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CSM Compensation: Q&A + Inspiration on Community

  • 24 May 2023
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We just released our CS Compensation report and are showcasing the results for North America and EMEA in webinars earlier this morning and next week for EMEA.

 

A few common questions emerged - how are you solving this today? What other CSM comp questions do YOU have? Answer/ Add as responses to this post!

I’ve added a few of my answers in bold

 

  1. Regarding bonus compensation, do you have any insights on the prevelence of quarterly vs annual calculations/targets and payouts?
    • Seeing more shifting to Quarterly (including Gainsight!) or semi-annually - more flexibility/cash flow for CSM, more flexibility to adjust the plans as year evolves
  2. I’d like recommendations or resources for identifying a comp structure for a CSM who’s sole role is upselling to existing customer base please
  3. How do you adjust comp model based on size of BoB per CSM. I’d say we tend to land at a much higher customer count per CSM than what’s the industry average.
  4.  For smaller organizations, where CSMs are taking on churn risks (even if the client is digital touch), monthly meetings with strategic clients (high ARR clients), SoWs (one time revenue as opposed to ARR), and escalated support tickets… can you comment on how to position oneself for a growth path/ compensation?  Sometimes, the tasks are so tactical (because volume of tasks are so high) that the strategic value is lost on both the team and management.  Thank you!
  5. What kind of SPIFFS? 1%, 2%, 3%?
    • We’ve typically looked at 1-2% ranges for closed won opportunities where the lead was via a CS Qualified Lead (awesome, super simple Gainsight feature!)
  6. Do you have any advice for splitting the rewards from renewals between a CSM and Account Manager?
    • AM variable is 25% renewal / 75% expansion oriented
    • CSM Variable is 50% renewal  / 50% verified outcome achievement

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A follow up note from Ray to answer How can Customer Success and Sales become more aligned???

 

👉 Team-based components - like Gross Revenue Retention (GRR/GDR) are good in theory to incent team collaboration but individual goals are more motivating to the individual CSM

👉 Blending both revenue-based outcomes like Gross Dollar Retention (GDR/GRR) and Verified Customer Outcomes is the best model

😱 ONLY 24% of Customer Success Managers and 15% of SVP, CS have "customer outcomes" as a variable compensation plan component!!!

👉 For CS organizations that do not own the expansion process - having Customer Success Qualified Lead (CSQL) goals is a best practice that both increases Net Revenue Retention (NRR/NDR) and helps to align Sales/Account Management and Customer Success

💡 Using "2" verified customer outcome goals is an enhanced method to ensure CS increases focus on the "customer value" side of the equation

💡 If you do decide to use "team-based" goals, like GRR/GDR ensure they are specific to the customer segment(s) the CSM is responsible for
- Example: Enterprise customers influence GRR for SMB customers CSM's

💡 On-time renewals have become a challenge in 2H22 and 1H23 - consider having an incentive or spiff for "on-time renewals" - this can make a significant difference in GRR and NRR metrics

🦉 Net Revenue Retention (NRR) has a high correlation to company value and is a GREAT VC/IC component for CSMs to align focus with Sales/Account Management and for the SVP, CS to share the NRR goal with the CRO, and even the CMO to align all Go-to-Marketing executives!!!

If you would like more detail on the current "State of Customer Success Compensation and Variable Compensation Plans" simply do a quick search on "Gainsight - The evolution of customer success report 2023"

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