The Optimal Compensation Plan for Customer Success Teams

At the Gainsight Pulse conference yesterday, I moderated a panel with Boaz Maor, VP of customer success at Mashery and Mike McKee, SVP of customer success and services at Rapid7. During the panel, both men described their path to building substantial customer success organizations at their respective companies. Boaz’s team numbers 60 people, and Mike’s exceeds 160.

YearAdoptionRetentionExpansion
201420%70%10%
201535%55%10%

Over the course of the panel, we discussed the ways to recruit, structure, and manage vibrant customer success teams. In his presentation, Mike made an important point. He presented the table above which shows the three main responsibilities of customer success team and his team’s time allocation evolving with the needs of the business.

In 2014, his team spent 70% of their time on retention with the remaining 30% split between adoption and expansion. In 2015, the company prioritize on-boarding to mitigate short-term customer churn by investing more time at the beginning of a relationship.

This shift in customer success team emphasis is analogous to the changes in sales team focus described by Mark Roberge in his book about Hubspot called The Sales Acceleration Formula. In the early years, Hubspot prioritized growth and consequently compensated their sales teams exclusively on new bookings.

But after observing some of the initial churn rates of particular customer segments, the company re-emphasized the importance of closing the right customers, and added a churn component to the compensation structure of the sales teams, to ensure that the sales teams were pursuing the right kinds of customers. Over the next few years, Hubspot continued to evolve their sales compensation plan to reflect the needs and the priorities of the business.

Today, it’s not uncommon to see customer success teams compensated with a 7030 or 7525 compensation structure, split between salary and performance compensation. This performance compensation is directly tied to up-sells and retention, and should be managed to reflect the priorities of the business.

There is no optimum compensation structure for a CS team. Like Hubspot’s sales team, customer success teams should align their goals with the overall goals of the business. As priorities for the business change, so should the compensation structure of the customer success team.

Published 2015-05-13 in Customer Success 


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