CSM Variable Compensation

@Justin Voellmann If there are no levers the CSMs can leverage to go above 100% NRR, then I would advise setting the variable comp model on GRR. If you have product plans to create an upsell lever, this will help you drive home retention performance while waiting for upsell levers to be created. This can be an effective approach to focus the team on what can be measured and improved.

There's two ways to go about GRR and NRR - Set one target for all portfolios, or customized targets based on portfolios. The latter is the best strategy if current performance varies significant across portfolios or in resource allocation.

One Target for all Portfolios - Pretty simple. Determine what your end-state targeted GRR figure is. Map an incremental plan from where you are to that figure over the course of however many quarters you have to get there. For example, if you are at 80% GRR today, you might up it 5% per quarter till you get to 90%, and then you might up it 2.5% per quarter till you're at 95% or 97.5%. Typically the last few percentages are the hardest to shave.

Separate targets for different portfolios. Imagine your SMB accounts currently retain at 65% GRR, MM at 75%, and Enterprise at 85%, you likely wouldn't be able to give them all the same goal. This is when you can take your company GRR goal, break it down by those segments and reverse engineer a path to the target for each segment. You can have these be separate targets, or you can just go for the same relevant GRR improvement for each segment. The latter would be setting the targets at a relevant 10% improvement compared to current for each segment.

Again, there's lots of ways to do this, and each way has pros, cons, and can be done fairly(and done well).

Some underlying assumptions are that the portfolios might vary in size, but all should be fairly equal in CSM capacity given your engagement model per segment. If you're saying portfolios vary 30-50, and the segmentation and engagement model are the same for all 4 CSMs….. you gotta go solve that problem first - just my opinion. I'm guessing that isn't the reality, but if it is, there's no way you create a variable comp plan that is "fair" and that doesn't cause a bunch of headaches.

In case that is your reality, find an interim solution - like a team-wide GRR goal, and let them know you are addressing the need to balance portfolios so you can properly implement variable comp for the team. It is much better (simper and easier too) to build a CSM capacity framework that lays the foundation for variable comp than it is to build a variable comp plan that fits an inconsistent set of portfolios. The former can be determined(and defended) with math, the latter will always be overly subjective.

Hope this helps. Let me know if I misunderstood something in your original post. Cheers.