napkin, it’s too complicated.
Avoid Confusion: Reps shouldn’t need a PowerPoint to understand their pay.
2️⃣ Quick Payouts:
Timely Rewards: Pay close to the action. Monthly payouts keep motivation high.
Avoid Delays: Waiting quarters for payment kills enthusiasm.
3️⃣ Control:
Fair Metrics: Compensate reps for what they can control.
Avoid Penalizing Uncontrollable Factors: Tying big incentives to won deals isn’t fair since SDRs don’t close deals.
Simple, fast, fair.
Breaking Down SDR Compensation: The Key Levers
It’s helpful to start by understanding the different levers that you have to work with, and when you might want to pull on each one.
On-target earnings (OTE)
OTE is the total cash compensation, including base salary and variable commission, paid at 100% quota attainment. It's your promise to potential SDRs about their earning potential.
Base salary
Fixed salary provided regardless of performance. Ensures financial stability for SDRs.
Variable comp
Additional earnings based on performance, including:
Commissions: tied to specific achievements such as:
Meetings Held: Bonus if the prospect attends.
Qualified Meetings: Bonus if the AE confirms the prospect's legitimacy.
Pipeline Created: Bonus when a meeting becomes an opportunity.
Revenue Generated: Bonus upon deal closure.
Quota
Performance target, typically linked to metrics like sales qualified opportunities or new customers. It is normally set at an individual level, but it can also be set at a team- or company-wide level.
Quota attainment
Measures how much of the quota is achieved within a period.
Current benchmark: Approximately 55.7% of ramped SDRs meet their quota (Repvue data, November 2024).
Sales compensation ratio
Your quota-to-OTE ratio shows SDR efficiency and ROI.
Outbound SDRs: Aim for 3-5x OTE in revenue.
2 examples:
$50K OTE = $150K-$250K revenue.
$100K OTE = $300K-$500K revenue.
Inbound SDRs: Aim for 8-10x OTE to cover marketing costs.
Accelerators
Incentivize top performers by offering higher rates for exceeding targets.
They encourage continued high performance beyond quota attainment.
Decelerators (or Tresholds)
Require SDRs to reach a certain percentage of their quota before earning commissions.
They help manage risk by ensuring minimum performance levels.
Learning stipends
I’ve seen a range from $2k to $5k a year that reps can spend in their personal development.
Supports training programs, prospecting courses, and coaching, enhancing skills and career growth.
Crafting the Perfect SDR OTE
Most companies, adjust their base salary for cost of living for the local market.
At Chili Piper, we only adapted the comp plan for France because labor costs there are higher than in other countries.
Max from Altisales shared a different approach, they pay all SDRs the same base salary, no matter where they’re located.
National averages can be misleading. Focus on local market data for accurate benchmarking.
For the US, Repvue is great, this table shows the average salaries for the job title “Sales Development Representative” in the US.
For EMEA, Canada, or APAC, use Glassdoor for more accurate median OTE data, as Repvue's data for these regions may be inflated.
Five factors for OTE adjustment:
Prior Experience: Strong academic backgrounds or longer work histories command higher OTE.
Job Complexity: More complex roles deserve higher OTE. Example:
Discovery call conductors > Meeting bookers
Outbound SDRs > Inbound SDRs
Product Complexity and Price: Higher-priced, complex products require more skilled SDRs, justifying higher OTE.
Intrinsic Benefits: Strong brand, culture, training, and clear career progression may allow for lower OTE.
Target Attrition: Higher OTE can reduce attrition, crucial when hiring and training costs are high.
Real-World OTE Examples
Let's look at some real-world examples:
Workday: Base of $60,000, OTE of $90,000, with top performers hitting $155,185. This reflects the complexity of enterprise sales.
LinkedIn: Base of $59,000, OTE of $85,000, with virtuosos reaching $144,166. A testament to the power of a strong brand.
Remote: Base of $55,000, OTE of $80,000, with high performers at $107,142. A balance of risk and reward for a growing company.
Chili Piper:
Base salary: Based on the city/country.
In the US, the range was $50k to $70k for cities like NYC, SF, Seattle.
Mexico City? $30k.
Variable: Same for everyone
Altisales: pay they SDRs the same
Actionable steps for founders and GTM Leaders
Gather Local Data: Use tools like Repvue for US markets and Glassdoor for international markets.
Assess Your Unique Factors: Evaluate your product, job complexity, and company benefits.
Create an OTE Range: Develop a range based on your local benchmark and adjusting factors.
Regular Review: Reassess your OTE structure quarterly or bi-annually to stay competitive.
Transparency: Clearly communicate OTE structure to candidates and existing SDRs.
Choose the target pay mix
The target pay mix is the ratio of base salary to variable compensation that makes up the On-Target Earnings (OTE). For example, a 70/30 mix means 70% of OTE is base salary, and 30% is variable compensation.
Common pay mix ratios
Frequently observed: 60/40, 65/35, 70/30, 75/25
Less common: 50/50, 80/20
Rare: Below 50%
Above 80% base, I obveserved it for early stage, when you're building the outbound function
Sales cycle and complexity
Longer sales cycles or complex products: Higher base (70/30 or 75/25)
Shorter cycles or transactional sales: Lower base (60/40 or 65/35)
Company stage
For early-stage companies or new sales development functions, opt for a higher base percentage (75/25 or 80/20) due to limited historical data, and proof of outbound working.
Choosing the right performance measures
Let's dive into the key components and real-world examples to help you create a plan that motivates your team and drives business outcomes.
Activities: What Not to Do
Pure activity-based compensation is like counting a chef's knife chops instead of tasting the food. While monitoring activities matters, paying for them creates the wrong incentives.
One seasoned SDR leader shared: "After 5 rounds of comp plans, I've never included activity metrics. When activities are met, quota follows naturally."
Meetings Booked
Generally not recommended due to potential no-show issues and quality issues.
I’ve only seen it once, and I wouldn’t recommend it. Why?
SDRs lose incentive to ensure prospects actually show up.
Without proper follow-ups, 20-30% of meetings end in no-shows.
With best practices (reminders, reschedules), that drops to 8-12%.
Meetings Held
This is your first viable option, especially if:
SDRs are given accounts and contacts
If you’re an early-stage company and your ideal customer profile (ICP) isn’t well defined yet, the number of meetings booked and attended might be a good outcome metric for your compensation plans.
When your AEs don't have enough meetings on their calendars until they get more and you switch to opps created
If you're worried about meeting quality, revisit your "right profile, right person, right pain" criteria. Don't confuse a strategy issue with an SDR issue.
Opportunities Created
This is the most common and balanced metric. It's the perfect balance between company performance and SDR control.
It's particularly effective when:
Your outbound data quality is questionable (as Tito Bohrt suggests)
You need SDRs to research accounts/contacts thoroughly
You can define clear qualification criteria
But there's a lot more nuance to getting this right...
Want to unlock the full guide? Here’s what’s inside:
Real examples from top companies like Brex, SalesLoft, and Chili Piper
How to set the right comp plan and quota for your stage
Creative ideas like point systems and no-commission plans
Simple ways to comp new SDRs during ramp-up
The truth about SPIFFs (and what to do instead)
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