Nick Mehta, CEO of Customer Success leader Gainsight, recently did a short post above on his Top 7 takeaways talking with client success leader for the very first time in-person in a very long time.
These points are so fascinating I thought I d add a couple of ideas on to them.
1. Many have NRR as a high-level company metric
I enjoy having NRR be the # 1 metric for Customer Success. Its what separates Good from Great, and its more impactful that simply owning NPS or a renewal rate. Its also a sign of a fantastic VP of Customer Success when they are willing to register for growing NRR as the # 1 metric and what their variable comp is tried to. I constantly see that as a sign of a great CS leader. Its also among the leading metrics youre graded on by both public and private investors now. Segment it, break it out, and set an objective to drive each sectors NRR up. And per the next point, pay up when you hit the goal!
2. The majority of are adding more “utilize” to their CSM comp plans– one attendee had 40% of the CSM compensation “at risk” with half of that being based upon NRR
As Nick notes below, a classic way to comp Customer Success Managers was an 80/20 compensation strategy. I.e., 80% of their compensation is a base wage, with a 20% boost for hitting NRR, NPS, new reservations from the existing base, and so on objectives. Thats still quite common. However VPs and DIrectors are often registering for more– and trying to find more variable compensation in return.
I like this too. A VP of CS that registers to grow NRR from 110% to say 125% definitely ought to make a 40% reward, not the conventional 20%. Etc.. Thats an excellent offer all around.
3. Others are at 80/20 or 75/25 but transferring to more incentive comp and more based upon NRR.
Once Again, NRR (over NPS, CSAT, logo design retention) seems to be the core North Star metric for CS today, irrespective of the quantity of variable comp. Having an 80/20 strategy of some sort and after that a benefit for striking a bookings prepare from the existing customer base can work well, too. Without having to own the bookings per se (see the next point).
4. While a lot of CS leaders dont own growth, the ones that do really own the entire NRR number
Should CS own growth– i.e., be account managers too? Ive seen again and again what Nick likewise sees– most CS leaders and officers dont truly want to remain in sales. Or they d remain in sales So they dont actually wish to own growth per se. But some do. Some VPs of CS do have a bit of the sales leader in them. And when those ones do desire to own growth, it can be effective. Because case, they own the entire NRR number for the company.
5. In these models, companies need to have a method to manage the quality of brand-new deals; one business measures sales group members based upon the “quality” (adoption/retention) of their new offers
Churn-and-burn and low-quality offers are the bane of Customer Success. I do not view this as huge of an offer as Nick does– I believe this works itself out in the end. However its certainly a stressor, and a great one, when commissions are tied to NRR.
6. Business are beginning to offer NRR goals to every department
If youre not sure how to drive NRR up per se, driving NPS up is an input and it tends to work well as an interim objective.
7. While Marketing hasnt historically been associated with post-sales in a lot of business, that is altering in time as NRR gains in importance
I still cant think, even today, the large majority of SaaS companies post $5m ARR dont have a Customer Marketing function. You need one. More on that here. A Lot Of VPs of Marketing are charged with driving new consumers and new leads and opportunities. However what if your VPM or at least your CMO is charged with driving all brand-new bookings– from both new and existing customers? Think about how your VPM would change their job. They d change it a lot. They d probably put 30%+ of their time– and budget– into the set up base.
Maybe attempt that.
This content was originally released here.
VPs and DIrectors are frequently signing up for more– and looking for more variable compensation in return.
In that case, they own the whole NRR number for the business.
Its definitely a stressor, and a good one, when commissions are connected to NRR.
If youre not sure how to drive NRR up per se, driving NPS up is an input and it tends to work well as an interim goal.
They d probably put 30%+ of their time– and budget– into the set up base.