It’s Time To Change The Software Sales Compenstation Plans

The B2B software sales compensation model hasn’t changed in decades: a rep closes a deal and gets comped for the revenue. It’s time for a change.

Why now?

1. The need for sales to bring in the ‘right fit’ customers to reduce the chance of churn is more critical than ever.
2. Buyers have so many options; the days of single vendor and monster deals are dwindling; the industry is moving fast to ‘land and expand’ models.  
3. Traditional sales and marketing techniques aren’t working as well to convert new prospects. Sales teams need to focus on getting more customer referrals.

Adding advocacy to your sales compensation model can boost your revenue and reduce churn. Advocates help companies grow 2.5 times faster than their competitors, because advocates spend 13% more than the average customer and refer business equal to 45% of the money they spend (according to a 2010 Satmetrix report).

It’s time to incentivize sales to focus on the long-term customer value—not just the short-term revenue.

How?

In addition to comping on closed deals, a portion of your reps’ salary should be tied to creating advocates.

Advocates are your most enthusiastic and successful customers. The more advocates you have, the more positive word of mouth, testimonials, reviews and social media buzz you can expect to receive. Your advocates will also become your extended sales team by providing you with referrals, references and case studies. Their efforts can help you drive sales and close new deals faster. Your sales team needs these things—so why not incent them to make it happen?

Here’s how do we do it at Influitive:

1. Educate your sales reps about the importance of advocacy

It’s crucial that your sales reps see how advocacy will benefit the company. Show them examples of how advocates are helping you reach your long-term goals.

Be sure to explain how advocacy will help each rep individually. For example, can your advocates send them referral leads that will turn into new sales? The more your reps see the benefits of advocacy, the more they will ensure your customers’ success.   

2. Give your reps rewards and recognition when they build advocacy

If you want to change your reps’ behavior, you have to make it worthwhile for them to change.

First, tie advocacy into their commission. I recommend that this portion is 10-20% of your reps’ total earnings. The amount should be meaningful, but it shouldn’t take away from their core job.

Here at Influitive, we reward reps when a customer becomes an advocate and we continue to reward the rep for every act of advocacy the customer performs indefinitely. Although using our AdvocateHub platform makes this process easy, you don’t necessarily need software to reward your reps; a spreadsheet might do the trick.

3. Ignite your reps’ competitive sides

A little friendly competition can go a long way in boosting your company’s advocacy. We have a leaderboard in our office that constantly shows our sales reps’ advocacy points. Seeing their numbers every day motivates our reps to build more advocates—and beat their colleagues.

Comping based on customer advocacy works! By encouraging our sales team to seek out potential advocates—and nurturing our new customers with an advocate marketing program—we have received 782 referrals, 123 testimonials, and 187 online reviews so far this year. As a result, we can attribute 20% of this year’s new business to customer referrals. Not too shabby for a pretty small sales & marketing team.