Variable Compensation for Lead Generation Reps: Consistency and Frequency are Key

Devon-McDonald by

Outbound prospecting is an exhausting role and it requires thick skin. Enduring constant rejection over the phone and via e-mail is never easy to swallow.

For most of the companies in OpenView’s portfolio (and this may very well be the case at your company) many of these teams are brand spanking new. They are still in “experimentation” mode: experimenting with the segment, experimenting with the buyer persona, experimenting with the messaging, etc. Fine-tuning this engine can be downright difficult for everyone involved until the team is at a point at which they are humming.

With that being said, your outbound prospecting lead generation reps need to be rewarded frequently for their efforts to keep them motivated. Compensation for lead generation reps needs to be a well-thought-out dollar amount (per appointment? per opportunity?) that isn’t too high or too low.

Don’t just come up with an arbitrary dollar amount per appointment or per opportunity (I see this happen a lot). What is the number that you have budgeted to pay out for the year? What is the appropriate goal for this team in appointments and opportunities based on historical data?

Here’s a tip: set the goals a bit higher when you are just starting this team.

You can always readjust your compensation for lead generation reps after a few months, and it’s easier to decrease a goal than to increase it with your team (talk about a motivation killer).

Of course, I understand that money isn’t the only solution, but if you’ve hired the right profile, money will likely matter. And it’ll matter a lot. After all, being the person to make the most money on the team is  a point of pride for the best lead generation reps (even if it’s just by $50, your top performer likely thrives on competition).

Trust me. If your compensation for lead generation reps isn’t right, they won’t stay very motivated after a few months on the job.

Now, please don’t confuse what I’m saying with overpaying your lead gen reps. Overpaying your reps is not a sustainable strategy, and it will only hurt you as you try to build a more long-term career path for your top performers. If you start your people too high, they won’t be satisfied with the next role’s comp plan, especially when it has even greater responsibilities. To make up for that dissatisfaction and a lead generation rep’s off-the-charts expectations, you’ll probably have to break the bank to keep them onboard.

To make sure you get compensation for lead generation teams right, we suggest the following:

  • Pay out your bonuses/commissions on a monthly basis. Quarterly (or even less frequent) payouts make reps wait much longer than they should. Keep in mind that with a monthly frequency, managers will need to perform more due diligence and work with finance to ensure that the payouts occur and that that the payout is for legitimate results (for example, appointments that have ACTUALLY occurred and met qualification criteria, versus an appointment that is set for two months out).
  • Pay for appointments set and opportunities created from those appointments.  Place more weight on the opportunity creation to encourage quality. The definitions of appointment and opportunity need to be crystal clear for all.
  • Never cap your goals. You should always encourage your reps to exceed their numbers, not give up once they’ve hit their number for the month.
  • Have a tiered approach to your bonus/commission structure. If your goal is 20 appointments and your rep gets four appointments, they honestly shouldn’t get any money for achieving such minimal results.
  • Don’t put a huge emphasis on closed deals when it comes to lead generation commissions. Closed deals are really out of their hands, and they can become really distracting. A very small percentage bonus on those closed deals can be a nice perk, but it should not be the main attraction in a variable compensation plan.

Here are some ideas from some Lead Qual Managers within OpenView’s portfolio:

  • “We pay tiered $ per appointments set based on monthly number of appointments set. 0-4 = $0, 5-7=$60, 7-10=$65, 10-13 = $70, 14 or more = $75. Also any appointments turned to opportunities by the enterprise rep = $600.”
  • “We pay out monthly based on the percentage of goal attained.”
  • “70% base, 30% variable. The variable is paid quarterly. We have four rates — base rate for appointments, base rate for opportunities (richer), and excelerated rate for both appointments and opportunities.”

How do you structure your variable compensation for lead generation? I’d love additional ideas!