Responsibility Specialization and Compensation

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​important​The compensation of customer success staff is heavily influenced by the responsibilities they bear. Firstly, as an aside, as of the mid–late 2010s, the compensation models of customer success staff have not yet seemed to wake up to the realities of the importance of customer success in a renewals-based world. If you refer to the revenue growth chart in the introduction of this chapter, and look at the scenarios with differing churn numbers, you can see the deep importance of customer success. That should be reflected in the level of talent you are willing to pay for and the compensation requirements that flow from that. Historically organizations have viewed support and customer success as a cost center to be minimized, rather than considering the opportunity cost of under investment in the function: higher churn rates, lower lifetime customer value, and reduced opportunities for upsell and positive word of mouth.

That said, one of the most important determinants of how you compensate your customer success staff is their commercial responsibility, or its absence. Will your customer success staff be responsible for renewals? Or will an account management staff or even the primary account executive staff be responsible for these? Generally, focusing account executives on new business is the right approach; focusing efforts and not splitting attention is typically the best way to assure that things are done right. AEs that are responsible for renewals often follow the same pattern, showing back up to an opportunity 60 days from renewal—270+ days from the last time they exchanged emails with the client. Approaching a client with the attitude of, “Okay, so catch me up!” is not a recipe for a functional success and renewal motion. The best organizations specialize this responsibility.

Who, then, should be responsible for renewals? There are typically two approaches. Customer Success staff can be responsible for renewals; you might even base part of their compensation, in a variable fashion, on renewals and upsells. The other approach is one wherein responsibilities are split, and Customer Success is responsible purely for customer success activities, like implementations, ongoing support, quarterly business reviews, and so on, but another commercial account manager is responsible for seeking out upsell opportunities and ultimately renewing the business. This latter approach offers the benefit of specialization and eliminates the concern (oft stated but dubious, in my opinion) that success staff can’t “close.”

My take on this is that early on, when there are fewer customers, that level of specialization creates unnecessary overhead. Creating specialization between account executives who are hunting new business and Success and Account Management staff who are farming existing business certainly makes sense—the behaviors and operational tempo of a new-business hunter are very, very different than those of an existing-business farmer. But at the very early stage, specialization between Customer Success staff and Account Management staff creates more complexity and overhead than benefit. Having a class of customer success person that’s responsible for the implementation, ongoing support, quarterly business reviewing, and eventual renewing of customers seems to be the best balance. You get both specialization and the benefit of a rep who’s deeply familiar with the 100, 200, 300 accounts that he is responsible for.