The Challenge
An international publisher of scientific and technical content was concerned that the sales incentive plan was focused too much on acquiring new business. Management wanted increased focused from the sales force on renewing and upselling existing customers while continuing to close new business opportunities.
Our Solution
- We recommended the client make several key changes to the sales incentive plan:
- Position target total compensation (salary plus target incentive) above market median to create sufficient leverage in the incentive plan to attract the caliber of sales talent required to accelerate growing the top line.
- Pay sales incentive on total revenue rather than high rates for new business and low rates for existing customer sales to eliminate the new/existing customer conflict.
- Maintain a commission structure with increasing rates as they achieved and exceeded quota to reinforce the strong sales culture.
The Impact:
The new sales incentive design provided flexibility for account managers to grow their territories appropriately (e.g., larger territories focused on renews and upselling, small territories focused on new sales). Annual sales after the plan was implemented increased 11% (double the historical average sales growth) with an improved mix of customer retention, upselling, and new customer acquisition.
RETURN METRICS: Identifying and monitoring metrics to capture changes in key performance areas enables managers to gain necessary insights and make informed decisions about their business and investments in human capital.