Myth: 80/20 Base-Variable Comp Split is Optimal for CSMs

With Gillian Heltai, CCO, Lattice

Recently, I had the pleasure of speaking with Gillian Heltai, Chief Customer Officer at Lattice. Gillian’s 15 years of CX and Sales experience was foundational to her perspective rooted in both experience and optimism.

In a candid Q&A, she shared with me her CS journey, her take on CS compensation structures, the impact of automation on CS; and busted some myths along the way. Read on for an expert lowdown on Customer Success in seven straight questions!  

1.  What’s your most unpopular CS opinion? The biggest myth you think needs to be challenged?

That an 80/20 base-variable split is a good comp structure for Customer Success reps.

It’s by far the most common compensation design for CSMs. But here’s the thing – it doesn’t work.

It is just not enough money to motivate reps. And it makes CSMs feel entitled to earn their variable/bonus and disgruntled when they don't. 

I believe that if the role is renewal or cross-sell heavy, the variable portion should be much higher. 

However, if the role is more customer service or product-enablement-focused, it should be lower. You could even have an entirely base comp structure, depending on the sophistication of your measurement and target setting.

2. Tell us about your journey into Customer Success.

Early in my career, I bounced back and forth between services and sales roles. As the CS function gained traction in the late 2000's, it naturally drew my attention.

CS is essentially a hybrid of sales and service. At the end of the day, my work has always focused on the customer. I have always drawn my energy by spending time with customers. So whatever role brings me closest to customers is bound to capture my interest. 

So that’s really defined my relationship with CS.

3. What CS career advice would you have given to Gillian 10 years ago?

1. Just focus on doing great work.
Crush your KPIs and be the best person on your team. Simple. 

2. Be proactive. Seek out special projects.
Don't sit around waiting for exciting work to be offered to you. Ask your boss what you can help with. Better yet, identify something that needs attention and offer to work on it. 

3.  Lead before you manage. 
Understand that leadership is so much more than managing a team.

Support your teammates.  Bring energy to the room.  And always, always, think about how your behavior and actions can lead by example. 

4. For people managers, do what it takes to build the highest performing team. 
This means you need to learn to be exceptional at hiring, firing, and developing folks on your team. 

And lastly, I can’t stress this enough…

5. Be THE voice of the customer within the org.
Own the customer voice—loud and clear—within and across the organization. You owe it to your customers and your role. 

4. Why does an organization need to invest in Customer Success? How would the CEO and the rest of the leadership team define success for CS?

Identifying a DRI (a Directly Responsible Individual) within the organization who is accountable for a customer's success and satisfaction is extremely powerful - that is Customer Success. The north star measure of success for CS is Net Retention. 

CS is also important to the org because it represents the Customer Voice within the organization. That is just so important.  I've heard CEOs ponder if we really need CS representing VoC or if the Product org could be responsible for that directly, but in my experience I have found a Customer Success team is much better and more focused at listening to customers and advocating for their needs. It’s also about creating that healthy tension internally -- having CS and Product debating what the customer needs.

5. Next year and beyond, what is the future of CS as you see it? How will AI impact CS?

CS is having an identity crisis right now. 

Leaders are looking at the CS job function with a critical eye and trying to determine the ROI. This is particularly true when CS doesn't own renewals or cross-sell. Many leaders think that they have over-invested in the CS function. 

Over the next year, I expect we will see organizations correct (and even over-correct)  for this thesis of over-investment. CSM books of business will get bigger and CS/Ops Leaders will scramble to put the data systems and tech stack in place to support it. 

As for AI, I think it has a huge potential role to play in this.  And more broadly in making the entire CS function more effective and efficient. 

6. Does that mean we could be placing a huge emphasis on more automation and fewer humans? Are we looking at more Digital CS initiatives, etc.? 

We have been heading this direction for years.  But the recent tech downturn and the associated focus on efficiency has rapidly accelerated the push for automation and tech-enabled customer interventions. 

And this is a good thing! 

For a while now, organizations have struggled with inconsistent customer experiences. And CSMs have struggled with monotonous job experiences.

That’s going to change. 

With the rapid investment in automation and technology, we will enable much more consistent customer experiences and a higher quality CSM job experience.

That’s definitely a WIN-WIN. 

7. Is there an opportunity to put humans back at the center of the customer value delivery loop? 

This is another huge myth that needs to be busted…that humans are going to be sidelined.

Humans will remain at the center of CS!  

Critical reasoning,  creative thinking, empathy, negotiation. These activities are best when human-led. 

AI and technology are just here to supercharge us humans! :-)

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Big thanks to Gillian for sharing her journey, debunking a few myths, and showing us what's on the horizon.

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