If you every want a lot of likes on LinkedIn, post the following
"Being an SDR is the hardest job in sales. We need to pay them more!"
A lot of people take this even further, often arguing that SDR base salaries should be upwards of $100k.
After all, living in New York or San Francisco is not cheap.
It's not out of the realm of possibility either - over the years, I've heard of multiple companies that are offering this.
Now I understand the realities of being an SDR.
I started my career as an SDR (on a $40k base! In 2016! In San Francisco!)
But here's the nasty side effect of paying a very high base salary to your SDR team:
It makes it impossible to promote them into an Account Executive position AND put them on a sensible comp plan that they can crush
SDR comp plans are usually 66-75% base and 33-25% variable.
General numbers have most companies paying something like $60-75k on the base salary, and then another $10-25k on the variable. Usually the more you pay on the base, the lower the variable (and the inverse). So in 2024 you're looking at an on-target earnings of $80-90k.
It hasn't gone up that much in the last 5 years, but that's ok.
After all, an SDR is usually a college grad (or pretty close to it).
The SDR function is similar to an Associate role at most professional services firms, or the rotational programs you see at Fortune 500s.
Account Executive comp plans are usually 50% base, 50% variable. That gives us the on target earnings. Which is usually tied to a quote number that is 4-5x.
Let's compare two hypothetical SDRs:
SDR 1 has a base salary of $65k, and can be promoted nicely into an AE role with a $75k base, $75k variable, matched with a $600k quota.
SDR 2 is at a $110k base, and then gets an AE role where they’re getting a $125k base, $125k variable, matched with a $1m quota is probably going to fail. This mathematical relationship is part of why quota attainment has dropped so much in the last 5 years Instead of being at 130% to plan, you’re only at 78% to plan.
Here’s what it looks like in table form:
Now this is all before you start thinking about the ROI of your SDR team (more about this here)
The argument against "top talent"
Now if you're brave enough not to stupidly overpay your SDRs, you'll inevitably come up against the people who scream that you're missing out on top talent.
Although as far as I have observed, "top talent" usually just means the person posting has had 4+ jobs in the 3 years.
You're not really missing much.
Actually it's the opposite.
These people are very expensive and also very mediocre.
It's why they haven't been promoted into an Account Executive role.
And finally, a case study:
If you'd like to see a sterling example of an SDR who came in on a reasonable comp plan, crushed her number, got promoted and has kept crushing her number, you're going to want to watch this video
Moira Duffy is a candidate I placed as an SDR back in 2021. She's since been promoted into a mid-market Account Executive role and hit 190% to plan (hint: she didn't start with a $1m quota)