Tuesday, February 17, 2009
Try Retention For A Change
What if sales based organizations focused on customer retention as much as they focus on customer acquisition? I know that most companies say that's a focus for them but their action plan states something different.
How does your commission plan or bonus plan for your sales team encourage retention rather than simply acquisition? Too many times sales reps are rewarded for playing "bump-and-run" coverage with your customers. Companies do this by shuffling accounts among reps, paying high sign bonuses on sales, or by paying inflated early commissions that deflate over time. Techniques like this are meant to force ones sales force to continue to seek new clients rather than settling in a comfort zone thus slowing focus. These practices all are counter productive to your bottom line and your companies reputation. They encourage your team to make the fast money and forget their client in order to move on to the next paycheck.
Chances are that you can afford to pay in month 3, month 6, month 16, and month 36 what you paid in month one. Why not pay a good, fair, commission that recurs as a client continues business with your company.
My hope is that my sales reps will all one day hit a comfort level with the amount of recurring accounts they maintain repetitive business with and can spend their time drinking coffee with and maintaining a good relationship with those accounts for the long term. When that happens, I'll simply hire a new rep to sell those new accounts and keep them coming in.
I believe that this will avoid the pinwheel of sales reps cycling through my office that so many companies have. Rather than feeling like their running on a treadmill, they can actually reach the goal of this race.