CSM Incentive Plans - NRR, GRR, ...

Miranda Balcar

Hi all,

I'd like to propose some changes to our CSM compensation plan for 2024. Last year we issued 2 bonuses each half based on NRR. I discovered that if a sales person helped land an expansion or an upsell for one of their accounts, the CSM coasted the rest of the year. This was the first year we implemented a bonus and I was hoping that my targets would motivate them to be more proactive and strategic, but it hasn't much. I wouldn't say that anyone has really developed better skills in this area this year. :(

My targets for 100% bonus attainment.

Mid-Market/SMB CSMs - H1 100% NRR, H2, 104% NRR. Everyone will hit this.

Enterprise CSMs - H1 108% NRR, H2 115% NRR. All but one will hit this.

Our GRR has been steadily 98%, so adding a GRR target didn't seem like it'd make much of an impact. How do you motivate CSMs for growth while keeping the incentive plan simple?

Miranda Balcar

Additionally, we based our NRR on the ARR at the start of the year. H2 was based on the start of the year, not the start of the half. Let me know if that's atypical. I can't really find an answer on that.

Jeffrey Kushmerek

Hi Miranda,

I do prefer quarterly bonuses, as its keeps motivation better. We created a doc around comp plans- you can grab that here:

https://www.dropbox.com/scl/fi/cfj3vdpk74xeyue2a8e3v/Customer-Success-Compensation-Models_Updated.pdf?rlkey=55p5i1fcv4rxamf2oeqv9maor&dl=0

hope that helps!

Miranda Balcar

@Jeffrey Kushmerek Thanks a ton for this resource!! Can you tell me what the beginning of each period is? We will also likely go to quarterly. Do you base each quarter on the ARR in January? OR Do you start the ARR over each quarter? That's the question Im having a hard time finding an answer to.

Jordan Silverman

@Miranda Balcar this is such a great question and there is not one answer that fits every organization.

When I was running my previous CS team the way I looked at it was:

• My major metric as VP of CS was NRR this is what I as a leader was compensated on
• What were 1 or 2 specific activities that each role within CS could take to help increase our NRR

The metric was different for each role:

• Trainers = Activation Rate
• Customer Service = CSAT
• Etc.

I would suggest choosing 1 or 2 metrics that you want your CSMs to take to help increase whatever your CS northstar metric is.

A few ideas:

• NPS
• Health Score
• Referrals
• NRR
• Logo Churn
• Pipeline created for sales

Like @Jeffrey Kushmerek we measured monthly and bonused quarterly.

Jeffrey Kushmerek

@Miranda Balcar ARR each quarter. A little more work but its the only way to go

Miranda Balcar

@Jordan Silverman What did you base each month's NRR on? The beginning of the year ARR? (Nov 2023 compared to Jan 2023?) Or did you start over each month? (Nov 2023 compared to Oct 2023?) Or something else? There's not a consistent answer out there on how best to do it.

MichelleNovak

@Jeffrey Kushmerek - the Comp Plans doc you shared is terrific!

You have a stat in there which says "an average of 16% of new recurring revenue should come from upselling to existing customers". Is that an industry benchmark? If so, where did you source it. That would be incredibly useful to share as we revise our own comp plan. Thanks!

Jordan Silverman

@Miranda Balcar we were a bit easier - we worked with small businesses so 90% of our customers paid us monthly. Because of that we did end of previous months MRR. I would say base it on your customer base and how they pay you.