choosing a csm compensation plan

Choosing a CSM Compensation Plan #CSMCompensation @TSLCustomers @GetAmity

Choosing a CSM Compensation Plan

Kristen Hayer, @KristenHayerFounder and CEO, The Success League


Choosing a CSM Compensation Plan Kristen HayerFounder & CEO, The Success League


Agenda1. Why Listen to Kristen?2. Why Variable Compensation?3. 5 Decisions You Need to Make & How to Make Them4. Some Math (Not Rocket Science, Math.)5. Variable Comp Alternatives6. Q&A7. Join The League8. Cool Stuff About Amity


Why Listen to Kristen?• As a leader, I designed and executed more than 25 compensation plans for

my own customer success, sales and management teams. Mistakes were made, and things were learned.

• As part of my MBA I did an independent study on variable compensation plans and how to implement them effectively.

• In my free time, I enjoy reading books and articles about compensation and human behavior (nerd alert!) My favorite resource on this topic is On Compensation by Harvard Business Review – 8 essential articles.

• Fun stuff I love…


Why Variable Compensation1. Humans have lots of things to focus on.2. Humans tend to focus on the things that are

urgent, even if they aren’t important. (shiny things)

3. CSMs have lots of things to focus on.• Email (feels urgent, generally not important)• Calls (feel urgent, sometimes important)• Internal Meetings (feel urgent, sometimes

important)• Career Development (important, generally

not urgent)• Customer Meetings (important)• Proactive Outreach (very important)• Selling (very important)

4. Variable compensation gives CSMs a tangible reward for focusing on the important things that align with company goals.


Decision #1 – Total Compensation• Many tools are available. Your HR team might

already have a subscription:• Payscale• Salary.com

• This will differ by region. If you have a multi-region team their total compensation should vary, but the percentage of variable compensation should be consistent.

People talk about compensation plans.Be fair.


Varia

ble • Clear Metrics & Goals

• Senior Executive Support

• Available Budget

No

Varia

ble• Fuzzy Goals

• Leadership Resistant to Variable Comp

• Not Budgeted

Decision #2 – Variable or No Variable

No Variable, No Problem – stay tuned for the end of this presentation where we’ll talk about what to do if variable compensation doesn’t make sense for your Customer Success team.


Decision #3 – Salary/Variable Ratio

Sales-Oriented Goals (selling, persuading, gaining commitment)

Support-Oriented Goals (tech support, training,

onboarding)30% Typical / 50% Variable Max

10% Typical / 0% Variable Max

Selling Roles (selling stuff for money, persuading customers to do things that lead to revenue) – Larger Percentage of Variable

Supporting Roles (customer support, training, onboarding) – Smaller Percentage of Variable

It’s a spectrum. Find where your team/s fit on the range.


Decision #4 – Commission or Bonus

• Linked to Revenue• Individual• Tied to Short-Term Goals• Ongoing Program

Commission

• Qualitative, but Measurable• Individual or Team• Tied to Long or Short-Term Goals• Can Shift from Quarter to Quarter

Bonus

P.S. It’s OK to have a combo.


Decision #5 – Monthly, Quarterly or AnnualM

onth

ly • Commission Plans

• Short-Term Goals

• Individual Initiatives

Quar

terly

• Commission or Bonus Plans

• Mid-Term Goals• Individual or

Team Initiatives Annu

al • Bonus Plans• Long-Term Goals• Team or

Manager Initiatives

Payout timing should tie to Goals and Roles. Timing should match goals (monthly goals=monthly commission) and roles (junior role = short-term payouts, senior role = long-term payouts).


Now, the Math…

Best Practices:• This is a lot easier with Excel or Google Sheets. Get comfy with spreadsheets.• It helps to weight the importance of the goals so you know how much to allocate to

each one.• Sometimes the Bonus/Commission choice isn’t obvious – see Goal 2 above.

Gather & Outline Data


… More Math…

Best Practices:• Always use a percentage or dollar amount per deal when calculating commission• Bonuses can be a dollar amount per item up to a cap (see Training Packages), all or

nothing (See Customer Satisfaction) or a sliding scale (ex. if you achieve 90% client satisfaction instead of 95%, you get half of the bonus).

Calculate Targets & Commission Rates


…Just This Last Bit of MathEstimate Low & High Performance

Best Practices:• There is an art to this, and it can uncover areas where you might want to rethink

your plan.


Excellent ExecutionBefore the Goals are Rolled Out:1. Think about potential side-effects2. Write up the plan:

• One page• No legalese• Clear, concise explanation of how to earn the variable• Brief rules and regulations (that address the side-effects)

3. Get approval from all necessary parties (boss, finance, HR…)

As and After the Goals are Rolled Out:4. Communicate:

• Team meeting where you present the goals and comp plan• Individual meetings• Written plans that reps sign• One-on-one meetings throughout term of comp plan

5. Review effectiveness of plan and make edits as needed (be careful with this)


Variable Compensation Alternatives• Individual, short-term, revenue-based goals• Generally $X for Y item, very simple structure

SPIFs

• Individual or group, short-term, concrete goals• Think through potential negative side-effects

Contests

• Group, short or long-term, concrete goals• Creativity counts!

Events

• Individual, short or long-term, concrete goals• Check with your HR team first

Time Off

• Individual, long-term, career-oriented goals• Consider teaming up with other managers on this type of program

Side Projects


Join the LeagueNewsletter – sign up at:www.TheSuccessLeague.io/blog

Follow – us on social media:@TSLCustomershttps://www.linkedin.com/company/the-success-league

Interested in Consulting Services? Contact:Kristen [email protected]

Welcome to the League.

http://www.TheSuccessLeague.io/blog

https://www.linkedin.com/company/the-success-league




mailto:[email protected]


Attend a public demo with Amityresources.getamity.com/customer-success-hero


Thank you for being here!

#CSMCompensation

choosing a csm compensation plan

Economy & Finance