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Compensation Plans for Account Managers: Inbound Agency Edition

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

Not because there isn't talent out there, there is plenty of talent. The struggle came with trying to formulate an incentive structure that was advantageous for both the new account manager and our agency.


Probably the most common compensation model we heard from other agencies was a straight salary option. Give the new hire $40k to $60k per year based on experience and see how they do. 

That is certainly the easiest option. It makes sense to the new account manager and it's easy on our accountant. But is it really the best option?

From our experience, the easiest option often is not the best option. Salaries are a perfect example. They are one of the least motivating compensation plans in the entire world. For some positions and industries it may make sense, but let me explain why it doesn't make sense to use for an account manager at your agency.

Commissions and bonuses are not just for sales people. At least they shouldn't be. And frankly, your account manager is also a sales person. They maybe didn't close the original deal that got the customer in the door, but they are the face of your agency when it really matters, when you're working to get the client results and continue the relationship. 

Why Salaries Don't Work

There are 3 major ways that the account manager can help your agency succeed. 

  • Client Retention
  • Additional Client Services (Growth)
  • Agency Profitability 

Let's break these down. 

Client retention is less expensive than the cost of a new sale. Keep your clients happy and successful and your yourself will be happy and successful. Your account manager is the direct face of your agency to your clients. They deal with the good situations and the bad situations. They have the most contact and therefore the best relationship with the clients. The better they are at retaining clients, the more they should be rewarded.

Therefore, it makes sense that your account manager is also the one who helps present additional services your agency can provide for you client. At your agency, customers shouldn't stay with the exact same set of services year after year. As you improve their sales, their budgets expand to allow you to provide more, or new, services each additional year (or quarter). The account manager should be on that call explaining the benefits of additional services to your clients. In reality, your account managers are sales people too. The better they are at upselling necessary services, the more they should be rewarded.

Not only do the account managers help with client retention and growing the list of existing services your provide, they also have a direct hand in agency profitability. Account managers are in charge of allocating agency resources to get the job done for the client. The more efficiently they work, the more they should be rewarded. 

The Best Compensation Plan for Account Managers

So if salaries don't keep account managers motivated how should you incentivize them the correct way? At our agency, we came up with a better compensation structure to help keep our account managers goals aligned with our agencies goals. 

We broke compensation down into 4 components. Here is the breakdown:

  • Base -- Typically around $40,000 per year --Covers the basics of the job and the responsibilities beyond simple account-facing (i.e. internal operations, marketing, etc.)
  • Retention Bonus --Typically around 5% per year -- Motivation to help clients to succeed and stay happy.
  • Growth Bonus --Typically around 10% per year -- Motivation to prove ROI and help clients expand on that via increased spending.
  • Profitability Bonus --Typically between 1-3% of total account revenue -- Motivation to balance cost-efficiency with true client success. Would scale with how profitable each account is, based on an acceptable range.

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

By providing a lower base with different bonuses it ensured that the account manager was rewarded for doing their job well. It also helped to align their best interests with that of the agency.

Have a different compensation plan for your account managers you love at your agency? Let us know below!

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Topics: Sales, Operations, Internal, Compensation

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