Q&A: New Business vs. Existing Business Quota Design
Q: What’s a good quota design for new business vs. existing business?
For example, when the same salesperson manages a few existing accounts and also focuses on new business, they may babysit one (or a few) accounts and attain quota. However, the goal is to incentivize them to focus on the new business acquisition.
A: We typically recommend that you split out the two sales motions and create two different quotas: one for new customers and another for existing customers.
1. New Business Quota
For new business, we recommend multiple targets (1-2 tiers leading up to quota and 1-2 tiers after quota) with escalating comp rates. The base rate should be higher than that of existing business. (We see base rates start at ~7-8%)
2. Existing Business Quota
For existing business, if you have a good read on when renewals should come in and who owns the account, you can create another tiered quota based on renewals targets for each month/quarter. If your accounts move around a lot, or there’s a lot of variability around the timing of booking the renewal, you can pay these out at a flat rate. (Rates typically around 1-3%)
Communication matters a lot in this! While this quota design will skew towards new business, you should also be clear with your sales team and explicitly say, “We really want you all focused on new business”.
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