Customer Success Compensation: 5 Key Decisions

By Kristen Hayer

It’s fall. If you lead a Customer Success group, now is the time to consider adjusting your metrics, goals, compensation plans and team structure for 2018. Over the next 2 weeks I’ll be focusing on how to build CS compensation plans that drive high performing teams toward achieving key metrics. In this post, I’ll cover the 5 decisions you need to make before you start building your plan. For more details and ideas on this topic, you can visit this article I wrote last year.

Decision 1 – Total Compensation

You need to make sure that your total compensation package allows you to be competitive with other, similar companies who are recruiting CS candidates. There are a number of different ways you can track down compensation information. One of the easiest is to use a tool like Salary.com or Payscale. While these paid services aren’t cheap, they do offer a comprehensive look at compensation by role, seniority and location. You can also check out job descriptions online. While many don’t include salary information, some do. Finally, check with colleagues in your area. Many of the customer success forums have discussion strings that cover CS compensation.

Decision 2 – Variable or No Variable

Once you’ve made a decision about your total compensation package you need to decide if part of that will come in the form of variable compensation. Variable comp is simply a lever that helps you drive performance. Team members who perform better are paid more. Variable compensation is not the only way to drive performance, so if you don’t have executive support, solid goals, or a budget, you can turn to other management tactics. However, variable compensation has been shown to be a very effective performance lever (sometimes too effective, cough, Wells Fargo!) Pull that lever if you can.

Decision 3 – Variable Percentage

If you decide not to move forward with variable comp, you’re done. If you decide that variable compensation is an important part of your performance strategy, you need to decide on a percentage. In a selling or persuasion-oriented role (account manager or CSM with revenue goals) the variable percentage of total compensation should be higher. A typical range is 20-25%. For a role that is support-focused (implementation specialist, technical support engineer, CSM without selling responsibility) the variable percentage should be lower. A typical range in 10-15%. Again, check your compensation tools and network for comparable packages so you can be sure you’re competitive.

Decision 4 – Bonus or Commission

There are 2 main types of variable comp – bonus and commission. Commission works great for revenue-oriented, short-term goals like selling 10 training plans a month or keeping retention rates at 98% of revenue for the quarter. Commission requires individual goals, and is typically paid on a per-transaction basis. For example, if you renew 98% of the revenue in a quarter, you might earn 2% of each renewal you close. Bonuses are more flexible, and in many cases easier to implement for customer success teams. You can have bonuses based on project completion, specific activities or achievement of goals, and they can be tied to either individual or team performance. Many CS teams employ a combination of both commission and bonus.

Decision 5 – Payout Timing

In a perfect world, your payout timing will match the timing of your goals. Do you have a monthly expansion revenue goal? A monthly commission payment is a great fit. Have a quarterly NPS metric? A quarterly bonus would do nicely. The idea behind payout timing is to place the reward as near to the desired behavior as possible. This reinforces the behavior and rewards great results. The more senior the staff member, the longer term the goals should be, and the longer the reward payout can be. It is completely appropriate to offer an annual bonus to a people manager who should be focused on the achievement of annual metrics and goals.

Once you’ve made these decisions, you can build a model that helps you visualize how a low, typical or high performer would be paid. Use that to dial in your dollar amounts and percentages, and you can write it up, get it approved, and roll it out. Next week I’ll talk about how compensation plan execution is the key to great results. Until then, happy planning!

Need ideas for your compensation plan? The Success League is a customer success consulting firm that offers an online course on Developing Compensation Plans. Our next classes are offered on October 10 and November 17, 2017. For more information on this class, as well as other courses in our CS Leadership Program, please visit TheSuccessLeague.io

A Little More on Culture Fit...

By Kristen Hayer

Last week I wrote an article about 3 kinds of interviews that can hurt your recruiting process and drive away good candidates. While that article made the point that you can focus too much on culture fit during the interview process, how well a team member engages with the rest of the team is very important. How do you balance culture fit and job performance? What do you do when one of the members of your team isn’t fitting in? Here’s my take on culture:

What is Culture Fit?

Culture fit, at the highest level, means that each employee is aligned with the corporate mission and values. For example, if integrity is a company value, then in order to fit the company’s culture each employee should demonstrate that they are honest in their dealings with coworkers and customers. Another core part of culture fit is the ability to work effectively with other members of the group. Can employees influence others and drive change through relationships? That is culture fit at work. Employees who fit well with the culture also perform at the same level as the rest of the group. For example, it can be a mismatch when one person takes a casual, slow approach to their work while the rest of the group is performing at a significantly faster pace. Finally, a critical part of fitting in with any culture is openness to being managed and coached. While new employees may come in generally aligned with the company and team, a great manager will help each team member become an even better fit over time.

What Culture Fit Isn’t

Unfortunately culture fit is often interpreted to mean being well liked, friends with everyone, and similar to other teammates. This interpretation can create real problems in terms of diversity and performance. If you only hire people who are just like the rest of your team, you may be missing out on skills and strengths that come from people who are different. For example, if your team is boisterous and outgoing but one team member is quiet and spends the day focused on work, that doesn’t necessarily mean that person isn’t a culture fit. If the quiet person works well with others and performs at the same level as the rest of the group, I would argue that they are a culture fit. Likewise, while it can be fun to have a team where everyone is friends both inside and outside of the office, that isn’t a requirement for culture fit. A teammate can be a great team player and able to effectively influence others without being friends with everyone.

When Someone Isn’t Fitting In

So what do you do as a leader when you notice that someone on your team isn’t fitting in? Before you go down the path of moving them off your team, it may be worth exploring what is going on. Start by learning more about them. What are their strengths? How do they like to work? What do they get excited about? Building a relationship with your team member will teach you how to help them fit in. Make room for them on the team by helping other team members understand their perspective. The more your team gets to know about this person, the more they will accommodate their differences. Finally, be willing to be uncomfortable. It is human nature to want to be around people that are similar to us, but if we do that we’re missing out on the benefits that people who are different bring to the table. Stepping outside of your comfort zone, and encouraging your team to do the same, can result in a diverse and higher performing group.

Do you need help creating a model (including a culture fit component) of your ideal CSM? The Success League is a customer success consulting firm that will work with you to build a custom hiring kit, including a role model, job description and interview questions. Visit our website for more information about our services – TheSuccessLeague.io

3 Bad Interviews – And How to Fix Them

By Kristen Hayer

In Customer Success it is a candidate’s market right now. Companies are adding and expanding success teams, and the pool of experienced CSMs is still relatively small. In order to recruit top talent, you need a stellar recruiting practice. Unfortunately, after spending time and money collecting amazing candidates, many leaders make major mistakes in the interview process. Here are 3 types of interviews that can turn off great candidates.

The Disorganized Interview

The candidate shows up a little early, but then sits in the lobby for 25 minutes waiting for their interviewer to show up. When they finally do, they clearly haven’t prepared good questions. The conversation is awkward, and the candidate leaves completely unsure of how the interview went and where they stand.

If your interview process is disorganized, your candidate will assume that your whole company is disorganized. You might get away with it once or twice, but high-performing, career-driven professionals will pass you up.

The Unresponsive Interview

The candidate shows up on time, you have a great conversation, and they get along with the team. They feel like the interview went really well. That is, until you fail to get back in touch with them, leaving them wondering what is going on for weeks at a time.

Even if someone isn’t a fit for the role, they can still refer other people to your organization. On the flip side, they can also badmouth your company out in the job market. You risk losing solid candidates and gaining a bad reputation.

The Fun Culture Interview

The candidate is asked a few job-related questions during the phone interview, and then is invited in to make sure they are a culture fit. There are group interviews, a day of shadowing people at the office, and beers with the team. The candidate leaves wondering if they are being interviewed for a job or a fraternity.

Culture fit is important, but it isn’t the only thing candidates are looking for. By focusing interviews primarily on culture fit you run the risk of hiring the wrong people (someone who is a good culture fit can still be bad at the job) and turning off more serious, career-focused candidates.

So, what should you do to prevent interviews like these?

Plan Ahead

Create a written model of your ideal CSM. Consider factors like industry experience, education, leadership, and communication skills. If you have a larger CS team, think about your top performers as you build your model. Then develop strong open-ended interview questions that uncover whether your candidates have the traits you’re looking for. Think about the answers you expect to hear. Finally, choose interviewers with experience, and prep them by assigning them questions to ask all of the candidates.

Show Up and Listen

Be on time to your interviews, or if there is an emergency and you can’t be there, take the time to apologize and reschedule. Treat candidates like you hope they will treat your customers. Ask the questions you came up with ahead of time, and take notes on the answers. The candidate took their time to come in and meet with you, so give them your full attention. Active listening will also help you to come up with additional questions as needed to explore the candidate’s experience.

Follow Up

Once you’ve had a chance to regroup with everyone who was involved in the interview process, it’s time to make some decisions. First, if they are a no-go candidate let them know right away.  Send them a thank you note, but be clear that the role isn’t a fit. It isn't fair to string candidates along. If you do decide to continue the process, get the next steps sorted out right away (ideally, within a day or two). Finally, if you decide to make an offer, get that to your candidate quickly so you don’t lose them to another company.

Candidates will assume that you treat your customers the same way you treat job-seekers. Make your interviews a great experience, and you’ll be more likely to attract and hire top customer success talent.

Do you need help creating a model of your ideal CSM? The Success League is a customer success consulting firm that will work with you to build a custom hiring kit, including a role model, job description and interview questions. Visit our website for more information about our services – TheSuccessLeague.io

How to Hire a Proactive CSM

By Kristen Hayer

Much of the recent discussion in the customer success community has centered on transforming teams from reactive to proactive. Proactive work (building relationships, quarterly business reviews, uncovering opportunities) is the main reason for having a customer success team in the first place. After all, most companies also have support or service teams who handle inbound questions from customers.

If becoming more proactive is an initiative for your customer success team, start by making sure your new hires are compatible with your vision. Here are 5 questions you should ask to determine whether your next customer success candidate is proactive:

Are they proactive through the hiring process?

One of the easiest things you can do to ensure that your next CSM is proactive is to observe how they handle the hiring process. Have they done their homework on your company? Do they ask great questions during interviews? Proactive people take steps to make sure they know about the companies they interview with, and have the answers they need. A thank you note or email not only indicates that they take initiative, but also shows you how they will interact with your customers.

Have they served in a proactive role before?

It’s also important to ask about the kind of work your candidate has done in the past. If they have always been in reactive roles, it is going to be hard for them to change. Look for prior experience that includes activities like uncovering opportunities, performing account reviews, or managing cross-functional projects. Tasks like this require initiative, and are a strong indicator that the candidate will take a proactive approach with your clients.

Did they work while going to school?

People who hustle – working while in school or having a side project while working full time – are people who understand how to be proactive in their own lives. They are more likely to take this approach with customers, and will often bring creative ideas on customer engagement to the table. Candidates who are former entrepreneurs or worked in food service or retail usually make fantastic customer success managers.

Do they participate in a competitive activity?

People who are competitive need to be proactive in order to train for their chosen activity. The skills they employ to keep themselves in great shape, practice on a regular basis, and continually push themselves are the same skills they will use to plan an approach to a challenging customer, always improve their work, and proactively engage with new clients. Ask about the candidate’s hobbies, and look for people who like to run, dance or play sports competitively.

Do they set goals and achieve them?

Setting goals, sticking to a plan, and achieving those goals indicates that a candidate takes initiative in their own life. These skills will help them set goals with your customers to help them achieve their desired outcomes. Seek out candidates who set a goal and achieved the results they wanted in their personal or professional life, and then ask them how they approached that challenge. You’re looking for a clear and consistent goal-setting strategy.

Proactive CSMs will transform your customer success team from a reactive service group to a strategic team that actively helps your customers stick with you and grow. Hiring for a proactive personality from the beginning is one of the best ways to make sure your team performs at its peak.

Need help planning the hiring process for your next CSM? The Success League is a customer success consulting firm that offers a CSM hiring kit, tailored to your company and team. Kits include a model of your ideal CSM, a job description designed to send the right candidates your way, and interview questions to help you find your top candidate. Check out our website for more information and additional services – TheSuccessLeague.io