Incenting the support engineers on support renewals

By Technical Support

For most vendors, first-year support is sold with the product and earns a commission for the sales rep. It’s best if the commission is at the same rate as the commission on the product so as to highlight the value of support. After all, the price tag on that initial year may be lower than the product cost but support is an annuity, so very valuable for the long run.

Beyond the initial sale the responsibility to renew support typically passes from the sales rep to a dedicated renewals rep. Renewing support is a very different exercise than selling product. For one thing, the success rates are much higher. In an enterprise sale context over 90% of support contracts renew. Therefore renewals reps are usually paid not on commission but with a bonus if they meet their targets. Neither the original nor the current account rep gets anything, although some vendors pay some commission on all renewals to attenuate channel conflicts, or pay a full commission if the account rep had to get involved to complete a specific renewal.

And where is the support staff in all that? After all, the support engineers are the ones who deliver the service, the quality of which has a big influence on renewals. I have not seen the support engineers receiving bonuses or other incentives based on renewals. It doesn’t mean it shouldn’t be done; it’s just not done usually. Bonuses for support engineers are typically based on objectives they can control such as customer satisfaction and productivity. Support managers and executives tend to have more financial-based objectives, especially if the renewals staff reports into Support. In that case the Support VP should have a support revenue target that determines part of the compensation. (And there would also be a margin requirement for support.)

Would it be wrong to reward support engineers with a fraction of the renewals revenue? No, although I would be concerned with rewarding everyone from the same pot without regard to different levels of effort (the individual who gets terrible customer sat surveys should probably not get the same rewards as the one with a collection of 10s) as well as what happens with a named support engineer who loses a  customer for reasons that have nothing to do with the engineer’s performance, such as after a merger.

If you think it’s important to link support engineers’ compensation to the renewals I would suggest creating a pool of bonus money based on the renewals revenue and paying bonuses drawn from that pool and calculated from the performance data (customer satisfaction & productivity.) That way if renewals are good then everyone benefits, to the level of their contribution.

Tagged under: