What are typical upsell commission plans you've seen?

Kathryn Moore
Kathryn Moore Member Posts: 11 Contributor
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edited July 2020 in CS Org Conversations

Hi all! For CS team members who have the ability to upsell/upgrade customers, what is the commission payout you have or that you've seen? 

Ours has always been pretty generous and we want to make sure we're aligned with best practices. For instance, I've seen some folks talk about commission based on the effort it takes to close (e.g. lower % for additional users versus a new module/widget).

For background, our team receives a base salary plus a 20% bonus based on CS KPIs plus upsell commission. Our ACV for upsells is under $2,000.

Comments

  • gurd3v
    gurd3v Member Posts: 70 Expert
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    edited July 2020

    I was told in the past a rule of thumb would be in general, blended 60% of MRR. Services have a little less, software a little more. We also implemented a clawback for CSM's to protect against bad sales. 

    As an aside, we just started measuring and comping against net revenue retention as well. So if a CSM saves 100% of revenue owned, they get 100% of the portion of their bonus tied to this metric. 

     

  • Jeremy Donaldson
    Jeremy Donaldson Member Posts: 71 Expert
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    edited July 2020

    I think commission goes against the grain for most CS organizations these days.

    Now that I've said that we use a base + commission structure. We are closer to 70/30 in our plans. We keep the plan simple: renewals are paid at one rate and upsells/cross-sells are paid at another with SPIFFs / Bonuses for over 100% achievement. 

    The rates are specific to each reps territory, but as an example a CSM might be paid 1% for renewals (since the CSM owns the renewal process) and .3% for upsells (since CSMs kick upsells to the assigned AE). 

    Inversely, the assigned AE/RSM gets paid less on renewals (giving some incentive for them to be involved in the relationship), but more for upsells/cross-sells (since they own upsells for each account).

  • Ronald Krisak
    Ronald Krisak Member Posts: 48 Expert
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    edited July 2020

    @Jeremy Donaldson Does your commission structure roll up to your CS Directors/VPs, as well, or does all the commission stay with the CSM?

  • Kathryn Moore
    Kathryn Moore Member Posts: 11 Contributor
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    edited July 2020

    Thank you, Gurdev and Jeremy! 

  • Moustafa Fawzy
    Moustafa Fawzy Member Posts: 1 Navigator
    edited July 2020

    Very similar structure to @Jeremy Donaldson however rates for renewal and upsell in Europe (or at least tech) are slightly higher from what I've seen than NA.

  • Brian LaFaille
    Brian LaFaille Member Posts: 10 Contributor
    edited July 2020

    @Kathryn Moore - Are AEs involved at all with expansion? Or is that something your team is fully taking on? 

  • Kathryn Moore
    Kathryn Moore Member Posts: 11 Contributor
    First Anniversary
    edited July 2020

    Thank you, Moustafa!

     

    @Brian LaFaille Our team is fully taking on upsells and cross-sells for existing customers.

  • Brian LaFaille
    Brian LaFaille Member Posts: 10 Contributor
    edited July 2020

    Similar to other responses, I've run an AM team that has had commission percentages for renewal + expansion. These were typically between 1-2% for renewals and 4-5% for expansion. That said, after moving over in full Customer Success, we have our CSMs on a GRR target (with accelerators for regional GRR performance over and above target), but then have spiffs for CSMs for sourcing high quality leads to sales. The Spiff is 1% of a closed, won expansion deal. 

  • Kathryn Moore
    Kathryn Moore Member Posts: 11 Contributor
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    edited July 2020

    Thank you, Brian! That's really helpful. You and others have mentioned the CS team funneling leads to a separate Sales team. This is something we circle back to often as we think through the team's future.

  • Will Pagden
    Will Pagden Member Posts: 99 Expert
    edited July 2020

    I think it varies dependant on software and length of sales cycle. 

    Ive seen CSMs close 3 month long upsell cycles and get no commission and people do transactional deals and get loads.

    In my opinion and what I try to do is tie it back to the companies plans. 
    If the company is looking for high growth trajectory then commission your CSMs on upsell, if it’s looking for high customer retention, commission on renewal.

     

    Whatever you do though, keep it simple, the CSM needs to be able to easily understand what their earning potential is.  

  • Kathryn Moore
    Kathryn Moore Member Posts: 11 Contributor
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    edited July 2020

    Thank you, Will! Great things to consider.

  • Britt Hall
    Britt Hall Member Posts: 11 Contributor
    edited July 2020

    I'm passionate about keeping CSMs out of commercials, so we don't do commissions of any type on closed/won oops. (It's important that CSMs are seen as strategic advisors, not sellers. If the customer thinks their CSM is selling them, that trust is broken. It's the reason CS is separate from account management.)

    Instead, our CSMs are responsible for identifying new opportunities, not closing them. Identification of those opps is part of performance metrics and variable comp. If you want to go a step further, one thing I've seen work well in the past is spiffing a set amount for new opportunities that make it past a particular qualifying stage. Even if the seller doesn't close the deal, the CSM did their part and gets paid out.

  • Kathryn Moore
    Kathryn Moore Member Posts: 11 Contributor
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    edited July 2020

    Great points, Britt! Thank you.