With the end of the year quickly approaching, what your success teams really want going into 2023 is to be included in a comp plan that comes from RevOps. To help them (and your entire org) out, we’ve brought together a roundtable of experts that includes Apporv Singh from Elevate HQ, Mark Truman of EdgePetrol and Simona Burbacki from Help Scout to help guide you through the process.
At Help Scout, Simona says there’s a need to respect all sizes of customers while continuing to understand what enterprise-level clients should be receiving in terms of customer experience and engagement. They are evaluating if it still works to have customers of 10 seats or less contacting Customer Success, with larger customers contacting their Account Management team.
“Account Management and Customer Success, because of the quantity of customers and the level of engagement that we afford to give customers in those two different scenarios, are compensated differently,” she says.
Any changes going forward will need to ensure levels of engagement, handling escalations appropriately while keeping proactivity high.
“Really aligning our new features and product fit to our customers,” she says. “Our customer success and support and account management will have their own appropriate compensation plans based on those varying needs.”
That should keep both the bean-counters AND the success teams happy. Because this strategy is about customer happiness. Not getting that micro-drone you wanted happiness, but close.
The bean-counters won’t like this next part.
Simona explains that revenue almost becomes a secondary goal. But this is only because ensuring products fit customers and create outstanding experiences is the theme across the organization.
Mark explains that with EdgePetrol, the similarity to Help Scout is the desire to create the right behavior within the team. His organization sells to gas stations, which is typically a different type of sale from Help Scout, but driving desired behaviors is the most important part of the comp plan.
“Our ideal customer profile is a small to medium business,” he says. “Probably a family-owned generational gas station business that hasn’t really had access to the sort of data that we are able to provide.”
The difference between EdgePetrol’s approach and Help Scout’s is that once that customer is on board, Customer Success takes over, which can take a considerable amount of effort.
“There is an implementation process involved,” he says. “Getting them ramped up, setting objectives with them, building strategies with them and how they can actually get a return on investment.”
“There needs to be a high-touch approach in what we do because it’s not a plug-and-play product.”
Customer Success and Support both report into the VP of Customer Success. Both teams work together and are responsible for the renewal, but are incentivized differently in ways to drive the desired behaviors.
“That’s really the key in how we’ve been able to come to the structures that we have put in place,” says Mark. “To say, what actually is our Customer Success team trying to do?”
They are also responsible for ensuring organic growth from customers at the end of the year. This is a challenge because EdgePetrol has gone for market expansion as a strategy rather than feature expansion.
“It’s something that will change and develop over time as we start introducing new products,” he says.
Apoorv has seen the same experience of having numerous comp plans, noting he’s seen the same patterns repeated.
“Whether it’s customer success, AEs or anybody else you’re looking to incentivize using variable comp,” he says. “The fundamentals don’t really change much.”
This doesn’t necessarily mean there isn’t work to be done on the comp plan, though.
“What you’ve got to decide is how frequently are you going to pay?” he says. “How much of their overall compensation should be tied to variable?”
Before any of that even begins, take a look at the Customer Success team and the company as a whole.
“Are they even at the right stage, or are you at the right part of the journey to even put variable comp in place?” he asks. “There’s a lot of things that can derail your comp process or demotivate the teams.”
He says that something that doesn’t get discussed often is the ratio of the target for Customer Success with on-target earnings. It’s usually known on the EA side, but not the CS side.
“Very few teams actually know what their customer success costs,” he says. “I think it’s super important if you want to drive that,” Apoorv says. “You want to have everyone’s buy-in, that Customer Success needs to have this variable compensation and this is how much they need to get paid because there’s the value they’re bringing.”
What exactly is the value of the quota the team carries? Whether it’s upsells, cross-sells, or revenue-drive quota, it needs to be included in the comp plan.
Apoorv says there are two questions that should be asked to establish a comp plan that includes customer success.
“What percentage of value am I willing to share with Customer Success? What percentage of that value that they’re adding do you want to give this person,” he says.
This could be 2% to 5%, which is typically what he’s seen but it depends on the company. If the team is carrying a renewal quota, it would be different.
The second question: what stage the company is at in the product journey and how mature is the product?
“How easy is it to upsell? All that stuff kind of bakes into this,” he says. “And now that you’ve figured out that value you want to provide to Customer Success, how do you want to split that?”
The most common splits are 80/20 and 70/30, but factors like understanding touch points required to sell, account size, and KPUs that matter most are all important factors.
For EdgePetrol, a fast-growing five-year-old company, Mark now sees some things he wished he’d done as he looks back. Like working back to determine the cost for customer retention. He’s seen the 12 cents per dollar best-practices standard.
“There were times where we were operating at 30, 35%,” he says. “You’ve got to bring the service to customers.”
While it makes sense, we all know that kind of percentage hurts. He says that when you’re at an earlier stage, it can be the main problem, when Customer Success costs can outweigh what’s coming in as business.
EdgePetrol uses Elevate to know what percentage of the book of business is going out.
“We’re trying to bring that OTE down,” he says. “We’re actually trying to increase people’s salaries to reduce the OTE.”
Help Scout is in its 11th year and the Account Management team is relatively new. They focus on the larger customers that need more training.
“We’re very mindful of making sure that our account managers, they’re on one hand focusing on revenue,” Simona says. “We also want to make sure that they know the customer value. We’re looking at ways of creating a little bit more complexity in terms of those commission plans.”
She wants to see this be more than dollar retention and expansion.
To learn more about our panelists’ comp plan strategies, watch the full roundtable video here..
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