Incentivize salespeople for the type of revenue you want

In the early business days Erik used to bill by the hour. Then he moved onto project work but that had its downfalls too. Years later Erik and Kevin got a taste for recurring revenue. That’s when they realized that’s what they wanted from that point forward.

Recurring revenue is money that we know we can count on from a client, month after month, unless or until they end services with us. When we sell services to a new client we promote the idea that we are going to provide these services on a continuous basis.  There is a minimum time commitment involved, but otherwise the services, and therefore the payments, continue.  

If a new client asks for a shorter-term or they want to put an end date on the contract, we don’t count that as recurring revenue. That is what’s known as re-occuring revenue. We want recurring revenue (as in no end date).

One way to get more of the type of revenue that we want is to incentivize our salespeople to sell recurring services by lowering the commission on any contract that has an end date on it.  If it’s not the type of work we want it is reasonable to do this.