Should CSMs get commission?
Should CSMs get commission?
A few things you should consider before you give your CS team a comp plan
As a general rule, I don’t like incentivizing CSMs.
It doesn’t mean that I wouldn’t do it again, or that you shouldn’t do it.
But if you do, here are a few things you should consider:
Make sure you’re not just adding a commission because your CSMs are underpaid (because they usually are)
Your CSMs are surely eyeing your AEs' salaries and comp plans.
And they - correctly so - sometimes faint when overhearing a bravado-laced conversation mentioning $$$ around the coffee machine.
Why are AEs comped higher?
Job risk is 10x
The market simply is paying more
And any of my CSMs were welcome to apply for open AE roles
Make sure your CSMs are paid correctly.
Don’t use commission to achieve that though.
What is the purpose of a CSM?
This is what many kind of get wrong.
The job is to drive “success” meaning “value” from the tool you are selling.
If your customers don't derive recurring value from the tool, they won't be sending you recurring revenue.
CSMs are there to make sure value is achieved.
And how? By teaching or “enabling”.
For the teaching to work you need to create a relationship of trust between the CSM and the user.
Now, if you incentivize your CSMs too keenly, they will show signs similar to a salesperson.
“By when will you sign this”
“If I give you this discount, can you sign this then by next week?”
“It's the last day of the Q, and I really need this signature to happen”
What is the customer going to think here?
Is she thinking that her success with the tool is the main concern of her CSM? Or that the CSM’s commission is the main concern of the CSM?
Trust lost. Teaching failed. Value not derived. Churn.
How to incentivize CSMs properly
I'll keep it simple:
Make it a team quota
GRR is hard to change in a Q. And one bad deal might kill the full quarter for one CSM. To reduce this noise, set team targets. I also found that this team approach is actually much better received by most CSMs.
Comp on NRR+
Sure, GRR + Upsell. But also deals from referrals, or from users that joined other companies. Which fiance will count as NewBiz (which is correct).
Try and hit a 80/20 split of base/commission
Don’t make it an aggressive 50/50 like in sales. I like 80/20, some folks land at 75/25. But don’t push it.
Commission is usually only 20% of the story
If your real reason for considering commission is you wanna increase upsell.
Well instead of paying them commission, teach the team how to do discovery.
Teach your CSMs to ask questions. They already have the trust of the customer. These questions will be answered genuinely.
And then have them ask, “Ok, we can actually help you with that. Do you want to explore this further with a colleague of mine?”
“Sure.” Opp booked. 50% CVR. Let's go ;)