Careers in Customer Success Management are on the rise globally. With more positions opening every day and ever broadening perspectives for career progression paths, it’s no wonder that candidates expect their employers to be competitive in pushing them forward towards professional success.
Employers are tweaking their compensation structures and looking to find the right balance between rewarding high performance, encouraging quality, and attracting top candidates. With the field of Customer Success Management evolving so quickly, it only makes sense that compensation structures get more intricate and precise over time. When considering a job offer, the compensation structure designed for CSMs allows candidates to learn more about the company culture and the perspectives for growth within their department.
Base Salary vs. Variable Compensation
A base salary is not necessarily less attractive than variable compensation. Overall, the total compensation is what indicates how valued the business unit is for the company, and when compared to other departments, it’s what indicates how customer-centric and dedicated to Customer Success Management an employer is. A non-variable compensation plan does, however, indicate a few things. For one, it relates closely to a lack of clarity into KPIs and goals that are set for the team. While variable compensation requires measured, tested, and secure KPIs, a base compensation plan makes sense for early-stage startups and younger Success organizations. Yet, for larger and more established organization, a base salary compensation plan rather indicates a lack of leadership support and hints at a lesser focus on customer-centricity. Finally, a base salary plan is associated with more reactive responsibilities falling in the realm of support and training, whereas more proactive teams that focus on renewals and upsells are associated with variable compensation.
A commission compensation is directly linked to revenue, it often comes in the form of a percentage of revenue the CSM brings to the company. Commission-based variable compensation plans are especially fitting for Customer Success teams that own renewals, upsells, and cross-sells. As long as a KPI is measured and assigned a net dollar value, a commission plan is suited. More often than not, a commission is tied to shorter-term goals - monthly or quarterly - and allocated on the individual basis as opposed to as a team.
Bonuses are sums of money allocated to employees upon completion of goals. While a commission is attributed on the individual basis, bonuses can easily be associated with team goals like improving CSAT or reducing a churn rate company-wide. Bonuses more easily relate to shifting priorities as they are set periodically to impact quarterly organizational goals. Bonuses work best for qualitative goals, and while associating them with quantifiable KPIs - those with a hard dollar value - can be done, it often ends up looking more like a capped commission than a bonus.
Now over to you
An appropriate compensation plan can balance a base salary with variable compensation in the form of both commission and bonuses. Overall, the compensation plan attributed to CSMs is a key indicator of the company culture and that of Customer Success. More than allowing for competitive incomes, a company’s CSM compensation structure indicates what KPIs are valued, what role the Success team plays in the company, at what pace they operate, and whether success of team members is evaluated individually or at the department level.
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