Customer Success Executive - B2B SaaS

Our philosophy on commission plans is distilled down to aligning 3 major parts to a plan:

1. Choosing the right plan type for each role
2. Picking your primary revenue goals as the major metric for the plan
3. Choosing the right secondary goals to incentivize behaviours and keep CS executives motivated
   

Before choosing the plan type and metrics, it is important to understand that each role has a specific set of goals critical to the overall business objectives. CS Execs of junior or senior levels are usually at the firing line and need to stay razor-focused on their goals. Their compensation needs to be as simple as possible without many variables outside their control like your leaders. Hence, we usually narrow their success metrics to two engines.

• Customer/Revenue Retention : Revenue Engine
• Customer Advocacy : Success Engine

Now that we have understood the success metrics for this role, we need to choose the right plan type that goes with your business goals. There are usually only 2 main structures of commission plans for CSMs. 

1. Renewals/Customer Retention ( % of Overall ARR/Customer Base) - Most Commonly seen
2. $ Payout against generated Case studies, Reference customers, Upgrade opportunities- Less Common

Now that we have covered compensation structures and commission plans, it’s time to optimize for your SaaS product, CS executive type, and the ACV of your customers. In general, we can classify SaaS sales models into 4 broad categories:

High Velocity and Low ACV - SMB

This Model may apply to your org in 2 ways:

1. Your product is designed to be DIY and is very easy for customers to self evaluate.
2. Your product has a low ACV and sales cycles are less than a month.
   

In either of these cases, the components you will use to measure and compensate your CSM teams will be one of the following, 

1. Customer Retention metrics

                  i. Customer Retention

                 ii. Customer Onboarding

2. Customer engagement metrics

                 i. Case Studies

                 ii. Referenceable Customers

Customer Retention metrics

1. Customer Retention - This can be a percentage goal of the number of customers remaining at the end of a period to the total number of Customers at the start of the period . For eg. for a business with a monthly churn rate( Number of customer) of 2% the retention goal can be 98% or more ( As aligned for the churn goals for the business. You might wonder why we haven't mentioned revenue retention goal for the high velocity business. As much as we want revenue accountability for everyone, the CSM role is poorly suited manage low ACV customers at scale due to costs involved and the fickly nature of low ACV high velocity products. It is better for them to focus on automated scalable initiatives to customer retention through emails and campaigns than to take accountability for revenue.
2. Customer Onboarding - In a high velocity SaaS business it is likely that customers self evaluate the product without much guidance and as such do not get a view of its full capabilities. To ensure a lack of understanding does not lead to churn later down the line its important to Onboard the Customer by walking them through a checklist of all capabilities available and pointing  them to the resources where they can get a better understanding.
   

Customer Engagement metrics

While Customer retention activities play an important part in post sales engagement Customer Success teams can also aid in Customer acquisition efforts by helping create the write marketing collaterals in the form Case Studies and Referenceable Customers

1. Case Studies & Referenceable Customer:  It takes time and effort to convince customers to endorse products publicly but relevant case studies help build trust with interested prospects immediately. Hence, this is a must have for all businesses .Customer Success teams are best suited to identify the right customers and foster the relationship to get a favorable response from the customers.

Stop 1 B - Low Velocity and High ACV - MM/Enterprise

This sales model apply to your company in 2 ways, 

1. The Product is requires extensive configuration and a guided onboarding/ implementation for customers
2. You are a MM/Enterprise only product and in general, your deal velocity is low and is high ACV in nature. Ex : Planning tools,  Compensation tools. 
   

In either of these cases, the components you will use to measure and compensate your CSM teams will be one of the following, 

1. Customer Retention metrics

                 i. % Churn Goals ( Dollar churn rate)

                ii. Upsell Opportunities identified

        2. Customer Engagement metrics

                 i. QBRs Conducted

                ii. Case Studies/ Referenceable Customers

Customer Retention metrics

1. % Churn Goal (Dollar Based): This is typically the churn rate for the organization but can vary a bit based on the portfolio of customers assigned to a CSM. This will typically be the percentage  of the portfolio value lost to churn to the portfolio value at the start of the period. Given the high ACV nature of the business the approach to reduce churn must be proactive and not reactive. CSMs must reach out to customers before the customer satisfaction levels fall below a threshold.
2. Upsell opportunities Identified : While CSM should not indulge in selling to customers as it may undermine their relationship. They can identify areas of business for a customer that can be aided by other offerings from your organization. This can help with customer stickiness and create a bigger barrier for exit. These identified leads can be passed on to the appropriate teams to action upon.
   

Customer Engagement metrics

For high ACV businesses measuring the only the number of opportunities is not enough 

1. QBRs Conducted ( Quarterly business reviews)- As mentioned above for High ACV businesses the goal is to be proactive when it comes to Churn. Having QBRs as a goal can ensure the correct engagement is taking place. The CSMs should provide customers a view of how the product has helped them( w.r.t. Time saving, cost saving , business development etc). Address what actions have been taken on any outstanding queries/requests they may have had. Also highlight any new features released or upcoming that can aid them in their current workflow.
2. Case Studies/ Referenceable Customers- Same as the previous section
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The base components that we looked at in the earlier section will only address what you have planned for. But, there are other goals that you want to address and reward to make the customer success engine more efficient and to address more focused goals. These are all optional and only make sense to help executives go the extra mile. We don’t want to distract them with too many bonus components as part of their base plan. 

We would rather do a temporary SPIFF program to address short-term behavioral changes. You can look at our SPIFF blog here to learn more about how to use SPIFFs to your best advantage. 

The following are some of the bonus components, 

1. Flat bonus - A flat one-time bonus of a fixed $ amount for hitting their quarterly target. This can also be a % of a executive’s incentive plan. 
2. Consistency bonus - If CS execs are able to consistently perform over a threshold for multiple periods. for eg If a exec is able to achieve their targets for 2 consecutive quarters then an additional bonus may be paid out to them. This can help keep the momentum going for performing executives.
3. Exceptional work effort - In the case where a CS Exec is able to turn around a lost customer and bring them back in the green. This is very difficult to do and must be acknowledged to motivate and showcase the same to other executives.

Let’s go over our journey till now and look at what we have learned about designing a perfect compensation plan for your teams:

1. Set the right Goals: Churn reduction requires many moving pieces and it may not be possible to achieve it solely by pushing the executives
2. Plans with Tiered rates keep the execs motivated to keep delivering.
3. Different types of primary success metrics can help you decide what works best for a high velocity team and a low velocity team.
4. Secondary success metrics like flat bonuses might help drive specific behaviors in executives.
   

We’ve also made a shareable image of the summary. Check it out: