By Ashley Hall
From day one of my customer success career, variable compensation has been a component of my total comp package: benefits, paid time off, salary, and variable. These have become the building blocks of any modern SaaS compensation plan. That being said, years ago my first variable package was terrifying! “Can I do it? How will I ever be able to hit that number? What happens if I don’t hit that number?” These questions are just the tip of the nerves iceberg when becoming accustomed to having a variable component of your compensation.
If variable compensation is new to you, or if you’re feeling stressed by your goals, read on!
First things first, let's get acquainted with the language. Variable compensation is defined as a portion of compensation that is determined by employee performance. Variable compensation is in addition to your base salary, which is the standard pay that you receive regardless of performance. While variable compensation may not be across all success roles, it is becoming more and more common so that your manager can drive the behavior which best supports the company goals. You might also hear variable comp called commission or a bonus. These two kinds of plans have different structures, but both are considered variable compensation. Note: If you’re a CS manager looking for ideas on how to design a variable compensation plan, check out this article by Kristen Hayer.
Now that you know what variable compensation is, here are some tips to help you make the most of it:
Understand your plan. In order for you to be as strategic as possible, it is important you have full comprehension of your variable. Don’t hesitate to ask lots of questions and revisit your goals frequently during the month or quarter. If something isn’t crystal clear, be sure to communicate that to your manager. It doesn’t help anyone when you underperform because you don’t understand the goals ahead of you. Additionally, most variables are comprised of a number of goals, so that you are motivated to support the company goals at large. If there are a number of levers in your variable, know that your plan should never be so complex that you cannot understand it or explain it to others.
Pace yourself. It’s important that your variable should be set to achievable goals. Hitting 100% should not be out of the question yet still challenging. Be sure to work directly with your manager to strategize on exactly how you will hit the goal. In order to not be overwhelmed by your goals, it can help to break them down into small chunks. Think days, weeks, or months at a time. Over time you will gain a better understanding of seasonality and what you are capable of under pressure. Having a clear pacing plan will empower you to always know where you stand, and when you need to punch the gas or scale back and prep for next month or quarter.
Develop a compensation calculator. Your end results and payout should not be a mystery to you. If your manager doesn’t provide one for you, build out a compensation calculator in excel or sheets where you can input your performance and calculate the outcome of all your hard work. Tying your variable compensation achievements to tangible financial goals, like paying off a debt or saving for a vacation can also be very motivating.
Owning a revenue number that is tied to your compensation can be scary at first, but it’s an incredible way to drive your personal success and prove your value to your company quarter over quarter.
Need help with goal setting and compensation planning? The Success League is a customer success consulting firm that offers both training and coaching for customer success leaders. Visit our Leadership page for more information on our programs.
Ashley Hall - Ashley loves to lead account management and success teams; from training newbies to building processes out of chaos to working directly with customers. She is passionate about helping customers achieve goals. With an eye on the future she is a powerhouse in building scaleable frameworks that support and drive growth. Ashley is one of the founding advisors to The Success League, and serves as a regular instructor for the company's CSM Training Program. She also serves as a customer success manager for ProsperWorks, and brings her work experiences to her articles and classes. Ashley holds a BA from the University of Colorado, Boulder and enjoys living in San Francisco while traveling all over the world.