Value Articulation vs Value Delivery - How to pay on these effectively?
Industries continue to become more and more nuanced in their offerings and addressing niche markets. This is great for determining your ideal customer persona and using effective communication to outline the value of your offering to them (Value Articulation). The true test still remains in delivering on that value (Value Delivery) and increasing Customer Usage = Customer Renewals. We’ll take an attempt in this article to outline some effective ways to drive the right behaviors to hit both equally important points with compensation.
Value Articulation: The verification of your offerings value being articulated well by a Sales Rep is the end result of a closed booking.
You can incentivize this with a few different strategies:
Make bookings the primary metric of the plan by increasing the weight of bookings (i.e. 70% iACV Bookings / 30% Renewal ACV)
Pay a higher commission rate for bookings (i.e. 8% New Bookings Commission Rate vs 2% Renewal Commission Rate)
Value Delivery: The ability of the company to deliver on their offering will have lasting impacts on the relationship and eventually the continuation of any further business through a renewal or up-sell. The goal is to promote successful implementations for Saas offerings and/or usage for both Saas and non Saas offerings. This can be achieved by training, professional services and implementation teams. Here are some ways to compensate the Sales Rep’s ability to help with Value Delivery.
Hold Sales Rep’s responsible for renewals if this is a subscription contract by ensuring they hold the quota for the renewal par value in their plan.
Compensation Sales Rep’s on customer usage if there is a burn down aspect to the contract with the customer. (2% Commission Rate on Usage)
Customer Satisfaction or Net New Promoter Scores as a measured metric for Sales Rep’s after implementation.
Depending on your sales model and maturity of your offering the value delivery may be completely out of the Sales Rep’s hand by design. This should be a point that is revisited often to ensure a Sales Reps is not only booking new business but is booking business with the right customers to ensure satisfaction/right fit.