What incentive comp do you find is most effective in driving results for the hunter sales role and the farmer or account manager role?
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CSO in IT Services4 months ago
So the answers are different for both of course, but diving deeper, how do you solve for achieving/exceeding quota, keeping the Sales rep constantly "growing" (where they wont leave), and mitigating seasonal highs and lows of the year - because you want them to be consistent. I wouldn’t do a Cap on either plan personally. It’s a barrier that only affects <5% of sales, but psychologically affects the whole team.For the Hunter :
Commission on New Sales: High commission rates on new accounts or first-time sales to incentivize aggressive pursuit of new business.
Tiered Commission Structure: Increasing commission percentages as salespeople surpass certain revenue thresholds to encourage continuous effort.
Signing Bonuses: One-time bonuses for securing major accounts to reward high-impact wins. (Think key logo's for the company)
Spiffs or Short-term Incentives: Immediate bonuses for short-term goals, like closing deals within a specific period, which can spur quick action (sense of urgency)
Annual Bonuses Based on Quota Attainment: Bonuses for achieving or exceeding yearly sales targets, which focus on sustained effort over the fiscal year.
For the Farmer:
Commission on Account Growth: Incentives based on percentage increases in account value, encouraging not just maintenance but growth.
Renewal Bonuses: Bonuses for successfully renewing contracts, emphasizing the importance of long-term customer retention.
Cross-Sell/Upsell Incentives: Additional rewards for expanding the range of products/services bought by existing customers and calling that out - monthly/quarterly - because this is your bench for your next hunter.
Customer Satisfaction Bonuses: Bonuses linked to customer feedback or satisfaction scores, promoting service quality alongside sales.
Profitability Incentives: Rewards for managing accounts in a way that enhances their profitability, such as reducing service costs or increasing efficiency.
CSO in IT Services4 months ago
To the capping the earning potential part...I wouldn’t do a Cap on either plan personally. It’s a barrier that only affects <5% of sales, but psychologically affects the whole team.
CSO4 months ago
When people think of incentive comp, they immediately turn to the material aspects. However, the biggest stimulus to motivation is recognition. Therein lies the manager's role. A manager who understands what makes the individuals in their team 'tick' and adjusts their style accordingly. A manager who is always there for them and goes in to 'bat' for them.
Farmer/AM: Revenue retention against baseline. In order to make it meaningful, include a minimum threshold. An AM who maintains for example less than 90% of baseline has done a very poor job and shouldn't be eligible for a variable bonus (comparable to a hunter who doesn't hit 50% acquisition). The flip side of the coin is including a kicker percentage for >target achievement. For example, if the target is 105% of baseline, the AM gets nothing below 90%, gets linear percentage from 90-105%, and gets a higher percentage bonus on any portion above 105%.