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.

 

Key Account Team Structure

 

Figure 1

 

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:

 

  1. Ratio of sales to variable compensation – typically 75/85% salary & 15-25% variable compensation
  2. Customer focus not geographic – everyone needs to understand clearly who they are supporting
  3. Clear / concise individual objectives that when combined add up to total account success
  4. Team incentives to provide the best long term customer solution – impact / benefit
  5. Key account manager has control over team compensation
  6. Balance between short & long term objectives
  7. Revenue growth & account profitability goals
  8. Avoid the key account manager’s impact on the regional sales reps sales commission
  9. Spend the time upfront to design the right program
  10. Avoid the potential of increasing the cost of sales without driving additional revenue or profits
  11. Avoid exception based compensation management
  12. 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.

 

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ABOUT THE AUTHOR

John Staples

Leads teams of highly qualified experts, all relentless in their pursuit of helping you make your number.

John is the global leader of SBI’s account management business unit. As such, he and his team help clients across 19 verticals drive top line growth and operational efficiency in sales and marketing.

 

John’s marketing, sales and product expertise span a multichannel strategic approach. He has an unyielding focus on strategic and key account development, which enables strategic alignment between all functional team members in order to reduce acquisition cost and increase lifetime value.

 

His broad experience in sales, marketing, product and engineering allows him to bring a unique problem solving approach to his team and clients. As he has discovered through decades of experience, clients are often distracted by the symptoms of a larger problem and overlook the root cause of it.

 

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