Page 81 - The Sales Acceleration Formula: Using Data, Technology, and Inbound Selling to go from $0 to $100 Million - PDFDrive.com

plan the following quarter, in order to align their customer churn performance
with their commission checks.

Sure enough, next quarter, I followed through on my promise. I stack-ranked the
sales team from the salesperson with the best churn rate right down to the
salesperson with the worst churn rate. I then segmented the team into quartiles.
The top performing quartile (top 25 percent) that used to earn $2 per $1 of
monthly recurring revenue now earned $4 per $1 of monthly recurring revenue.
“Congratulations,” I said to them. “I am doubling your commission payments.
Why? Because you bring on the best customers. Keep it up.”

I moved on to the next quartile in the list. “Good work. You now earn $3 per $1
of monthly recurring revenue, a 50 percent increase above your previous rate.”

“For the folks in the third quartile, there is no change. You will be paid the same
rate of $2 per $1 of monthly recurring revenue.”

I concluded with the final and most difficult message. “For the fourth and worst-
performing quartile, your earnings are cut to $1 per $1 of monthly recurring
revenue. Why? Your customers are not succeeding. On average, they are
unprofitable for our company. More importantly, you are wasting our customers'
money by not setting proper expectations on how they can succeed with our
service. We have initiated training over the last month on better customer
expectation setting. We need you to take that training seriously. We are here to
help you through this skill development.”

Within six months, churn had dropped by 70 percent.

The sales compensation plan drives the results of the business.

Plan 3: The Customer Commitment Plan

About 18 months later, Plan 2 (the Customer Success Plan) had run its course. In
the past, “poor expectation setting from sales” had dominated the list of reasons
why customers churned. As Plan 2 took effect, “poor expectation setting from
sales” was almost nonexistent on the churn reason list. Churn in general was far
lower and the cancellation reasons were not alarming—customers were acquired
by larger companies, isolated product bugs, and so forth. Overall, this was a
great outcome for the business. However, because the sales compensation plan
was still highly correlated to customer churn and because most of the remaining
customer churns that were occurring occurred for reasons outside of the
salesperson's control, the plan was no longer effective at rewarding salesperson
behavior. At this point, all of the salespeople were proficient at setting good