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The Best Compensation Plans for Account Managers: Inbound Agency Edition

Gray MacKenzie
Gray MacKenzie is a true operations nerd who has spent the past decade helping hundreds of agencies build more productive, profitable, and healthy teams by solving the core issues plaguing their project management.

To chat with Gray and have ZenPilot lead your team through the last project management implementation you'll ever need, schedule a quick call here.


Hiring account managers was a bit of a struggle for our agency.

Not because of a lack of talent — there’s plenty out there! The struggle came with formulating an incentive structure that was mutually beneficial to the new account manager and our agency.

Eventually, we found the perfect path for our agency, GuavaBox, but that doesn’t mean it’s a one-size-fits-all solution.

To help you find the best compensation structure for your agency, let’s look at the drawbacks of fixed salaries and three ways that account managers can tangibly drive growth!

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Why Fixed Salaries Don’t Work for Account Managers

The most common compensation model we’ve heard about from other agencies was a straightforward salary option.

Give the recruit $55k to $65k per year based on their experience level, then see how they do. 

From our experience, the easiest option is rarely the best option. Salaries are the perfect example of this. Why? Because salaries are one of the least motivating compensation plans in the world.

It makes sense for specific positions or industries, but it’s far from the best fit if you’re hiring an account manager for your agency. The first thing you need to realize is that account managers are, at a high-level, salespeople too.

Account managers aren’t responsible for closing a deal right when the customer walks through the door, but they serve as the face of your agency when it comes to building a relationship and ensuring long-term client retention.

Like any other salesperson, you shouldn’t hesitate to offer commissions and bonuses that incentivize them to go the extra mile.

3 Ways Account Managers Drive Growth for Marketing Agencies

There are 3 significant ways that the account manager can help your agency succeed and hit its growth targets. These are: 

  • Client Retention
  • Additional Client Services
  • Agency Profitability 

Let’s break each one down further.

1) Client Retention

Client retention is less expensive than the cost of a new sale.

Data from Invesp Consulting shows that acquiring a new customer is five times more costly than retaining an existing client.

Their research also found that increasing retention rates by only 5% raise profits from 25% to 95%. Numbers aside, it’s clear that keeping your clients happy and prosperous is the best way to keep yourself happy and successful.

And your account manager can be the make-or-break contact point between your agency and its clients.

They deal with the good, the bad, and the ugly of client communications.

They spend the most time with your clients and should have the closest relationship with them. Business owners should reward them for retaining clients so that they don’t lose sight of what matters most: retention.

2) Additional Client Services

In the same vein, customer expansion (the art of upselling or cross-selling to increase the amount of revenue generated from a client) should also fall squarely into your account manager’s wheelhouse.

As they’re already well-versed in your clients’ personality, goals, and likes/dislikes, account managers are the ideal candidate to present additional services. After all, you shouldn’t expect clients to stick around if you offer the same service year after year.

As you improve their sales, so too will their budgets increase. This creates opportunities to expand on an existing service line or start providing new services at the end of each year or fiscal quarter.

If you don’t have an experienced, motivated, and well-compensated account manager on that upselling call, you’re severely hindering your odds of success. You need someone who can explain the benefits of new services without coming off salesy.

The better they become at upselling, the more they should be rewarded.

3) Agency Profitability

Last but certainly not least, account managers also play a direct role in agency profitability. This ensures that all the hard work into retention and revenue growth translates to a healthier bottom line.

Considering account managers are the ones deciding which agency resources get allocated to a specific project, rewarding them for increased efficiency will pay dividends in the form of higher profitability.

The Best Compensation Plan for Account Managers

So if salaries don’t keep account managers motivated, how should you incentivize them? At our agency, we came up with a better compensation structure to ensure our account managers’ goals stay aligned with our agency goals. 

Specifically, we broke compensation down into four components:

  • Base â€” Typically around $55,000 per year and covers the basics of the job and the responsibilities beyond simple account-facing (i.e., internal operations, marketing, etc.)
  • Retention Bonus â€” Typically around 5% per year (motivation to help clients succeed and stay happy.)
  • Growth Bonus â€” Typically around 10% per year (motivation to prove ROI and help clients expand on that via increased spending.)
  • Profitability Bonus â€” Typically between 1-3% of total account revenue. Scales with how profitable each account is, based on an acceptable range (motivation to balance cost-efficiency with true client success.)

*These bonuses are a part of the paycheck the account managers receive each month. It is important to note that the base number could change quite a bit depending on which part of the world or country you live in.

Providing a lower base salary with different bonuses ensured that the account manager was rewarded for doing their job well. It also meant that their best interests and the best interests of our agency were the same.

Is Compensation Too Confusing? Try Outsourcing.

It’s simple, really: reward people for doing their job better, and they will keep striving to become better versions of themselves. However, between base salary and the different types of bonuses, compensation can get confusing.

Instead of defaulting to a more straightforward compensation plan (with a higher base salary but no bonuses) that doesn’t motivate or reward your account managers for their hard work, why not outsource instead?

Take our friends at DOT & Company, for example. They’re a dedicated client account management company specializing in finding, hiring, training, managing, retaining— and, yes, compensating — their account managers, so you don’t have to.

It makes scaling your team with account managers more effortless and more sustainable, which is a win-win in our books.

Do things differently at your agency? We’re all ears! Share your tried-and-tested compensation plan for account managers by sending us a chat on this page!

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