Moe Revenue

Ineffective Sales Plans

Probably the most common mistake I see companies make is developing a performance-based incentive plan where they pay the same commission for both new account business and ongoing business with established accounts.

New account business is ALWAYS worth more than ongoing business with existing accounts because:

1. it’s more difficult business to obtain than continuing business with already established account relationships
2. it’s the only way your business will generate sustainable growth

By paying more for new business, you train your salespeople to GROW your company instead of just booking the easy business (low-hanging fruit) that was likely coming to your business anyway.

To address this situation, start with the following value definition for your sales rep roles:

Recognize Effort = Base compensation

Reward Results = Incentive compensation

In recognize effort, I mean compensation paid to the salesperson for executing the desired sales behaviors: sourcing introductions, making cold calls, scheduling and attending appointments, qualifying prospects (Critical Qualifying Questions), submitting accurate sales forecasts (Four  Aces), providing proposals and quotes, etc., in essence, engaging in the behaviors necessary to achieve sales goals.

By reward results, I mean the incentive pay used to compensate those who are effectively able to translate theirefforts into company desired revenues. Here is where you want to separate the new business and existing business incentive plans. If you don’t differentiate this value contribution, everyone is sales will want to pursue the account manager role.

Developing new business is critical for all companies and incentives are a primary resource for making that happen.