Dan Steinman, Chief Customer Officer at Gainsight, and Catherine Blackmore, VP of Customer Success at Badgeville, talk about various organization structures and possible compensation/incentive options to drive Customer Success.
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4. The Five Org Models of Customer Success
1. Firefighter CSM
2. Sales-Oriented CSM
3. Service-Oriented CSM
4. Integrated CSM
5. Partnership CSM
5. Firefighter CSMs
Common In Companies With:
Early-stage companies
CSM does support, renewals, etc.
CEO
Sales
Services
Customer
Success
Management
Pros:
CSM is “one stop shop”
CSM ensures great client
experience
Cons:
Hard to scale with so many hats
Difficult to hire for role
6. Sales-Oriented CSMs
Common In Companies With:
Low level of product complexity
Competitive sales/renewals
CEO
Sales
CSM /
Renewals /
Account
Management
Services
Pros:
CSM aligned to revenue
Also aligned to up-sell
Cons:
Less customer focus
Perceived as “another salesperson”
7. Service-Oriented CSMs
Common In Companies With:
Medium level of product complexity
More mature organization
Pros:
CSM aligned to customer needs
CSM also aligned to rest of service
org
CEO
Sales
Customer
Success
Management
Services
Professional
Services
Training
Cons:
Less revenue
alignment/quantification
Lots of touch points for client
Onboarding
Support
8. Integrated CSM
Common In Companies With:
Moderate level of product
complexity
Expansion opportunity
Pros:
CCO “owns” existing customers
Sales team are pure hunters
CEO
New Business
Sales
Renewals /
Account
Management
Customer
Success
Management
Cons:
Requires versatile CCO
Depends on mature organization
Chief
Customer
Officer
Professional
Services
Training
Onboarding
Support
9. Partnership CSM
Common In Companies With:
High level of product complexity
Competitive sales/renewals
Pros:
CSM can be very customer-focused
Renewals aligned with sales motion
CEO
Cons:
Some level of duplication / overlap
Sometimes hard to quantify ROI
Sales
Renewals /
Account
Management
Services
Customer
Success
Management
Professional
Services
Training
Onboarding
Support
10. Product Complexity
Where Do You Fit?
ServiceOriented
SalesOriented
Firefighter
Business Maturity
Partnership
Model
Integrated
Model
11. Best Practices
Up-Sell
Customer
Marketing
Titles
• Lives in Sales, unless CSM owns all customer
revenue
• If in Sales, incent CSM team for
opportunities created
• Lives in Marketing, but assign dedicated
resource focused on existing customer
marketing as part of virtual team
• Customer Success Manager trending, as
Account Manager often has connotation
of Sales
12. Should CSMs be on a variable compensation model?
• Sales: Up to 50% or more
• Renewal Managers: 25-35%
• Customer Success Managers: 15-20%
13. What should the variable component be based on?
Renewals?
Net Promoter Score?
Cross-Sells?
References?
Service Referrals?
Customer Calls?
QBR Feedback?
Up-Sells?
Meetings?
15. Should they be compensated on over-achievement?
Team Size = 5 CSMs
Renewal quota = $10M
Base to Variable = 85:15
Base + Variable (if quota is met) = $100K/CSM
Total variable pool for the team = $75K
Achievement (of quota)
Pay
< 80%
Zilch!
90%
85%
100%
100%
110%
125%
Revenue saving = $1M
Cost = 25% of $75K = $18.75K
16. Customer Success is a common thread in each element of growth
1
2
3
New Bookings
Renewals
Up-Sell and
Cross-Sell
Primary metric for
measuring Customer
Success (supported
by renewals sales)
Happy customers
buy more
(supported by install
base sales)
Customer Success
makes existing
customers happy
and reference-able
17. Then shouldn’t all executives be compensated on Customer Success?
Think about the behavioral changes this will drive across your
company:
Engineering is just as intent on developing sticky features as they are new,
flashy ones that help sell the product.
Sales thinks twice about selling to those customers they know you can’t
really satisfy.
Finance pays just as much attention to the drivers, and accuracy, of the
Renewal forecast as they do the New Business forecast.
Marketing gives some time and energy to campaigns to the install base
that are all about loyalty and love, not just upselling.
HR treats the hiring and retention of great Services people with the exact
same attitude as they do for great Sales people.