Designing a Comp Plan for a New Sales Role: SDR, AE and AM

Most companies build their second comp plan by copying their first one and changing the number at the top. That works fine when the new hire does the same job as the last one. It fails the moment the new role is structurally different, and SDR, AE and AM roles are structurally different in ways that matter a lot to how you should pay them.

Start with what the role actually controls

An SDR generates and qualifies pipeline. They rarely touch pricing, rarely sit in the final negotiation, and have limited influence over whether a qualified opportunity eventually closes. An AE owns the deal from qualified opportunity to signature: they control the pitch, the negotiation and, largely, the timeline. An AM owns an existing relationship after the ink is dry: renewal, expansion, and the health of an account they didn't necessarily win in the first place.

The rule that should drive every other decision in the plan: pay a role on the outcomes it actually influences. Paying an SDR on closed revenue rewards luck as much as effort. Paying an AM on new-logo bookings measures something they have almost no control over.

Pay mix by role

These ranges aren't law. A transactional, high-velocity AE motion can push toward 60/40 base-heavy to reduce reps' income volatility across many smaller deals. A strategic AM role carrying a real expansion quota can push closer to 50/50. The point is the direction, not the exact split: SDR and AM roles generally carry less pay-at-risk than AE roles, because the AE is the one closing the number.

What to measure for each role

SDR: qualified meetings booked, meetings that convert to pipeline, and increasingly, pipeline that survives past the first sales-qualified stage. A plan that pays on meetings booked alone invites reps to book anything that fills a calendar slot. Tie at least part of the variable to meeting quality, measured by conversion to a real opportunity within 30 days.

AE: new ARR or bookings against quota, with accelerators above 100% attainment. If multi-year deals or specific product lines matter strategically, weight them explicitly rather than hoping reps prioritize them on their own.

AM: net revenue retention, renewal rate, and expansion bookings. Some organizations also carry a churn decelerator, a lower rate or a hold on a portion of variable when an account in the book churns within the period. Use it carefully: a decelerator tied to churn the AM had no way to prevent (a company going out of business, a budget cut from the CFO) breeds resentment rather than accountability.

Quota-setting differs by role too

An SDR's quota is usually a volume number, meetings or qualified pipeline dollars, set from historical conversion rates and territory size. An AE's quota is a bookings number set from territory capacity and historical productivity. An AM's quota should be set against the size of the book they're managing: a flat percentage retention or expansion target applied uniformly to every AM ignores the fact that a book full of at-risk accounts is a different job than a book of healthy, growing ones.

The mistake that shows up in almost every young sales org

New roles frequently inherit whatever plan structure the founder or first sales hire used, regardless of fit. A common version of this: the company's first AE plan gets copied onto the first AM hire with a few numbers changed, and the AM ends up paid on new-logo bookings that an AE is actually closing. The AM has no lever to move that number, learns this within a quarter, and either stops caring about the metric or starts negotiating deals in ways that step on the AE's territory.

The fix isn't complicated. Before writing a comp plan for a new role, list what that role controls, what it influences but doesn't control, and what it has nothing to do with. Pay on the first category, weight lightly on the second, and leave the third alone entirely.

Building the plan without starting from zero

None of this means every plan needs to be invented from scratch. Benchmark data for pay mix and OTE by role is widely available and a reasonable starting point. What should never be copied wholesale is the metric structure: that has to be built from your own sales motion, your own definition of what each role owns, and an honest look at what happens when a rep optimizes hard for exactly what the plan measures.