Q&A: Should Account Executives Be Compensated on Renewals?
Q: How do you ensure that Account Executives (AEs) only get compensated on renewals that they were involved with?
For example, let’s say a team of Customer Success Managers is responsible for customer renewals but sometimes they need help from AEs on activities like contract (re)negotiations or re-engaging the customer after the champion leaves.
A: The best results we see are when AEs have comp plans that are focused on very specific sales motions. We actually recommend not paying for renewals at all (including Annual Recurring Revenue is okay.) The conversations around renewals are always very different than new business because AEs already have a history with those customers.
Here are some recommendations to manage this scenario…
1. Look at the data to see how many times this has really come up. Is it coming from the whole team or just one person?
You may find cases where AEs are seeking out being compensated on renewals, and cases where an AE thought they were just helping a colleague and didn’t expect to be compensated for it at all.
2. Look into what specific activities they are running with these deals.
What would you do if the original AE was gone? If it’s an intro email to another contact, that doesn’t feel like a comped event.
3. If you determine that you do want to pay for these activities, keep the payout simple and not distracting.
For example, no quota credit, a flat rate that is set at 25% of their base payout rate (or better yet, a flat dollar amount for the activity!)
4. Create a training plan for your CSMs to take over the activities that the AEs are doing.
Remember, the psychology of compensation is that incentives motivate behaviors. If your AEs are compensated on renewals, it will almost certainly lead them into looking for more renewal opportunities.
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