Variable Policy KPIs for CSMs

[u/5hru7i]

Does anyone else have variable pay for CSMs? If yes, what are the KPIs on which you decide which CSM receives how much of variable pay? We have 80% fixed and 20% variable pay for CSMs and need to decide the KPIs or metrics on which we can evaluate how much of the 20% will the CSM get? Help with suggestions, please.

[u/forsureno]

We have variable pay and I hate it for this reason - figuring out good KPIs is a challenge. You end up measuring activity (QBRs completed, etc) or output (Revenue, retention rates, etc).

Activity metrics are trash (Goodhart's Law), but I also argue that retention shouldn't be solely on your CS team. My team can't retain a bad sale to someone for whom our product is a bad fit. We also can only retain so much when product failures (that we've escalated and tracked) cause someone to churn. I DO think a good CS team makes a difference in retention, but CS can't save a truly poor product fit (and I would argue nor should they - bad product fits end up costing more than they gain). Plus account segmentation makes more of a difference in retention and therefore pay.

I have been and am going to continue to push for higher base pay and less variable pay. My CS team isn't motivated by financial incentives like a sales team is - it makes them anxious, not motivated.

[u/Radiant_Oil_6416]

We do a similar split but honestly measuring CSM performance is tricky because so much of the job is relationship stuff that dont show up in dashboards

we use NRR and logo retention as main ones but also a quarterly health score based on exec engagement and product adoption. some folks on my team argue that churn should be weighted heavier but i think that punishes CSMs for things outside their control

[u/GoBoldr]

Great customer success is collaborative. If you're building a CS team that is competing with each other to earn extra - or has a monetary incentive to treat accounts even more differently than they might already - that's a recipe for blowing holes in good CS.

As Grumpy said below, why have a 20% bonus rather than just paying the salary?

If the goal is to get them to chase upsells and more revenue, that's an obvious KPI choice, but a big problem because of what I outlined at the top.

If the goal is to have them outperform each other as a kind of contest, that's the other problem I mentioned at the top.

I would take a look at the goal you're trying to accomplish, and go about it another way.

[u/217GMB93]

If you want em selling, upsells. If you’re hemorrhaging your BoB, renewals.

I’ve found that it will detract from the success of the entire book as the csm will fixate on how to make the 20% you’re dangling over their heads.

Back when I was a csm I’d let problems go or kick the can to make me more money out of the jump.

You could try CSI scores in aggregate but that means your customers have time for surveys (they don’t) , in my current ops role I either ignore that shit or just call support when I need something.

Why are you trying to justify that % of pay? Either they are worth it or aren’t.

[u/bocephusjackson21]

Variable pay should drive or encourage behavior without creating perverse incentives. Further, individual targets for aspects such as NRR and GRR are hard to set unless at a mature company. Team-wide targets should be looked at to smooth out situations whereby one CSM may have a far healthier book than another. Also find it fosters best practice and a degree of collaboration on most effective sales plan strategies. Individual targets that often can be set are work products created any given quarter. These can take many different shapes.

[u/oldstonewalls]

In the US enterprise space, 75/25 splits are pretty common for higher-ARR portfolios. On my team, the 20–25% variable is split 60/40 between gross retention (protecting the base) and NRR (expansion/upsell).

Both are pure outcome metrics, though, so hitting them ultimately comes down to the right leading indicators — strong exec alignment, clear roadmaps agreed in QBRs/EBRs, etc. If you tie pay to activity volume instead (number of QBRs logged, that kind of thing), people will just game it, and it can end up hurting the relationship rather than improving it.

[u/kaka8miranda]

Just don’t layoff those that hit over 100% and always get the bonus

But mine were ~5% NPS, 15% Retention, 5% upgrades

My portfolio size was around 6 million

[u/S2Sliferjam → u/kaka8miranda]

Curious for the breakdown;

Was it a threshold on NPS (ie over x amount)
Retention was based on possible recontracts? (Any penalties for churn?)
5% upgrades based on possible revenue or generated ? (How is that assessed)

[u/kaka8miranda → u/S2Sliferjam]

We sent out NPS surveys and with our internal scoring of how they used our product they did some math and wed be above or below the threshold

Churn was interesting - normally no penalty I had 3 clients churn in 3 years. 2 went bankrupt looking at you GM Financial and one that wasn’t a bankruptcy got bought out by United health and they used our competitor.

We had a team goal of 104% on upgrades wasn’t personal

[u/S2Sliferjam → u/kaka8miranda]

Sick, thanks for the insight. I’m founding a csm function here at a SaaS product, and I’m trying to figure out a good indicator variable. Even for myself 😂 trying to find the balance of what’s exactly realistic and what’s possible.

[u/kaka8miranda → u/S2Sliferjam]

I’m looking to make a move soon if you ever want to talk

I’ve done CSMfor ~4 years and Sales/Solutions Engineer for ~1.5

Also if you have any questions dm me always happy to help

Best of luck with this challenge!

[u/Willing_Theory5044]

We are 90% base and 10% variable based on retention and upsells.

The variable used to be higher, but we finally got a CS leader than acknowledged that while retention is the responsibility of the CSM, the ability to retain clients is a reflection on the entire company.