Choosing a CSM Compensation Plan

By Kristen Hayer

One of the questions I hear most often from customer success leaders is, “What kind of compensation plan should I provide for my CSMs?”  My answer is always “It depends.” – the typical non-answer you’ll get from any good consultant or MBA!  However, here’s what it depends on, and a framework for thinking about compensation in general.

Variable Comp vs. Salary Only

Many people argue that as trusted advisors, CSMs should not have a variable component to their compensation plan.  I disagree.  I think that most CSM teams benefit from a variable plan as long as it is based on clear goals that align with the company’s mission and initiatives.  People are motivated by money (see my recent post on variable comp), and variable plans can be one of the best ways to drive the behavior you want from your team.

That said, if either of these things are true you should avoid variable comp: 1. Your metrics and goals are unclear or 2. Your executive team does not support variable comp in general.  A team with unclear goals will be frustrated by having a portion of their compensation impacted by something they can’t influence, and if you try to push through a variable plan with an unsupportive executive team you’ll end up fighting for every penny your team earns.  In both of these cases you should offer a salary that is slightly above average (in order to compete), and consider contests or SPIFs as ways to drive desired behavior on your team.

Bonus vs. Commission

Let’s assume you have made the decision to have a variable component as a part of your team’s comp plan.  The next decision you need to make is whether it should come in the form of a bonus or commission.

Commission is terrific for things that are incremental, easy to measure and directly related to revenue (cross-sell, add on features, paid training).  To work well, commission should be a logical percentage of the value of what was sold, and should be uncapped.  The best commission plans reward employees at a higher rate once they have exceeded their goals.  Keep in mind that commission doesn’t need to be limited to things that are sold for money:  If the value of getting customers through an unpaid training program is that they stick around for an extra year, it’s valid to pay commission to the CSMs that sign them up.

Bonuses are a good option for goals that are challenging to measure, project-based or team-based.  In order for a bonus plan to work, the expectations for earning the bonus should be clearly defined and communicated to members of the team at the beginning of the bonus cycle.  Since bonuses are often paid on a quarterly or annual basis, it is also important to regularly communicate with team members about how they are pacing against their bonus plan.  This helps to keep the good behavior you are trying to drive top of mind.

Some of the most effective compensation plans for CSM teams include a combination of commission and bonus, because CSM goals tend to include a mix of selling and project-based work.  If you have a blend of goals consider a variable plan with a blend of commission and bonus.

Annual vs. Quarterly vs. Monthly

Once you’ve decided how to structure variable comp for your team, you’ll need to decide on the term of your plan.  It helps to think about 2 factors as you make this decision – the plan structure (commission vs. bonus) and the seniority level of the role (CSM, lead, manager). 

The structure of the plan can help you to determine how often it should pay out.  In general, commission plans are based on short-term goals like sales this month or renewals this quarter.  If your plan is primarily commission-based, choose a term that corresponds with the goals it is based on.  Bonus plans, as I mentioned earlier, tend to be based on goals that are quarterly or annual.  Again, choose a payout timeline that corresponds to the goals you’re trying to drive toward.

Another factor to consider when deciding on the term of your plan is the seniority of the role.  Front-line employees (CSMs, account managers, support reps) are expected to drive short-term wins and typically have short-term goals.  In order keep these team members focused on and excited about their goals, the variable payout should be more frequent.  On the other hand, more senior team members are often driving toward long-term goals (improving customer satisfaction this year or decreasing churn this quarter).  To keep these team members focused on the big picture, the payout timeline for their variable comp should be longer.

Once you make these decisions, you can move on to deciding on dollar amounts and writing up the plans.  This is also a good time to have a chat with your finance team about your ideas.  They can help you understand how other teams in your organization have set up their compensation plans, and will often have great feedback on things that have worked (or not) in the past.

Need help building a highly effective compensation plan for your CSM team?  The Success League is a consulting firm that works with executives who want to unlock the retention and revenue a top performing customer success team will bring to their business. www.TheSuccessLeague.io

4 Steps To Successful Customer Onboarding

By Jeremy Gillespie

A prospect signs on the dotted line, you hear the sound of a gong and coworkers high-five. At this point it’s easy for everyone to take their eye off the ball and assume the product will do the rest. Instead, as coworkers rejoice, the hard work begins for the Customer Success team. It’s time to focus on onboarding your new client.

Here are 4 steps to ensure successful customer onboarding:

1 - Align on Success

Each customer is a snowflake with their own unique needs and they should be treated that way. Time spent at the beginning of onboarding to thoroughly understand these needs is crucial to delivering true customer success.

Gather as much information as possible from your sales team about why the client decided to buy and what they are hoping to gain from your solution.  Then take the time to have a conversation with your new client about their goals, and define their success metrics. This will give you the opportunity to tailor your onboarding process to each client as well as manage expectations throughout the process.

2 - Establish a Timeline

Once you’ve defined success from your customer's perspective, you're ready to set up a timeline and milestones. A timeline accomplishes a number of things, but most importantly it allows you and the customer to get on the same page about the onboarding process (up next). This step can be an extension of the conversation you have in step 1, and is also a big help in managing client expectations.

Think of milestones as checkpoints along the onboarding journey, to make sure you’re on the right path. Before you start the down the onboarding path, define a clear timeline with expected results at each checkpoint. Use milestones to assess if you’re meeting expectations and correct course if not.

3 - Develop Repeatable Processes

Processes are especially important for growing companies, because they provide a system for onboarding customers quickly and efficiently. Not only do you need the right processes, they need to be repeatable in order to provide consistency for both customers and CSMs.  With repeatable processes, anyone can know where each customer is during onboarding. 

Create an outline of each step in your ideal onboarding process. Once you have an outline, review the steps with your team to make sure you haven’t missed anything. Then carefully go through and write a detailed standard operating procedure (SOP) for each step. This will be the guide everyone follows to provide consistent onboarding. Be sure to communicate these processes with your customer during the timeline discussion.

4 - Identify Points of Contact

When a customer is learning the product and getting everything set up, the last thing they need is a new contact every time they turn around. This isn’t to say that one person needs to handle each customer or every conversation, but there should be specific points of contact during onboarding.

Define a contact hierarchy and clearly communicate (both internally and with your client) who's who. Typically, an account manager or relationship manager are the main point of contact during onboarding. For example, a customer might have an account manager that oversees the onboarding process, an onboarding specialist who takes care of training, and a technical support person who handles software-related questions. In this example, the account manager would be the primary point of contact, and would be responsible for making sure other team members understand customer needs and are pulled into conversations as appropriate.

That’s it. Sounds easy, right? 

In fact, implementing these steps will take time and is an iterative process. Go through each of these steps with your team and carefully lay out your onboarding process. Revisit onboarding quarterly as a team, and send out satisfaction surveys to customers to continually improve. If you nail these four steps you will build a strong foundation for long-term customer success.

Do you need help building a delightful, yet scalable customer onboarding process?  The Success League works with executives who want to optimize customer success efforts and realize the loyalty and revenue that will bring to their company.  www.TheSuccessLeague.io

Jeremy Gillespie - Jeremy is a growth-oriented marketing geek, technology enthusiast and customer evangelist. He loves using complex data to build creative retention solutions. By leveraging technology, Jeremy excels at creating scalable retention marketing programs.  He works for LinkedIn, holds a BA in Communication from the University of Pittsburgh and MBA from Point Park University.  He is a proud former Pittsburgher, but currently lives in San Francisco, CA.

How to Fire a Customer

By Kristen Hayer

It is an unfortunate fact of life that things don’t always work out the way we planned. Friendships break, marriages end, employees get fired and, occasionally, one of your customers becomes a bad fit for your company. Perhaps the customer outgrew your company or vice versa. Perhaps the expectations that were set for the customer were unrealistic or undelivered. Whatever the cause every CSM will, at some point, need to let a customer go.  Here’s a method for making the break-up as professional as possible, and potentially saving customers who are going downhill.

Set Expectations

As soon as you know the relationship is no longer working, it is critical to have a candid conversation with the client.  While it can be tempting to leave the client alone and hope things get better on their own, this almost never works and often makes the situation worse.  Instead, schedule time with your client to talk about what is going on.  You need to understand what is happening from the customer’s perspective.

This conversation is a great time to spell out what a successful relationship looks like for both the customer and your company.  Ask questions like, “What were you hoping to achieve with our solution?” and “What initiatives did you expect our solution to support?”  Be sure to share your company’s expectations of the client as well, especially if there are areas where the customer is not a good fit.  Things like, “Our implementations typically take 2 weeks, but yours has been in process for 6 months because we can’t schedule meetings with your team.” are important to surface at this stage.

Involve Key Players

While your primary contact might be the right person to kick off this conversation with, it’s critical to involve any other key stakeholders.  Sometimes you’ll find that the person who signed off on the purchase has a much different perspective on your solution than the person you work with day-to-day.  Make sure you’re taking everyone’s viewpoint and expectations into account as you work through issues.

One important thing to note is that executives generally take a broader view of how a solution or vendor fits in with their company’s goals and vision.  They also tend to be removed from much of the detail on things like implementation and service delivery.  By including an executive-level contact in your initial conversation about fit, you may find that the fit is actually better than the feedback you’re hearing from your main contact.  In addition, executives can often resolve problems on their end more quickly.

Document Actions and Results

The next step in the process is to create a game plan to try and get things back on track.  Work with the customer to design a plan that clearly outlines both parties’ expectations and what each team needs to do to resolve any issues that can be fixed.  Define the time frame for an agreeable resolution that works for both groups.  Put everything in writing, ideally in a format that can be shared by both teams (Google Drive and Box are a couple of good options). While you’re in this phase, weekly or bi-weekly meetings with your customer to review progress are a smart idea.

As both teams start working through the action plan, document results.  Is your company missing deadlines or unable to deliver on commitments?  While it’s no fun to see that in writing, documenting your company’s failures is just as important as documenting problems on the customer’s end.  This is great information for your team to learn from, and may ultimately support your position that there is a poor fit between your client and company.

Create Transition Plan

If you’ve done all of the above, and things are still not working out, it’s time to pull the plug.  Before you break things off with your client, make sure you know exactly what needs to happen internally by creating a transition plan with your team. For organizations with complex or expensive solutions, letting a client go can materially impact revenue and operations teams. Be sure to run your transition plan by any teams who will need to deal with this change.

As you build the transition plan you should consider:

• Timeline – How long will it take for the customer to find an alternative?

• Contracts – What cancellation clauses are you and the client subject to?

• Refunds – If you cancel, will you owe the customer money?

• Support – How are you planning to support the client through the transition?

Communicate Clearly

Having frequent, candid discussions with your customer throughout this process should mean that this result is not a surprise.  That said, having the break up talk is never fun.  Just like ending a personal relationship, you should follow standard etiquette for this conversation:  Do this in person or over the phone, be polite but clear, and be prepared to discuss next steps.

It can help to write out what you want to say before the call.  A sample agenda:

• Let the client know that you’re ending the relationship

• Outline the reasons for the decision

• Reinforce that you’re ending the relationship

• Provide the client with your proposed transition plan

• Ask the client if they would like to discuss the transition plan

Firing a customer should always be a last resort.  Setting clear expectations up front, providing a smooth on-boarding experience, and clear communication throughout the client’s lifecycle can help to prevent this situation in the first place. When it does happen, handling the situation professionally can prevent long-term damage to your relationships with the people involved, and leave the door open for referrals to companies who are a better fit. 

Customer Success playbooks are a great way to make sure that your CSMs know exactly what to do in every client situation.  The Success League is a consulting firm that works with executives who want to unlock the retention and revenue a top performing customer success team will bring to their business. www.TheSuccessLeague.io

A Needle In a Haystack - What to Look for When Hiring a CSM

By Amin Akbarpour

Given that Customer Success is a relatively new field, it should be no surprise to see the different backgrounds of current Customer Success Managers (CSMs). They're a ragtag group, with folks coming from all over the place to give this whole Customer Success thing a go. Diversity aside, there are certain skills that you always see in successful CSMs. If you're in hiring mode, here's what you should be looking for:

Attention to Detail

Whether it's dotting your i's and crossing your t's in a client meeting or making sure the internal CRM tool is completely up-to-date, attention to detail comes into play in just about every aspect of the job. Regardless of whether or not the role will be a high-touch position, there's a level of understanding the CSM must possess about their clients' business. If the role is high-touch or involves a small number of key clients, that requires even bigger emphasis on noting details within those accounts. 

Organization

As Evan Addams mentioned in a recent post, Customer Success must be able to speak all languages as they work with multiple departments internally on a regular basis. Balancing time between managing client relationships, ensuring successful consumption of your offering, and working on multiple internal projects can very easily turn into a jumbled mess. It's critical for a CSM to stay organized so they can give their undivided attention to each project. Without solid planning, the end result could be mismanaged client relationships and ill-prepared programs.

Great Follow-Up (Without the “Follow-Up”)

Take a moment and put yourself in your client's shoes. You have a full-time job and leverage multiple tools to be successful. You have a boss and a few vendors that support these tools you utilize. Perhaps you even have a team of folks you manage as well. Don't forget you also receive plenty of sales calls from vendor hopefuls. That's a lot of noise your CSMs have to cut through to get noticed. They need to be persistent and have great follow-up in order to constantly stay top of mind and get work done.

This leads to a second point. The phrases “follow-up” or “check-in” are not a part of a good CSM's vocabulary. These are hollow words that carry zero value and make it seem as if the rep is just checking a box on their to-do list. Successful CSMs always specify what's on the agenda and work to add value in each client interaction.  I wrote another article about this a few months ago.

Obviously, there are many other things to consider when evaluating candidates for an open CSM role, like industry knowledge, culture fit and technical skills. In addition to checking those boxes, make sure your hiring process includes opportunities to highlight your prospective CSM's attention to detail, organization and follow-up abilities. Speaking of which...

...I'm currently looking for an account manager to join my team at Persado. Feel free to reach out if you think you know the right person for the job! 

Need help finding that perfect CSM? The Success League helps companies develop a profile of the ideal CSM for their company that includes a job description and key interview questions.   www.TheSuccessLeague.io

Amin Akbarpour - Amin is a customer success coach and architect. With relationship-building at the core of his practice, he molds teams by instilling the necessary principles to transform them into trusted advisors. Understanding what's needed for organizational change, he translates theory and ideology into practice and habit. After the aforementioned job hunt he accepted a position as an Account Manager for Persado. Originally from Southern California, Amin is a University of San Francisco alum who is grateful to still be able to call San Francisco his home.