Customer Success Leadership Community

Strategic CSM Comp Plans

  • 1.  Strategic CSM Comp Plans

    Posted 20 days ago
    Hello!

    I have run into an issue recently that I am looking to solve and wanted to see if anyone has encountered the same and have come up with a solution.

    My team is broken up into two segments - Commercial and Strategic and have a bonus that is paid out on renewals, upsells, and MBOS. This has worked well for a few years, but recently I have run into an issue where my strategic CSMs don't have any renewals next quarter (2021). This is going to become an issue because my Strategic CSMs manage a handful of accounts since they are larger. Has anyone encountered this issue? How did you solve? Or do you have a comp plan that does not measure renewals?

    Would love your thoughts, thank you in advance!
    #CustomerSuccess

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    Tahima Begum
    VP, Customer Success @ Pixlee
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  • 2.  RE: Strategic CSM Comp Plans

    Posted 19 days ago
    Hi @Tahima Begum

    I guess based on what you are saying your team are comp'd quarterly? Could you move the comp plan to an annual plan?

    Are they measured on logo retention or revenue retention (I presume the latter)?​

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    Matt Myszkowski
    VP, Customer Success Management, EMEA
    SAP
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  • 3.  RE: Strategic CSM Comp Plans

    Posted 19 days ago
    Hi @Matt Myszkowski

    Thank you for your thoughts!

    Yes, paid out quarterly, I am thinking of looking at renewals annually and then payout on a quarterly scale. ​For example, if they have no renewals in Q1 they won't get their bonus that Q for renewals. But if they hit 30% of their renewals in Q2 they will get paid out in Q2 at a percentage of their renewal goals.

    Measured on revenue retention!


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    Tahima Begum
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  • 4.  RE: Strategic CSM Comp Plans

    Posted 15 days ago
    Hi @Tahima Begum,

    Another idea you could pursue is team retention goals vs. individual retention goals; I would imagine that while a single Strategic CSM may not have a renewal per quarter, the larger team as a whole does.  My previous organization pursued retention goals as a team to reinforce camaraderie and ownership of the entire book, not just their own​. It was successful in CSMs helping each other out on tough renewals and can lead to strong retention outcomes across the company.

    Hope that helps and have a wonderful day!

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    Melissa Litwack
    Director of Operations and Delivery
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  • 5.  RE: Strategic CSM Comp Plans

    Posted 15 days ago
    If you're open to it, @Tahima Begum, perhaps rethinking CSM incentives entirely may be of interest. 

    It's controversial, but eliminating pay-for-performance for most CSM roles is worthy of contemplation. It flies in the face of convention, but the science shows there are fundamental problems with typical schemes:

    1. Mathematical. In complex systems, outcomes are most often determined by other factors, including chance, than by individual efforts. This is especially true when it comes to the CSM role. It's counter-intuitive, but mathematical laws demonstrate that this is indeed the case. 
    2. Cognitive. Forty years of research into human motivation shows that people actually become less engaged, persistent, curious, proactive, creative, flexible and happy when extrinsic reward systems are used. Again, this is counter-intuitive, but the evidence is clear. 
    3. Strategic. The end goal in Customer Success is to protect and grow installed base subscription revenue. Strategies to accomplish the goal include reactive (saving accounts on the brink of cancellation), proactive (ensuring good onboarding, value realization, satisfaction, etc. to improve the likelihood customers will renew and buy more), and preventative (perfecting products, services, and processes upstream so customers wouldn't dream of going anywhere else). This means we must get the most from our employees pursuing all of these strategies. Our motivational systems should support, not inhibit, these efforts. 

    I presented these ideas a little over a year ago at a Colorado Customer Success Meetup and here's a video from that event. If an entirely different way of thinking appeals to you, then I would encourage you and others to watch it. The Q&A at the end of the session with Customer Success VPs added some interesting examples and practical approaches to deploy these concepts.

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    Ed Powers
    Consultant
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  • 6.  RE: Strategic CSM Comp Plans

    Posted 14 days ago
    @Tahima Begum I was part of the discussion that @Ed Powers referenced above.  I took an alternative approach to the variable compensation plan for my CSM team.  Instead of focusing on renewals since there are many variables to the renewal that were out of control of the CSM we focused on ​measuring activities which would increase the probability of that renewal.  These included targets for execution of proactive business reviews, conducting regular health assessments and the identification of what I call Customer Success Qualified Leads (CSQLs) which would help the sales team in upsell activity.  These controllable actions by the CSM and lead to a better understanding of the health of the customer as well as identification of issues that the CSM would manage for the customer in order to make sure the customer is having a great experience.  Be happy to talk more about it.

    Cheers,
    David

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    David Mangham
    Director Global Customer Success
    ZOLL Data
    Boulder CO
    7202448014
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  • 7.  RE: Strategic CSM Comp Plans

    Posted 14 days ago
    Glad you chimed in, @David Mangham. You talked about a lot of great ideas and applications you put in place with your team.

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    Ed Powers
    Consultant
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  • 8.  RE: Strategic CSM Comp Plans

    Posted 13 days ago
    This is great.  I also like it because you can clearly articulate the value activities the team is doing to the rest of the company.   Adoption/retention is too nebulas for many and get asked "but what do they do".

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    Renee Bochman
    VP, Customer Engagement
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  • 9.  RE: Strategic CSM Comp Plans

    Posted 12 days ago
    @Tahima Begum the video @Ed Powers ​​​posted was eye-opening for me when I first saw it.  He nailed comp planning issues I've had as a leader, but could never quite articulate, backed it up with science, and offered an alternative.

    If you can measure your Strategic CSMs on something, maybe stick to leading indicators that they have control over?  The results will translate to good performance on revenue and upsell, which you can still report to your QBR audience.

    If you really must measure them on revenue, you might try measuring the "active" revenue per month or quarter.  You can include monthly-paid subscriptions and pro-rate the monthly value of an annual or multi-year term.  The nice thing about that is it takes the focus off the renewal event - healthy both for your customer journey and your customers.

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    Russell Bourne
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