Wanted to get some insight on some KPI changes I'm thinking of making for my CSMs. Specifically -- I

To get into some details. My CSMs are more non-traditional. Here's a breakdown of their role/responsibilities:

Our product is a small part SaaS and a large part service, they own onboarding for the SaaS piece, and initial adoption
They also own fulfillment which is the service piece and the largest part of their day to day and they're biggest KPI is revenue recognition
They do not have to attend business reviews, the account manager owns the relationship and runs those (CSMs do attend if there are outstanding things to be delivered, but play only a small part)
They're not responsible for renewal
Identify potential upsells (this has been happening naturally, but they are not KPI'd on it though we are tracking CS qualified leads)

Current KPIs are:

Fulfillment Revenue
Onboarding within 30 days
Churn

The reason they're tied to churn now is that when all products are delivered within a certain timeframe of the partnership, churn drops significantly, so if the CSMs don't do their job customers are more likely to churn. That being said, they currently have little to do with the management of the actual relationship (outcomes, building relationships) that it's starting to feeling a little odd. They also try to deliver by month 9, meaning for the last 3 months of the partnership (during renewal talks) they may not even speak to the customer.

That was long, but I have been noodling over this for a while and would love some insights from the community!

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Comments

Arit Nsemo

Thanks, all. The insight is helpful.

@Will Pagden good call out. The KPIs are currently aligned with top line company metrics, with both churn and NRR being north stars, as well as fulfillment revenue recognition.

@Jeff Breunsbach absolutely, we’ve been working on ways for the CSM to stay involved, but right now their role is so specific to fulfillment that we’re trying to find meaningful ways. The best bet is for them to put together plans for year 2, but initially the AM was meant to own that strategy piece. Revenue recognition and fulfillment in contract deliverables is the CSMs most heavily weighted KPI because it’s another key organizational metric.

@Matt Myszkowski yeah, that’s the piece that is missing in our model, the AM/CSM relationship has had some bumps, which is another reason we are holding both to churn as KPIs. If we were a true SaaS business it’d be like KPI’ing your implementation team on churn instead of time to rev rec. We just have a 9-month delivery runway so we need to keep their behavior focused on fulfillment. For more history, we previously did not have fulfillment as a KPI and so the CSM behavior wasn’t going in the right direction.

Overall it sounds like adding NRR might be a good direction to go (though I’m a no-more-than-three KPI fan). I’ll also move forward with some plans on how to keep the CSM involved after delivery so they’re not so out of the mix. I’ve always KPI’d my CSMs on churn in the past, but because of our business structure I think we just need to be more thoughtful about it.

Adam Houghton

@Will Pagden ^^ ?on aligning your team's kpis to the org ones in some way.

@Arit Nsemo - if what csms are doing now is keeping churn low i'm not sure why you'll remove that. there's no reason you can't have both and with lower churn you'll have an easier path to higher NRR. there's also no reason AMs shouldn't also have churn as a % of their plan.

a downstream issue that incentivizing NRR and not churn to watch out for that i've experienced before for is that gunning for a high NRR to hit a target does not mean you have low churn.

Matt Myszkowski

Hi @Arit Nsemo - my response is on the same lines as Will.

The biggest mistake companies and leaders make is creating the KPIs and then question the behaviors. For me you start with the behaviors in mind, then create the KPIs that drive that behavior.

So adding in @Jeff Breunsbach 's point, if collaboration & alignment with the AM team is critical to the customer and business success then a shared NRR KPI works well. I would also think carefully around words like responsibility and accountability. The AM may have the accountability for the renewal transaction but the CSM is responsible for areas of the value delivery ensuring the renewal risk is mitigated.

Will Pagden

Really interesting topic you raise here @Arit Nsemo. What are the overall objective of the business? I tend to try and ensure my KPIs are reflecting those.

For example, if growth is the goal, NRR is great, if its more retention and remain stable, churn may be better!

[Deleted User]

I'll make the assumption that the Account Manager is then compensated for Net Revenue Retention and the Renewal.

We have found that when you can align incentives on a "customer team" then it makes a better working relationship. So if I were in your shoes I'd like to see my CSM compensated on Net Revenue Retention alongside of the Account Manager.

This way, the Account Manager also feels that they can 'count' on the CSM to find upsell opportunities and be invested in the growth of the account.

Side note, for those last 3 months - I'd love to see if there is something of value the CSM can be doing. Working on stuff for Year 2 - bringing to bear a Success Plan that can get buy-in from the customer - developing an industry trends report. From a customer perspective it may feel "clunky" to not talk with my CSM for 3 months and then pick up like nothing happened (It may not be that stark).