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Should part of sales comp be tied to renewal?

Pre-Transparency-Todd debates Post-Transparency Todd

· transparency sale

It's 2015. Three people walk into a conference room:

  1. CEO: OF the fastest growing tech company in Chicago.
  2. Me, who we'll refer to as "Todd": SVP of Sales for said company, pre-Transparency Sale.
  3. Future Todd: from today, post-Transparency Sale

CEO: “Todd, the sales org should have a portion of their compensation tied to the first-year success (first year renewal) of the clients they sell.”

Todd: “Wellllllll, I’m not sure I agree. If the sales organization is focused on everything, they’re focused on nothing.

"We need systems in place to ensure we’re doing good deals, but at the end of the day, I want sellers controlling the controllables - not worrying about the implementation and how the client success team takes the baton, too.

"Implementation & Client Success doesn’t need another supervisor - the sales rep.

"We need to trust our processes, our reps, and the clients themselves, to ensure solution fit.”

Future Todd: "Wrong answer, Me.

"CEO, you're right. Me, you're thinking about this wrong. I agree that having sales stick their nose into assisting in implementation management, or micro-managing client-success / account management through the renewal is a bad idea. However...

"The answer is transparency.

"The answer is in setting proper expectations starting with the first conversation.

"The answer is in qualifying OUT opportunities early in the sales process, and not penalizing a rep with a pipeline that’s not “3x of their target” or whatever bs we used to tell reps is 'ideal', and instead work with them to get to target with a pipeline full of deals that are great fits.

"I would rather have a rep with an empty pipeline than have a rep who shows me their pipeline load is 3x their quota (i.e., old-school sales leadership theory) - full of deals likely not worth winning."

Here's something that happened to us this week that made me realize how wrong the old Todd was...

We're on a family road-trip vacation right now. We should be in an AirBnB, but instead we’re in a hotel.

Here's what happened.

A few weeks ago, my kids looked on as we scrolled through potential places to stay.

My kids fell in love with a place on AirBnB. It had a giant screen TV. It had a pinball machine. It was recently renovated - new kitchen, new flooring.

My son exclaimed, "Imagine us playing Minecraft on that TV!"

I showed my wife. Her criteria for an AirBnB is, if we're going to do that instead of a hotel, she wanted it to be a house, and that we would have the whole home. We've done this a few times, and we like the home-away-from-home feeling and privacy.

Great match. Whole-home, pinball machine, big TV. We booked it.

The road trip was just under ten hours. We arrived at the property in the evening a bit weary, pulled into the driveway, and were immediately hit with the feeling that this wasn't what we saw online.

It wasn't a house. It was a two flat, where we were downstairs. Upon walking in, there was a stairway where the top of the stairs had a large slab of plywood blocking the top of the stairs. There were people upstairs. With kids. Loud kids. And they were cooking dinner, which smelled absolutely foul.

A bit distraught, my 7-year-old son ran to the pinball machine in anticipation that it would outweigh the weirdness of the property.

"Daddy, can you turn it on?" he asked as he stood in anticipation.

I figured out how to turn it on...and quickly realized this thing was 'out of order'. The digital screen said, "Call a technician."

My daughter then asked me to connect our Nintendo Switch to the giant TV. I unpacked it, made the connections, and turned on the TV. The inputs wouldn't work - they were somehow pixellated and scrambled.

Now, both kids were really upset, and my wife was exasperated by the smell and the screaming just up the stairs and on the other side of the plywood.

I texted the property owner as my kids literally stood by their suitcases upset, and my wife was already on my laptop looking for other options. My son typically just rolls-with-it. Not this time. He stood upset, and wouldn't put his stuff down. He was leaving.

We wanted out.

AirBnB got the sale. The property owner got the sale. But expectations were set incorrectly.

The owner called. He apologized for the pinball machine, told me the TV was quite old, and said he'd call the neighbors above to tell them to keep it down. But we weren't going to stay there. Period.

Is it the our fault that expectations were set incorrectly? I think not.

Is it the client's fault when expectations are set incorrectly? I think not.

I know not.

Especially when the client experience goes awry the minute the client steps into the solution, that’s on sales...nobody else.

When expectations are set correctly pre-sale, including the "here's what could go wrong" and "here's what you might not like", your sales cycles speed up, your win rates go up because you're (a) working on the opportunities which should be a good fit, and (b) you're qualifying out the opportunities quickly which aren't a good fit, and you get a lot more rope post sale when something doesn't match / inevitably goes wrong.

That's on the seller.

Embrace transparency. Align compensation to it - and you'll end up with reps working the deals that make for clients who want to buy quickly, stay, buy more and tell their friends.

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