By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.
Revenue Operations
Flash Icon Decorative

A Guide to Inside Sales Compensation Plans

Scribbles 2

Inside sales has often been a role SaaS companies hire very early in the business growth cycle. They’re seen as an arm of company representatives somewhere between marketing and sales and are meant to:

  1. Free up account executives to focus on closing qualified business
  2. Exponentially increase cold outbound
  3. More effectively convert inbound leads

In larger companies, cold outbound and inbound coverage is split between two distinct roles:


The Inside Sales Representative (ISR) takes the inbound lead portion and is responsible for weeding out the leads that don’t meet qualification criteria. 

Business Development Representatives are responsible for targeting accounts that are both in and out of market and generating more interest for the account executives.

In smaller companies, the same person is expected to perform both tasks and split their time between the two according to the volume of leads per representative.

We’ll examine how to compensate these roles competitively and the importance of proper oversight and enablement. But before we do so, let’s consider the pressure they face in today’s market.

Market pressures on Inside Sales

Many businesses are – rightly or wrongly – re-evaluating how they have staffed the go-to-market team. The inside sales team is heavily under fire. Pundits and executives alike question the effectiveness of cold outbound and are looking for ways to cut costs.

We think the problem doesn’t lie with the inside sales team. Businesses have consistently failed to prioritize hiring the right people for the role and investing in the appropriate level of enablement, viewing the position as a proving ground for the account executive role. Their role has historically been looked at with the cavalier attitude that “they’ll either make it or they won’t.” The new hire is expected to stay in their role for 12 months and then move up or move on.

And they’re right. But is it a self-fulfilling prophecy?

Too often, we hire inside salespeople with zero industry experience, let them loose using massive-scale cold outbound tools, and hope for the best. They get minimal instruction on persona pains and product benefits and don’t have the depth of knowledge necessary to authentically connect with their buyers. 

In our experience, the most talented inside salespeople are either experienced in sales in an adjacent industry and trying to prove their mettle or the rare career inside salespeople who take pride in their ability to generate and secure interest through masterfully crafted, personalized outbound.

We also need to mention that they may report to sales or marketing. What should matter more is the skill and experience of their manager, but the conflict between sales and marketing is real. If sales doesn’t trust marketing, it’s even more challenging to build trust between the inside salesperson and the account executive if they report to marketing.

How do we fix the SaaS landscape for Inside Sales?

Shifting the executive mindset isn’t going to be easy. It takes a leap of faith for a leadership team to invest heavily in their inside sales team without first seeing results, which is impossible. Hopefully, some leaders will find success and socialize this approach.

We also need to:

  • Be realistic about what the inside salesperson can be held responsible for (qualified meetings and pipeline, not bookings)
  • Align every part of the go-to-market team on the strategy, value proposition, and message
  • Align every part of the go-to-market team on the definition of what is qualified to be handed off to the next leg of the go-to-market team
  • Stop valuing the volume of activity over results
  • Stop encouraging sellers to start selling before they have the knowledge necessary to do so

We advocate for a ramp plan for inside sellers and use historical KPI data to set realistic goals. With the proper enablement, your plans and rep productivity should scale over time.

We used Mike Cuilla’s excellent list of metrics and modified it a bit:

  1. Time to first outreach (SDR specific) - How quickly do SDRs follow up with inbound inquiries?
  2. Overall Connect Rate (SDR specific) - What percent of inbound inquiries do SDRs make contact with?
  3. Attempts - How many attempts are made by each inside salesperson each day/week/month/quarter?
  4. Daily Connect Rate - What percent of all attempts made (emails, calls, INmails, text) in a given day result in a response or conversation? Track both positive and negative responses separately.
  5. Demos Scheduled - How many demos are scheduled by each salesperson each day/week/month/quarter?
  6. Demo Scheduled Rate - What percent of total connections result in a demo being booked?
  7. Demos Held - How many demos booked show up for their demo?
  8. Demo Held Rate - What percentage of demos scheduled are held?
  9. Pipeline Generated - How much pipeline was generated on inside salesperson-created opportunities?

Not all of these are KPIs. We don’t recommend showing all of these metrics to the inside sales team or prioritizing all of them equally.  KPIs should include Demos Scheduled, Demos Held, and Pipeline Generated.

Demos Held should always be viewed as the top metric. That’s the primary compensation trigger. The Demo Held Rate is also extremely important. We also care deeply about pipeline generated because it can indicate whether the account executive and inside sales team are aligned on the definition of a qualified opportunity.

We care about the attempts to demos booked ratio because it is also a great indicator of how effective their outreach is. Reps with high ratios can be used to build case studies and train the rest of the team (and marketing!). 

We also care about time to outreach and overall connect rate so we can identify whether certain lead types are being avoided because they don’t convert or if sellers avoid certain types of leads. This knowledge can improve our marketing targeting and lead-gating mechanism.

Volume metrics can help verify a salesperson's disengagement from their job and are used in performance improvement plans, but they are the lowest priority. In our experience, volume quotas lead to padding numbers—not higher meetings booked. We should all care about quality, which is measured by productive meetings and can further be validated by pipeline generated.

There is room for debate on whether AI is helping or hindering sales outreach. AI is an excellent research tool, but an inside salesperson should always validate the information. AI might be able to help with copy if you have established guidelines, but research shows that a more personalized approach is better. Again, we’re going with quality or what works–not necessarily the highest volume.

We get that, historically, the role has been turned into a statistics game. Only 5% of our target market is in-market at any given time, and we’re trying to reach those people at the right moment through cold outbound. Those messages only help if they resonate with your buyer. Otherwise, you’re burning equity.

This role deserves more attention and respect.

The SDR and BDR Compensation Plans

Blake Kendrick, Revenue Operations Manager @Thankful, provided an excellent toolkit for compensating inside seller compensation. Sales compensation is made up of the following:

  • Base Salary - This is a set compensation amount that is paid out regularly to the salesperson, whether they hit quota or not.
  • Variable Compensation - This is the performance-based part of the compensation plan, and we’ll primarily focus on it in this article. 

The base salary is paid according to the company's typical schedule (bi-weekly is common), and variable compensation is typically paid monthly for inside salespeople.

We will not discuss other elements of compensation here, such as health benefits, 401(k) matching, and even equity. Explore these options to beef up a compensation plan that is low on the salary / variable compensation ranges.

Blake focuses on two outcomes that all inside sellers are expected to produce, which he defines as: 

  • SALs - Meetings Set with Sales Accepted Leads (AKA Demos Scheduled)
  • SQLs - Meetings Held (AKA Demos Held)

At the RevOps Co-op, we think the compensation plan should differ depending on the maturity of the company and we focus more heavily on Demos Held or, if suitably mature, Qualified Opportunities (meeting held and qualified by the account executive). 

In unestablished organizations with few inbound leads, we recommend focusing on Meetings Held and tying a bonus or accelerator to Meetings Held over quota. 

In larger organizations, we have used a Meetings Held quota for inside sellers (and the number given as a goal often differs between BDR and ISR) and use Pipeline Generated for the bonus portion of on-target earnings (OTE).

Whether you use our approach or Blake’s, the workbook is very helpful and easily modified once copied.

Blake's Compensation Calculator

Here is a Link to Blake Kendrick’s Compensation Calculator. Feel free to make a copy of this calculator and add or subtract variables you would like to use in your plan – or create multiple copies and compare your options. Here is a brief breakdown of how Blake set up this worksheet.

Column 1 (Targets)

Yellow cells in this column and throughout the calculator are used to indicate inputs or entry points. These are the numbers that you can change and update to test out different models. 

Base Salary - This is the salary you have set for this role. Feel free to use industry benchmarks and verify them with peers (like people in our community!) as well as your own company’s budget to set this number.

SALs/SQLs Target (per month) - Here is where you set the number of SALs or SQLs this inside salesperson would have to generate in order to hit quota for the month. This will be higher for lower deal sizes and shorter sales cycles. Also, keep in mind that the SQL goal will always be lower than the number of SQLs goal since not all SALs will convert to SQLs after speaking with sales. 

Bonus for SALs/SQLs Target Attainment (in-month) - This indicates the amount of commission that the inside salesperson will receive if they hit 100% of their goal for that metric. This does not have to be an ‘all or nothing’ goal. Some companies choose to provide a fixed rate per meeting. Some offer a tiered approach where (for example) 50% of quota attainment gets you 50% commission, but anything less gets you 0 commission. Choose the one that fits your organization and team best. A senior rep might not flinch at a 50% cliff, but someone new to sales may need to see compensation coming in on a per-meeting basis to help keep confidence up.

Bonus per excess SAL/SQL (in-month) - What happens when an inside salesperson exceeds quota? The best practice is to add a kicker on top of their normal per meetings bonus. This way, inside salespeople are being further incentivized to perform well above expectations and not simply hit the target every month. In this example, we are offering an extra $50 on top of the regular commission for every SAL that a sales rep generates in a given month over the goal of 13. 

Bonus on won revenue - Some companies offer compensation to inside salespeople for all closed deals that they generated. If your company has a long sales cycle, we recommend building a bonus around pipeline generated instead. With the short tenure of inside salespeople, it’s rare that they’ll be incentivized by a closed won bonus with a long sales cycle.

Column 2 (Projections)

SALs/SQLs attained (in-month) - Use these cells to test out what different levels of quota attainment will do to change commission amounts. In this example, our salesperson hits 100% quota for the SQL & SAL goals while not contributing any Won Revenue in the same month. This means they would receive $2,000 in column 1 ($1k for SALs & $1k for SQLs).

Column 3 (Payouts & Scaling)

Here's where it can get much more complicated. Use this column to adjust the payout timelines for each individual element of your compensation plan and set up your tiers. For this example, we have Base Salary being paid 2x monthly (standard), with SAL, SQL, and Commission bonuses paid out monthly. Your Finance team will be the one to talk to about this piece, as they will have a heavy hand in deciding when things are paid out based on their own Accounts Receivable (AR).

Pay special attention to the “Target Attainment Scaling” section. This is where you set up your tiered system. For this plan, salespeople receive 80% of the $1,000 target if they are able to hit 50% of that target and 100% of the $1,000 target if they reach 80%. Use the bottom 4 cells to change the scale above. 

‍How should BDR and SDR compensation differ?

As every RevOps consultant will tell you, it depends. Typically, outbound selling is considered much more difficult and generally leads to a slightly lower target for the BDR if you also have SDRs focused on inbound. However, that can vary due to the BDR’s level of experience and historical performance.

You can also help make outbound selling easier by providing your BDRs intent data from providers like G2, Capterra, and TrustRadius. Giving them access to deanonymized website signals and ranking the pages by intent (for example, product pages are more meaningful than a career page visit!) gives them the ability to chase accounts that are already aware of your company and have a higher probability of being in market.

Remember, you must have a suitable growth plan for every salesperson you hire. 

Do they want to be an account executive? Great! Set a realistic timeline with milestones that must be hit in order to reach their goal – and plan to backfill accordingly. 

Do they want to be the most awesome inside salesperson ever? Great! They need to have a career growth plan like anyone else that keeps them challenged and satisfied with their compensation. This also shows other reps that ::think:: they want to be account executive and change their minds that it’s more than okay to stay in inside sales.

Do they want to manage? Great! They’ll need a mentor and a plan to get them there.

Finally, we can't emphasize enough the importance of having the right inside sales manager in place. They need to agree with your philosophy on quality over volume and have the mentality required to create a bridge between marketing and the account executive team.

Looking for more great content? Check out our blog and join the community.

Related posts

Join the Co-op!

scribbles 7 birds
Tail Spin Animation