A lot of account movement between reps may point to opportunities to improve sales effectiveness that have nothing to do with compensation design, like…
- Are those account movements good for business? Does the lack of a stable long-term relationship hurt customer loyalty?
- Why are the accounts moving? In a quota-based incentive plan, is this perhaps a case of “hot potato” in which both quota and sales credit move with the account, and it helps a rep to “dump” accounts that are likely to generate under-quota sales? In a commission plan, are sales managers moving accounts in an effort to directly manage pay by giving more accounts, and therefore more sales credit, and therefore more income to the reps they think need it?
- …and there are many other possibilities.
So it might be good to start with the goal of reducing the account movement. However, if this appears to be inevitable you definitely want to anticipate it in your design. Here are a few ideas:
- Independent months or quarters. Instead of measuring results for a whole year, issue goals and measure results for each quarter (or month) separately so that an account move will not result in continued adjustments for the rest of the year.
- If the reason for the account movement is to balance territories, and keep opportunity even across the team, then a commission type plan may be a good idea. In this case, only allow movements at the end of a month, and calculate the commission based on credit for all accounts assigned during that month. Add the months of credit together and you have year-to-date credit for calculation purposes.
- If the reason for the account movement is “hot potato” (see 2nd bullet above), then you need another mechanism to total pay level problems. If this is the only way managers can retain good reps, then the plan is not delivering market-competitive pay. You may need to review base pay levels, consider adding comp at target for higher quota territories, etc.
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.