We have a freemium model [offering a valuable service for free, typically online, with options to upgrade to a paid “premium” level of service] where all of our current customers buy online with a credit card. Zero sales interaction. No contract, no lock-in. The customers pay for the resources they’ve allocated to their application monthly in arrears.
But there are a lot of prospects and customers who would benefit from interaction with a sales person.
What we’ve started to do: We recently hired a sales guy. He’s being alerted to existing customers who do something that demonstrates deepening interest or commitment (i.e move from a shared to dedicated database). The sales guy e-mails the customer to see what they’re doing and how we can help. Once the customer replies and we connect with them, we help them be more successful on the app — which often times leads them to spend more. The goal is to get wider and deeper in the organization, piggybacking on the existing user’s early success.
But how do you comp that? There’s no close date. There’s no ACV [Annual Contract Value].
At a high level, my suggestion is that this can’t be a high-risk/high-upside role since it will be hard to attribute definite income statement effects to the successful sales person’s effort. But some variable pay (20% – 25% of total comp at target) with a measure like average spend per customer (for customers > $xx in ACV), or average number of users/customer (again for “substantial” customers, or customers at least 6 months old or, …).
Try to find a measure that would improve if the type of customer that has long-term potential is finding more value in your offering, but be careful not to let successfully bringing in a lot of new early-stage customers drive the measure down. That’s the reason for measuring only those who have been with you for some length of time, or have some threshold level of established usage. Then the evidence of “sales” success would be making that sort of measure improve by a few percentage points – no incentive pay if it doesn’t improve, target payout at the targeted (and achievable) level of improvement, and meaningful upside if improvement exceeds expectations.
Would love to hear other ideas – please comment below if you can add to the discussion.
Donya Rose, CSCP, is Managing Principal of The Cygnal Group. She is a recognized expert in sales compensation plan design, regularly speaking at conferences and writing published articles. She serves clients from F500 to growth-stage businesses, and advises WorldatWork on sales compensation hot topics and best practices.