The purpose of any compensation program especially one that supports Key Account Management is to drive the “right” behavior of the sales team. When we discuss the sales team’s relationship within key accounts it’s not just the sales rep and perhaps a subject matter expert, it’s everyone supporting the account.
When we consider driving the right behavior, its how do we drive the right behavior of all those required to support the client. This includes but is not limited to those with direct customer contact: account executives, sales reps, inside sales reps, SME’s, project managers, customer service reps, solution architects and in some cases product managers but also the matrix support resources such as human resources, billing, logistics/operations (direct or matrix), etc. Figure 1 provides an example of a key account management team and the matrix support resources.
In order to develop our key account management compensation program we need to consider all those within the team. Balancing the right ratio of salary verse variable compensation and providing the key account manager with the ability to compensate those support resources in conjunction with account, regional or global incentives is critical. The following 12 areas need to be considered when developing the key account compensation program:
- Ratio of sales to variable compensation – typically 75/85% salary & 15-25% variable compensation
- Customer focus not geographic – everyone needs to understand clearly who they are supporting
- Clear / concise individual objectives that when combined add up to total account success
- Team incentives to provide the best long term customer solution – impact / benefit
- Key account manager has control over team compensation
- Balance between short & long term objectives
- Revenue growth & account profitability goals
- Avoid the key account manager’s impact on the regional sales reps sales commission
- Spend the time upfront to design the right program
- Avoid the potential of increasing the cost of sales without driving additional revenue or profits
- Avoid exception based compensation management
- Consider local legalities when developing global key account programs
In my next post we’ll discuss the various roles and responsibilities of the Key Account Management team.