Startup Best Practices 12 - Customer Success Compensation
Compensation structures are one of the most interesting questions facing customer success organizations in software startups. How should customer success leaders structure their team’s compensation in order to align the objectives of individual customer success managers with those of the larger business?
At the Customer Success Summit, Boaz Maor, VP of Customer Success at Mashery presented his rubric for answering this question. I have copied his table below.
|Product Adoption||Consistency of feature usage, the fraction of active seats||10%|
|Program Expansion||New use of other product features and services; new department using product||15%|
|Value to Customer||Is the customer measuring ROI from our product? How compelling is the ROI?||20%|
|Relationship||Weekly or monthly update calls with relationship owner; occasional calls with executive champion||15%|
|Non-Monetary Value||Customer willing to provide references and/or case study; customer sends referrals||20%|
|Monetary Value||Identify a number of leads for upsell, contract renewal rate||20%|
At Mashery, customer success managers are evaluated on five different objectives: product adoption, program expansion, value to customer/ROI, strength of the relationship, non-monetary value, and monetary value. Each field has a corresponding weight, used to calculate the ultimate bonus for the CSM.
Like sales compensation plans, customer success compensation plans should evolve to serve the business’s needs. Using a rubric like this, Mashery’s management team could, for example, decide that in the next six months, upsells of existing customers are the most important strategic priority. So Boaz might increase the weight of the Monetary Value component, and in particular the identification of upsell leads.
Additionally, a structured compensation plan like the one used by Mashery clearly communicates the expectations to each individual customer success manager. So it can be a great management tool.