CSM Compensation Plans: Factors that Matter

There is no one-size-fits-all formula for designing customer success compensation plans. Each company is unique and has different goals and KPIs in place that affect CSM compensation structures. However, according to Totango’s 2021 Customer Success Salary Report, CS teams are being tasked with owning more revenue-generating activities that make an impact on organizations’ bottom lines, as well as activities that improve product stickiness, which decrease churn and increase renewals. Because of this, customer success compensation structures have evolved over the past several years to be more heavily focused on bonuses and other incentives like stock or equity options.

In order to drive the business outcomes you want, it’s important to properly incentivize the right behaviors for your team. A salary-only customer success compensation plan will not provide additional motivation for your team members to meet or exceed your basic performance standards, nor will they be impacted if they under-achieve. It is great to reward your employees for driving growth, however, putting too much focus on revenue generation could drive your customer success team to be focused more on sales than success, which can be off-putting to your customers.

So, which variables should be included in your CSM compensation structure in order to motivate your team to focus and prioritize the programs that actually drive revenue over time while also providing exceptional customer experiences? Let’s take a look at four important factors. 

4 Factors to Consider in Your CSM Compensation Plan

In this year’s Customer Success Salary Report, we asked participants to rank which factors had the greatest influence over their compensation structures. According to the results of the survey, these four factors have the greatest impact:

csm compensation factors, how to pay your csms

Team/Company Performance

As it has been for the past several years, team/company performance was the top factor that CS professionals said affected their bonuses – and for good reason. Customer success is a team sport, so promoting a culture of collaboration throughout the entire company by incentivizing overall company performance helps encourage communication and cross-collaboration.


Expansions & Upsells

When the COVID-19 pandemic hit and organizations were uncertain if and when they would be able to secure new customers, they began to realize just how important it is to focus on generating advocacy and revenue from their current customers. As a result, expansions and upsells have become a key incentive in CS compensation plans.

Renewals

As with expansions and upsells, incentivizing your CSMs through customer renewals is a great way to drive revenue from each individual customer. This can help motivate CSMs to work on building and maintaining relationships that provide value to customers and staying on top of any issues that may arise, so that when renewal time comes along, the customer is ready and willing to stay on board.  

Net Promoter Score (NPS)

NPS has become the gold standard for measuring customer satisfaction, so it makes sense that many organizations include this in their CS compensation plans. NPS indicates a customer’s inclination to make repeat purchases and make referrals to others. If a CSM’s clients are consistently providing high NPS scores, then it is likely that the CSM is delivering the value and service that his or her customers need and can be rewarded based on that data.  

 

How Totango Can Help

In order to effectively track and measure overall team performance, expansions and upsells, renewals, NPS and other important factors, you need to be able to collect and analyze the right data. With Totango’s all-in-one customer success platform, you are able to build out customized dashboards that show you how well your CSMs are performing as well as provide you with actionable insights into your customer’s journey and overall health. Ready to get started? Sign up for Totango for free today!

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