Principle
When an SDR is measured on meetings booked and an account executive is measured on deals closed, the two are optimising different functions on the same opportunity, and the difference between those functions is paid for by the account executive in wasted hours and by the company in an inflated cost of acquisition.
Behaviour
The SDR's task, as constructed by their compensation, is to secure a calendar commitment. The quality of that commitment, whether the prospect has budget, authority, a real problem, or any intention beyond politely accepting an invitation, does not enter the SDR's payout. It enters the AE's calendar.
AEs respond predictably. They develop private heuristics about which SDRs produce real meetings and which produce attendance. They begin pre-qualifying meetings before taking them, which is work the SDR was ostensibly hired to do. In organisations where this has run for a while, AEs quietly decline a meaningful proportion of the meetings booked for them, and the SDR's booked-meeting number, on which their compensation is entirely based, becomes a measure of an activity that partially does not lead anywhere.
Nobody surfaces this, because the SDR hits their number, the AE finds ways to protect their own time, and the aggregate funnel metrics still show meetings converting to opportunities at some historically consistent rate that everybody has stopped questioning.
Two functions optimising different things on the same opportunity, and the account executive pays the difference in hours.
Evidence
Calculate the meeting-to-opportunity conversion rate by individual SDR over a year. Genuine variation in prospecting skill produces a spread. A spread wider than roughly two to one indicates that some SDRs are booking meetings and others are booking calendar entries, and that the metric does not distinguish between them.
Track AE-initiated cancellations and no-show rates by originating SDR. An SDR whose booked meetings are disproportionately cancelled by the AE before they occur has been rejected by the receiving party, and the rejection carries no consequence in their compensation.
Measure the time AEs spend on pre-meeting qualification. Where AEs are conducting substantive research and outreach before accepting a booked meeting, they are performing the SDR's function at a considerably higher cost per hour, and that cost belongs in the fully loaded acquisition cost calculation but is nowhere in it.
Psychology
SDRs are not gaming anything. They are doing precisely what the organisation pays them to do, which is to secure meetings, and a meeting with a curious but unqualified prospect is a meeting. Asking an SDR to sacrifice a booked meeting on qualification grounds is asking them to sacrifice their own income to protect a colleague's time, and no functioning incentive system asks that of anyone.
AEs, for their part, rarely escalate. Complaining about meeting quality reads as an excuse for missing quota, particularly from an AE who is behind, and so the AE absorbs the cost silently, adjusts their heuristics, and the organisation never learns that a substantial proportion of its top-of-funnel activity produces nothing.
Commercial Risk
Cost of customer acquisition calculated from SDR headcount and marketing spend systematically understates the true figure, because a meaningful share of AE hours is being consumed performing qualification work attributed to the SDR function. The efficiency ratios in the model are wrong in a direction that flatters the business.
More consequentially, an acquirer scaling the SDR function to accelerate pipeline generation will scale the tax proportionally. Doubling the SDR team doubles the meetings, doubles the unqualified proportion, and consumes twice the AE capacity in filtering them, which is precisely the capacity the growth plan requires for selling.
The fix is to move a portion of the SDR's compensation downstream, to opportunities accepted or pipeline created rather than meetings booked, so that the qualification decision sits with the person who has the information and the incentive to make it correctly. The change is straightforward, is resisted because it reduces the SDR's control over their own payout, and is among the highest-return compensation adjustments available in a commercial organisation.
Investment Committee Note