Robert Statsky

Traditionally, Customer Success orgs had soft targets at fast growing companies. When the mantra was growth at all cost, most companies designed their revenue engines around generate leads with marketing and marketing spend, and then focused resources on bringing in new business and driving revenue.

As the markets have matured over the last decade Customer Success has taken on a larger share of the revenue. Not just because of renews, but because most growth occurs within an existing customer base.

Obviously I am speaking in generalities, and I am expressing this concept in a very broad scope. This is of course subject to the specific industry you’re in, the vertical, the revenue tier, how long you’ve been around, your addressable market etc. What applies to one company could be totally different for another.

However, I have seen the shift in the last 10+ years around a focus on sales into more of a revenue focus from the post sales orgs. Thats why I knew it was important a while back that I get into revenue.

“Owning” a revenue number was very important. Plus, I noticed a distinct shift in not only responsibility but also the slack and leeway you get when you own a revenue target. You could argue there is more risk, but there is a TON of reward.

That said, I have not found this be a risky endeavor. Owning a revenue number ensures you are DIRECTLY tied to a business outcome, and it makes everything you do at a startup easier. If you are no longer a COGS department, but a part of the revenue/go-to-market team, you will see the freedoms that come with that.

I function best when I have a target and I have an opportunity to build out teams that drive revenue directly. If your CS function is setup correctly, there is no need for an account management org, or a renewals org once it leaves the sales team. If your team is trained, and functioning properly, your CSMs will have no issue not only selling your product in the form of expansion, but growing your business with renewals and price increases in a meaningful revenue driven way.

As always here is what Chat GPT had to say:

Here are some steps you can take to get started building targets/setting goals:

1. Understand Business Goals:
   • Identify the key business goals and objectives that the Customer Success team needs to contribute to. This could include customer retention, upsell opportunities, and overall customer satisfaction.
2. Define Key Performance Indicators (KPIs):
   • Determine the specific KPIs that will measure the success of the Customer Success team. This may include customer retention rates, expansion revenue, customer satisfaction scores, and other relevant metrics.
3. Tiered Compensation Structure:
   • Implement a tiered compensation structure that reflects different levels of achievement. For example, higher compensation for exceeding retention targets or successfully driving upsells.
4. Base Salary vs. Performance-based Incentives:
   • Balance the compensation structure with a combination of base salary and performance-based incentives. Base salary provides stability, while performance-based incentives motivate the team to achieve specific goals.
5. Variable Components:
   • Consider variable components tied to individual and team performance. This could include bonuses for meeting or exceeding retention targets, upsell quotas, or achieving high customer satisfaction scores.
6. Customer Segmentation:
   • If applicable, differentiate compensation plans based on customer segmentation. Large enterprise accounts may have different success criteria compared to smaller businesses, and compensation plans can be tailored accordingly.
7. Feedback Loops:
   • Establish regular feedback loops to assess the effectiveness of the compensation plan. Monitor the impact on team motivation, customer success outcomes, and overall business performance.
8. Market Benchmarking:
   • Research industry benchmarks and competitor practices to ensure that the compensation plan is competitive. This helps attract and retain top talent in the Customer Success space.
9. Communication and Transparency:
   • Clearly communicate the compensation plan to the Customer Success team. Transparency fosters trust and helps team members understand how their efforts directly contribute to their earnings.
10. Adaptability:
    • Build flexibility into the compensation plan to adapt to changing business needs. Periodically review and update the plan based on evolving priorities and market conditions.
11. Incorporate Customer Feedback:
    • Consider incorporating customer feedback metrics into the compensation plan. This reinforces the importance of customer satisfaction and encourages the team to focus on delivering value to customers.

Remember, the key is to align the compensation plan with both individual and organizational success while fostering a positive and motivated team culture.