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I have written about Customer Success and revenue in previous articles.
Specifically, drilling into the question of why Customer Success fears owning revenue and examining the irrationality of that fear, why owning revenue is a natural extension of what Customer Success does and why it is good practice for the Customer Success executive to own revenue.
This time I want to drill into what “owning revenue” means.
Somewhere along the way Customer Success owning revenue has come to automatically imply that Customer Success Managers (CSMs) own quota.
And by extension, that this is a bad thing for the customer as a CSM cannot act as a trusted advisor and in the customer’s best interests if they focus on the commercial side of the business.
It is unclear to me why these ideas came to be but I do not subscribe to either.
Owning quota does not mean a CSM cannot do right by the customer and owning revenue does not mean that compensation must consist of revenue quota for individuals.
It is not bad when everyone wins
While it is true that compensation plans do motivate behaviours, when the behaviours are the right ones, is owning revenue wrong?
Arguably not if compensation is designed to motivate action that aligns the objectives of the customer, the vendor and the quota carrying individual.
In fact, when objectives are aligned such that the CSM is acting in the best interests of the customer, the vendor and benefiting themselves as well, I call that a pretty smart triple win.
Which compensation model should Customer Success design then?
When I hear that “carrying quota” is a concern I investigate further to see where the issue really lies before eliminating quota as a compensation strategy.
Does achieving quota result in behaviours that drive business value realization for the customer or not?
In other words, do the resulting activities motivated by achieving quota also drive the customer to be successful and achieve their desired results?
Does quota cause internal role conflict or role confusion for the customer because the incentivized behaviour is at odds with the customer’s journey?
Do the people expected to carry the quota have the skills and acumen to achieve it?
If any of these raise red flags then I look at what the root concern is and make adjustments accordingly to align holistically to driving the customer along the successful journey.
If that means adjusting compensation models to reflect more of a group commitment to revenue retention versus individual numbers, or a more traditional revenue number that “reps” (i.e. CSMs) need to attain, then it should be done in the context of what will best align the roles and their responsibilities to that of moving the customer forward in the journey.
Both types of models can work, it is simply a matter of ensuring that the model encourages behaviours that align all interests.
Owing revenue does not necessarily mean owning quota and owning quota does not automatically mean that Customer Success is no longer acting as a trusted advisor.
If compensation models align driving vendor revenue with customer business value realization, and they encourage the right internal behaviours to promote that, then the decision to have quota carrying individuals or not becomes a pragmatic business decision based on available skill sets to carry out the plan.
Start thinking of Customer Success owning revenue as a result of customers gaining business value and staying loyal versus a compensation model, and Customer Success will find the right structure for its resulting compensation model.