CONTEXT

A company that grew beyond its original model without updating the one thing that holds its commercial team together.

The company was founded as a family business and built its reputation on product quality across a focused range of small household appliances. Over two decades it grew from a domestic player to an organization with meaningful international distribution, reaching €100M in revenue with sales across Europe and selected markets outside the continent. As the company scaled, it introduced a professional management layer: a CFO, a commercial director structure, and formalized financial planning processes.

The commercial organization is lean by design. A GTM team of approximately 15 people manages the full revenue base, with four senior key account managers responsible for the relationships with the largest retail groups. These four accounts collectively represent the majority of domestic revenue. The remaining commercial team covers international distribution and secondary domestic accounts.

Over the course of eighteen months, three of the four senior KAMs had resigned. The fourth had not resigned but had communicated his intention to leave if conditions did not change. Each departure followed a similar pattern: no dramatic incident, no counteroffer negotiation, no public friction. A conversation with the Head of Sales, a notice period served professionally, and a move to a competitor or a larger retail-facing brand.

The Head of Sales had flagged the pattern twice to the executive team. He had not been able to translate his read of the situation into a form that produced a decision. He approached Clario because he needed an external structured diagnosis that could make the structural problem visible to a leadership team that was reading the exits as individual career decisions rather than as an organizational signal.

DIAGNOSTIC FINDINGS

Targets set from the budget. Market knowledge excluded from the process. The people who carry both leave.

The diagnostic engaged the GTM team, the Head of Sales, and the commercial operations function. The constraint was consistent across all respondents and specific in its mechanism.

1. Incentive targets defined without the people who understand the accounts

The annual target-setting process follows a top-down sequence. The CFO produces a revenue budget based on the prior year performance, the company’s growth plan, and the board’s expectations. That budget is translated into individual targets for the commercial team by the commercial director, working from the financial plan rather than from a market assessment.

The Head of Sales participates in the process in an advisory capacity. His input on account dynamics, buyer behavior at the major retail groups, and the competitive conditions in each territory is heard but does not alter the targets. The targets are set to meet the budget. The question of whether the budget reflects what the market will bear in a given year is not part of the formal process.

The senior KAMs experience this directly. They manage relationships with buyers at large retail chains who operate on their own commercial calendar, their own margin requirements, and their own promotional logic. A target that was achievable in one market cycle may not be achievable in the next if a major buyer has restructured its private label strategy, changed its shelf allocation policy, or entered a promotional freeze. The KAMs carry this knowledge. It does not enter the target.

2. Relationship value invisible in the incentive structure

The four senior KAMs each manage a retail relationship that took years to build. The buyer contacts they work with are not transactional counterparts: they are decision-makers inside complex procurement organizations who have granted access, trust, and favorable shelf conditions based on a sustained commercial relationship. This relational capital is not reflected anywhere in the incentive structure.

A KAM who manages a demanding buyer at a national retail group, navigates a difficult promotional negotiation, preserves shelf space through a category review, and closes the year at 95 percent of target receives the same treatment as a KAM who manages a simpler account and closes at 95 percent. The complexity of the work, and the institutional value embedded in the relationship, is not measured, not recognized, and not compensated.

The diagnostic identified this as the structural driver of the exit pattern. The KAMs leaving are not looking for higher base salaries. They are looking for an organization where what they actually do is understood and valued. A competitor with a more sophisticated account management incentive structure can offer that without changing the compensation level.

3. The Head of Sales carries the problem without the authority to address it

The third element is structural rather than behavioral. The Head of Sales has a clear read of the situation. He understands why the KAMs are leaving, he knows what would retain them, and he has the credibility with the team to execute a change if the organization decided to make one. He does not have the authority to change the incentive framework. That authority sits with the CFO and the commercial director, neither of whom has direct visibility into the account-level dynamics that are driving the exits.

The diagnostic made this gap explicit: the person with the market knowledge had no voice in the incentive design, and the people with the authority to change the incentives had no direct visibility into the market conditions that made the current design unworkable.

ECONOMIC EXPOSURE

Two numbers. The model measures one. The other is why this matters at board level.

The Clario TFI scoring model applied to the engagement profile produced the following direct friction cost output:

Estimated productivity loss	approx. €97K annually
Estimated attrition risk	approx. €207K annually
Total friction cost (range)	€260K – €350K annually
Top performer cohort	5 reps (top 30% of GTM team)
Replacement cost multiplier	1.5x fully loaded annual compensation
Talent friction score	8.2 / 10

The TFI model measures the direct HR cost of structural friction: productivity loss in the top performer cohort and the replacement cost of exits. For a GTM team of this size, those figures are contained in absolute terms.

They are not the primary economic risk.

ACCOUNT REVENUE RISK (outside TFI model scope)

The four senior KAMs manage retail relationships that represent approximately €80M in combined annual revenue. Each relationship has been built over multiple years and is not transferable at speed.

At a conservative 10 percent revenue-at-risk estimate per account during a KAM transition, each exit carries an exposure of approximately €2M. With one to two exits per year from the senior cohort, the annual account revenue risk runs between €2M and €4M.

This figure is outside the scope of the TFI model. It is included here because it reframes the conversation at executive level: the friction cost is not a HR line item. It is a commercial exposure.

The executive team had been tracking the exits as a hiring cost problem. The diagnostic reframed the question: each senior KAM exit is a potential €2M revenue event, against a backdrop of €80M in accounts that have no redundancy in their relationship coverage. The CFO, who had been the principal in setting the incentive framework, engaged directly with the diagnostic output.

POST-DIAGNOSTIC SITUATION

Market knowledge entering the incentive design for the first time.

Clario identified the structural drivers and quantified their cost. Execution remained with the client.

The diagnostic output was presented jointly by the Head of Sales and the CFO to the company’s board. For the first time, the incentive design question was framed as a commercial governance issue rather than a compensation administration question. Three changes followed within two quarters.

Changes made

• The annual target-setting process was redesigned to include a structured market assessment phase, led by the Head of Sales, as an input to the financial budget rather than as a downstream adjustment. Account-level market conditions, buyer cycle changes, and competitive dynamics became formal inputs to the revenue plan.
• An account complexity weighting was introduced into the KAM incentive structure. Accounts above a defined revenue and relationship complexity threshold were assigned a multiplier that recognized the difficulty of the commercial environment, independent of the absolute revenue result. Managing a demanding buyer at a national retail chain was treated differently from managing a simpler regional account.
• A KAM account transition protocol was defined: a structured twelve-month handover process activated whenever a senior KAM gives notice, with explicit steps for relationship introduction, buyer communication, and commercial continuity. The protocol made the revenue risk of each exit visible and manageable rather than absorbed informally.

Turnover rate: top performance quartile

Pre-diagnostic (18-month period)	Post-diagnostic (12-month target)
3 exits out of 4 senior KAMs	0 exits. Fourth KAM retained.

The fourth KAM, who had communicated his intention to leave before the diagnostic was commissioned, remained with the organization through the target-setting redesign cycle and confirmed his continuation at the twelve-month mark. The three positions that had already exited were filled through structured hiring, supported by the new account transition protocol.

The account revenue risk during the transition period was contained. Two of the three major retail accounts maintained their commercial terms through the handover. One required a renegotiation that was managed directly by the Head of Sales before the new KAM took over the relationship.

The company did not eliminate the risk of future KAM exits. It addressed the structural condition that had made those exits rational. The incentive framework now reflects the market knowledge of the people closest to the accounts. That is what the diagnostic identified as missing.

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