Compensation and comp plans are always a topic of conversation at this time of year, as we plan for the next fiscal year. Recently, we had a cracking good discussion amongst the Notion portfolio about compensation and comp plans for Customer Success people and teams. You can view the whole discussion below.
Want the resources sent directly to your inbox? Click the button below.
During the discussion, we answered three key questions:
1. Should Customer Success teams be on a variable comp plan?
2. Should CSMs be on individual quotas or team targets?
3. Who owns renewals and upsell?
I believe strongly that Customer Success should be on a variable comp plan. Anyone who spends that much time facing customers, should have some leverage in their comp. Most mature SaaS companies have their CSMs on an 80/20 plan with GRR or NRR as the primary metric for comp.
My experience has me convinced that CSMs should NOT be on individual quotas. They do not want to be treated like sales people. Team targets work better for a few reasons:
- They don’t make CSMs feel like sales people
- Territory management is easier
- Easier to swap one CSM for another when needed
- CSMs will be more highly incentivised to not let their teammates down than to make more money for themselves
Key point to remember: CSMs are REWARDED by money, not INCENTIVISED by money.
Lastly is the very difficult question of ownership of the commercial side of the business with existing customers: renewals and upsells. Lots of varying opinions on this topic but I see most mature SaaS companies compensating Customer Success teams on both GRR (renewals) and NRR (upsells) while having the sales org own the actual sales transactions. The idea is analogous to the way most sales teams work on the new business side. There are Account Executives and often they are partnered with Sales Engineers (there are many names for this role). AEs carry a quota and are responsible for driving new business. SEs are partners in that effort, usually doing the demos and technical conversations and security reviews, etc. Although the AEs are the ones closing deals, the SEs also get compensated based on deal closures because they are indispensable in the success of that endeavor. In the world of existing customers we can think about CSMs in the same way; instrumental in closing deals (renewals and upsells) but not necessarily the ones executing the transactions.
Very important in this conversation is the shared part of the commercial business between CS and sales and that is demand generation. Who is responsible for finding new opportunities within existing customers? In the model just described, where a sales person (usually called an Account Manager) has transactional responsibility for the deals, and the the CSMs are enabling the opportunities by delivering value to customers, both parties own demand generation. For CSMs, it will often come pretty naturally through their conversations with customers. For Account Managers, it’s doing what they do best- digging, cold-calling, networking, etc. to uncover opportunities. Ultimately, it’s a Venn diagram that looks something like this:
Organizing for Customer Success - https://www.smartkarrot.com/resources/blog/customer-success-org-structure/
Who owns Renewals and Upsells - https://www.gainsight.com/blog/who-should-own-renewals-and-upsells-sales-or-customer-success/
THE book on Customer Success - https://www.amazon.com/Customer-Success-Innovative-Companies-Recurring/dp/1119167965/ref=sr_1_4?crid=3HLSTG89JB2TJ&keywords=customer+success+book&qid=1638822055&sprefix=customr+succ%2Caps%2C301&sr=8-4