Question and answer format
In professional services, do you compensate differently in sales plans for “new” business vs. maintaining an account to incent the best “prospectors” to develop new business?
I’d say that the best course would depend on both the company strategy and the way the selling roles are defined. If the strategy is focused on penetration of existing accounts, then the most valuable sales might be those in current accounts (this tends to be true with mature companies who have some kind of relationship already with most of their key prospects).
But for the majority of our clients, new business is very important. You’ll have to be clear about what counts as “new” – a new “logo” (new company name…), a new buying entity (maybe a new division/location in an established customer could be counted as new), a new service offering (generally one that does not replace an older legacy service they have been buying). Generally “new” business (however you define it) takes more time and effort to win than renewal or penetration business, and for that reason you’ll need to reward for it at a higher level in order to keep sales people focused on it.
Another approach successfully employed by companies with enough sales people to do this is to separate “Account Management” from “New Business Sales” so that different people/teams are responsible for those different selling activities. This may not be practical in a small sales force – but once a company achieves enough scale to operate this way it allows the focus of those who love the new business hunt to be where they do their best work, and those who love the longer-term relationships and more nurturing selling role can focus on managing and growing existing accounts. If you do end up splitting the role into Account Managers and New Business Hunters (sometimes called Sale Executives), you will probably want to have different pay plans for those two roles (e.g., quota bonus with a threshold and significant acceleration for over-quota performance for Account Managers; first dollar commission with lower quotas and less acceleration for New Business Sales).
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.