The right sales plan plays a vital role in achieving sustainable and growing revenue for any business. As an organization transitions to a recurring revenue approach, the right sales compensation program becomes even more crucial.
The information and views outlined here are the result of two years of analyzing hundreds of sales plans, identifying the underlying issues that, if avoided, can lead to a functional recurring services sales plan that works.
Implementing a recurring revenue sales compensation plan has the same core dependencies as any sales plan including:
Acknowledging that sales planning does not sit as a standalone activity
Ensuring that the plan is integrated into the business framework
Supporting the organization’s revenue objectives
It is important to recognize that transforming to a cloud-based recurring business model does not need to be a seismic shift.
Many times an organization’s existing sales model becomes an impediment to growing and sustaining cloud and recurring revenue services sales. In addition, you’ll need to ensure that your business and financial model are in alignment – many times they are not. Which leads many companies to thrash and not make the moves necessary to successfully implement a recurring revenue sales plan.
With your sales, business and financial models positioned correctly it’s time to focus on implementing a sales plan that will drive consistent and sustainable recurring revenue that will begin your evolution towards a recurring revenue friendly business model.
There are several tenets that can strengthen your sales plan, including creating a program that:
Supports and drives the business objectives
Fits into and/or complements the organization’s current business model
Drives the sales professional to build a book of business
As always, it is important to remember that any sales plan should be straight forward, easy to understand and most importantly easy to track and manage.
In order to produce solid month-over-month gains and build a truly sustainable recurring revenue services business, the approaches below are the most affective:
Pay entire Year 1 commission upfront as though it were a transaction
Pay Month 1 revenue to sales professional as total commission
Pay a percentage of the deal (example = 25%) upfront and then the remainder monthly over the term of the contract
Pay commission on a monthly basis for the term of the contract
Note: Number 4 is the predominant methodology that we’ve seen deliver the most consistent results.
There is no perfect approach or one-size-fits-all approach, rather there is a framework, critical thinking, some hard work and commitment towards creating an effective sales plan. Utilizing a multi-pronged strategy that is executed with passion and conviction ensures you create a positive and pragmatic shift as you transform to a cloud and recurring revenue services business.
To see a much more expansive and complete view of this topic, please fill in Contact Us information below and place "Recurring Revenue Plan" in the subject line. We'll send you a link to download a whitepaper sponsored by The Westcon Group (@WestconComstor) entitled Foundational Elements of Recurring Revenue Sales Plans.