As the chief sales operations officer at a professional services organization, Victor routinely reports to management that account growth is a top priority. And yet, account managers focus almost entirely on retaining business, with growing existing accounts as a last resort. After reviewing the compensation structure, Victor spots the problem: A lack of incentive.
“ Create a pay structure that rewards account growth, and ensure plans are clear and detailed”
“Unfortunately, today’s sales compensation plans are not designed to deliver the account growth that sales operations leaders want,” says Craig Riley, senior principal analyst at Gartner. “They are either not measuring growth, diluting growth’s importance or just leaving sales teams confused.”
To identify and implement appropriate compensation plan changes, leaders must understand where and how sales efforts fall short, create a pay structure that rewards account growth, and ensure plans are clear and detailed enough for sales people to easily understand.
Identify where and how sales efforts fall short
Are sellers devoting resources to the right activities? Diagnose whether sales behavior is aligned with strategic goals by evaluating current sales performance on renewals, cross-sells/upsells and new revenue against projections and growth targets. In the areas where sales strategy and seller performance diverge, illustrate areas for leaders to better address and motivate sellers to tap revenue channels where they have the largest chance to drive growth.
Read more: Position Sales Teams to Grow Accounts, Not Just Retain Them
Include account growth in compensation plan
Current account managers’ compensation plans rarely force them to focus on the hard work required to grow their accounts. The Gartner Driving Growth Through Smarter Account Management report shows that 49% of account managers have a single revenue goal that makes no distinction between retention and growth.
Even when an account manager’s quota does have a growth component, the median proportion of their overall goal assigned to growth only accounts for 9% of their variable pay. This small portion of variable pay is not reflective of the time and effort required to drive account growth.
“ Of surveyed account managers, only 24% of sellers can easily calculate their total variable compensation”
Companies currently using single-metric plans should consider whether implementing thresholds and accelerators will provide enough motivation to their sellers before undertaking the effort necessary to move to a multimetric plan.