A reader writes, "Recently, I sponsored a sales contest for my reps. To win a gift certificate at their favorite store, a rep's top 15 accounts needed to finish10% ahead this quarter versus last. All but one rep enthusiastically embraced the contest. This individual claimed that several of his top 15 accounts from last quarter should no longer be in the top 15 for this quarter. I want to be reasonable. Under what circumstances should certain accounts be switched for others?"
What a great contest! Most rep's top accounts do fluctuate. Number three switches places with number five and so on. Reps and companies in all industries experience this. These changes affect sales contests, forecasts, and commission pay-outs.
In certain instances you as the manager should give serious thought to moving an account out of their top group. Issues could include the following.
Client Who Has Lost a Contract
Sometimes your company's customers lose contracts or large clients of their own. An event like this impacts their bottom line dramatically, resulting in downsizing or significantly reduced hours for employees. This leaves even the most effective sales representative unable to recoup the lost revenue.
Customer Credit Issues
Accounts get put on credit hold due to concerns with outstanding balances. Many remain in this status for more than 90 days. Reps bear little or no responsibility for their client's cash flow issues and shouldn't be penalized as a result.
Client Discontinues Use of Your Product
Permanent changes to a client's business model may result in a client no longer using a product you sell to them. Working with the rep on price negotiation or other adjustments won't help. It's not a matter of their buying a cheaper or generic version. The client will no longer be buying this product at all. The rep cannot sell them anything else from the product line.
Seasonal Variations in an Account
Due to the nature of an account's business,they might buy a lot in one or two quarters of the year and little or no product in other quarters. No amount of effort on the part of the rep would or could change this.
In all four of these scenarios, a rep may not be able to recoup the lost bookings from these accounts in the next few quarters or years - or possibly ever. Fairness dictates that you consider removing these accounts from the rep's top roster and then replacing them with the next account down the list.
Replacing the Revenue
Removing a company from the rep's top account list or allowing them to alter a forecast might, but does not necessarily mean, they are off the hook for the revenue generated by these accounts.
Depending on the severity of the drop in sales from an account, the rep might be expected to make that number up through one or a combination of accounts. This requires a team effort between a manager, the sales reps, and other departments like marketing. Reps need to feel supported as they strategize.
The Sales Contest
Back to your original question, let's say the rep's sales for Q1 totaled $2,100,000, making $2,310,000 their Q2 goal for the contest. If the account that replaces the problematic one brings in $50,000 less in revenue per quarter, you need to be the judge as to whether or not you hold the rep to the full $2,310,000 or come up with some number in between.
Some reps will work a territory where certain customers have been hard hit by an economic downturn. Others will experience a buyer or decision maker with whom they had an excellent relationship leave a company. Companies changing the direction of their business prove problematic for reps.
These situations make the position of sales a challenging one, but do not necessarily mean removing the account for the purposes of a sales contest or allowing the rep to alter their sales forecasts. It means they need to work harder and smarter.
Always keep in mind that sales contests keep reps focused through the tough days in sales. Try to make a decision that honors both the company goals and helps the reps overall motivation.