When Goals Meet Incentives

Erik W. Charles
Erik W. Charles
In Xactly Blog
Erik Charles is the Vice President, Product Marketing, at Xactly Corporation where he is responsible for driving the product strategy, defining the product vision, and developing a strong team of product owners and designers.

How well do you know your team and their rewards?

Do you motivate your hunter like a farmer? Does everyone regardless of his or her team have the same compensation plan?

For companies bound to spreadsheets, creating specialized plans can chew up precious time and increase the likelihood of error as formulas become more complicated.

Using sales performance management tools, it’s easier to reward team members for their specific jobs.  This week I am kicking off an occasional series on job goals and how to best reward for them.

Let’s start with your renewal team.

For companies that sell anything on a renewal basis – subscriptions, software licensing or rented hardware – renewals deserve a dedicated sales team.

Leaving this opportunity to create a stream of revenue to an administrative position or billing makes it an afterthought.

Leaving it in the hands of salespeople who are rewarded with a portion of the new business they bring in also lets renewals languish. Renewing customers isn’t their main goal, landing new clients is.

A team focused on renewals – sometimes called farmers or customer sales reps – should be a separate group with its own rewards.

How?

Because renewal reps aren’t pushing customers to make the initial decision to buy, their ratio of base salary to target incentives should be slightly different than other sales people. The decision to renew – to maintain the status quo – should be an easier one for customers to make.

That means a smaller portion of a renewal reps pay should be variable than it is for a sales person.

For example, if your sales reps’ target salaries – the amount on average you want to pay each rep based on salary surveys – includes a pay mix that is 50 percent variable, consider starting your renewal reps with variable pay making up 40 percent of the target pay.

But, there are other business factors you should consider before you set the final ratio, including:

  • What is your current churn rate?
  • Are there competitors in the market?
  • How easy is it for a customer to switch providers?
  • What is the adoption rate for your product once purchased?

All of these affect the difficulty of the renewal rep’s task.

As deals become harder to secure, the percentage of the renewal rep’s pay that is variable should increase. Decrease it as deals become easier to close.

How do you incent your renewal team?



Recent Posts

Leave a Comment

.

Thank You for Your Interest!

Please Share This Resource!


When Goals Meet Incentives

GUIDES CONTACT US CHAT WITH SALES DEMO