In this clip we drill into the approach Luke uses to incentivise his team, specifically so that they can win. As 'winning' creates the right mindset and drives the right behaviours. And the right behaviours lead to the right result.
🟢 Traditional comp structure as the base
🟢 The importance of giving CS teams the chance to 'win'
🟢 Basing additional comp on product functionality that retains customers
🟢 The decision to comp on platform adoption on a recurring basis
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Full Article
In today's competitive business landscape, customer success has emerged as a critical function for driving long-term growth and profitability. Customer success managers (CSMs) play a pivotal role in ensuring that customers derive maximum value from a company's products or services, ultimately leading to higher customer satisfaction, retention, and expansion. As such, incentivizing CSMs has become a strategic imperative for organizations seeking to foster a customer-centric culture and achieve sustainable success.
The rationale behind incentivizing CSMs is multifaceted. First and foremost, it aligns their interests with those of the organization, motivating them to go the extra mile in delivering exceptional customer experiences. By tying their compensation to customer success metrics, CSMs are incentivized to proactively identify and address customer pain points, facilitate seamless onboarding and adoption, and foster long-lasting relationships built on trust and value delivery.
Furthermore, incentive programs can help attract and retain top talent in the competitive customer success job market. Top-performing CSMs are highly sought after, and offering attractive incentive structures can position a company as an employer of choice, enabling it to build a high-caliber customer success team.
Common incentive structures for CSMs include a combination of base salary and variable compensation tied to specific performance metrics. These metrics may include customer retention rates, expansion revenue, adoption of key product features, customer satisfaction scores, or a combination thereof. By aligning incentives with desired outcomes, organizations can effectively drive the behaviors and actions that contribute to customer success.
Incentive programs can also be designed to reward both individual and team performance, fostering a collaborative and supportive environment within the customer success organization. Team-based incentives encourage knowledge sharing, cross-functional collaboration, and a collective commitment to delivering exceptional customer experiences.
Effective incentive programs should strike a balance between short-term and long-term goals, ensuring that CSMs remain focused on sustainable customer relationships and value creation. Additionally, organizations should regularly review and refine their incentive structures to adapt to changing business priorities, market dynamics, and customer needs.
At Deel, customer success managers are compensated through an 80/20 split model, where 80% is a base salary and 20% is variable pay or incentive compensation. This split aims to provide a stable income foundation while also motivating customer success managers to drive desired behaviors and outcomes through performance-based incentives.
The base salary component ensures that customer success managers receive a reliable and competitive fixed income, recognizing the core responsibilities and value they bring to the organization. This base pay is typically determined by factors such as experience, skills, and industry benchmarks.
The remaining 20% of the compensation package is variable, allowing customer success managers to earn additional pay based on their ability to meet specific goals and metrics. This incentive pay is directly tied to the level of customer implementation and adoption of Deel's key features and services.
At Deel, customer success managers are compensated using an 80/20 split between base salary and incentive pay. This compensation structure provides a stable base income while also creating opportunities for customer success managers to earn additional pay through performance-based incentives.
The 80% base salary component ensures that customer success managers have a reliable income stream, reducing financial stress and allowing them to focus on delivering exceptional service to customers. This base pay recognizes the essential role customer success managers play in fostering strong customer relationships and driving customer retention.
The remaining 20% of compensation is tied to incentives, which are designed to motivate customer success managers to go above and beyond in their efforts to maximize customer value and adoption of Deel's key features. By aligning a portion of their pay with specific performance metrics, customer success managers are incentivized to prioritize behaviors that directly contribute to customer success and the overall growth of the business.
This split compensation model strikes a balance between providing financial stability and creating a performance-driven culture where customer success managers are rewarded for their ability to drive tangible results. By offering both a competitive base salary and the potential for additional earnings through incentives, Deel aims to attract and retain top talent in the customer success field while fostering a culture of continuous improvement and customer-centric excellence.
At Deel, the concept of a "golden customer" is central to their incentive structure for customer success managers (CSMs). A golden customer is defined as one who has activated and is actively using at least 10 of Deel's core product features that differentiate the company from its competitors.
To determine if a customer qualifies as golden, Deel has identified around 40 key features that set their product apart. These features likely span various aspects of their offering, such as payroll management, compliance, international hiring, and employee benefits administration. If a customer is leveraging at least 10 of these features, they are considered a golden customer.
By tying incentives to the golden customer status, Deel aims to encourage CSMs to drive deeper product adoption and utilization among their assigned accounts. The more golden customers a CSM has in their portfolio, the higher their potential incentive earnings. This approach aligns the interests of CSMs with Deel's goals of maximizing the value delivered to customers and fostering long-term customer relationships.
At Deel, customer success managers have the opportunity to earn substantial bonuses based on the percentage of their portfolio that achieves "Golden Customer" status. This status is awarded to customers who have activated and implemented at least 10 of Deel's key differentiating features.
The incentive tiers and corresponding bonuses are structured as follows:
This tiered bonus system serves multiple purposes. First, it provides a clear and motivating target for CSMs to strive towards, incentivizing them to drive deeper product adoption and implementation among their customers. Additionally, the recurring monthly bonus for maintaining the 25% Golden threshold helps reinforce and sustain those desired behaviors over time.
Moreover, the bonus structure is designed to disproportionately reward top-performing CSMs who excel at driving value for their customers. By tying bonuses directly to the percentage of their portfolio achieving Golden status, the highest compensations are reserved for those who consistently deliver exceptional results.
Deel's innovative incentive structure for customer success managers is carefully designed to encourage specific behaviors that directly contribute to customer retention and satisfaction. By tying bonuses and recurring incentives to the adoption of Deel's key differentiating features, the company aims to motivate CSMs to actively promote and ensure the successful implementation of these features within their customer accounts.
The 'Golden Customer' concept, which recognizes accounts that have activated at least 10 of Deel's core features, serves as the foundation for this incentive model. By setting tiered bonus levels based on the percentage of a CSM's portfolio that achieves 'Golden' status, Deel creates a powerful incentive for CSMs to prioritize feature adoption and utilization among their customers.
This approach acknowledges that customer retention is not merely a passive state but rather the result of ongoing engagement, value delivery, and effective utilization of the product's capabilities. By incentivizing CSMs to actively drive feature adoption, Deel is encouraging behaviors that directly contribute to customer success and, consequently, retention.
Moreover, the recurring nature of the incentives, where CSMs receive ongoing monthly bonuses for maintaining a certain percentage of their portfolio as 'Golden,' reinforces the importance of sustained customer success efforts. It discourages a short-term mindset and instead fosters a long-term commitment to ensuring customers continue to derive value from Deel's platform.
Ultimately, Deel's incentive structure aligns the interests of customer success managers with those of the company and its customers. By rewarding the behaviors that drive customer success and retention, Deel is not only motivating its CSMs but also creating a virtuous cycle where satisfied customers are more likely to remain loyal and continue their partnership with the company.
Luke Ferrel used a vivid analogy to illustrate the challenges and potential rewards of being a customer success manager. He likened the role to that of a goalkeeper in soccer or football. As a goalkeeper, your primary responsibility is to prevent the ball from entering the net. If you successfully stop every shot on goal, you've merely done your job - it's the expected outcome. However, if even a single ball slips past you, it's considered a failure on your part.
The analogy highlights the high-pressure, high-stakes nature of customer success management. A CSM's role is to ensure the successful implementation, adoption, and ongoing satisfaction of their assigned customers. If a customer remains content and renews their subscription, the CSM has fulfilled their core duty. Yet, if a customer churns or becomes dissatisfied, it's often perceived as a shortcoming by the CSM, regardless of the circumstances.
Despite the inherent challenges, Ferrel's analogy also underscores the potential for CSMs to truly excel and be rewarded for their efforts. Just as a goalkeeper who makes multiple outstanding saves can be celebrated as the game's hero, a CSM who goes above and beyond to drive customer success can be recognized and compensated accordingly. By incentivizing CSMs to pursue specific goals and behaviors, Deel empowers them to be more than just gatekeepers – they can actively shape customer outcomes and be rewarded for their exceptional performance.
Deel's incentive structure for customer success managers is designed to disproportionately reward top performers. By setting tiered bonuses based on the percentage of a CSM's portfolio that achieves "golden" status, the compensation model provides greater upside for those who excel at driving customer adoption and retention.
The tiered bonus system, with payouts of $1,000, $800, and $1,200 for achieving 25%, 50%, and 75% golden portfolios, respectively, creates a powerful incentive for CSMs to go above and beyond. This approach recognizes and financially rewards the extra effort required to deeply engage customers and maximize their value from Deel's differentiated features.
Moreover, the recurring $400 monthly bonus for maintaining a golden portfolio incentivizes sustained high performance, rather than just short-term wins. This ongoing reward helps retain top talent by ensuring that exceptional CSMs continue to be compensated commensurately with their impact on customer success.
By disproportionately rewarding top performers, Deel's incentive model serves as a powerful retention tool, keeping the best CSMs motivated and engaged. It also creates a culture of healthy competition, where CSMs are driven to continuously improve and learn from their high-achieving peers.
Overall, this approach aligns compensation with the behaviors and outcomes that drive customer success and business growth, while ensuring that Deel's top talent is appropriately recognized and compensated for their outsized contributions.
Deel's approach to incentivizing customer success managers emphasizes rewarding the specific behaviors that drive customer retention, rather than solely focusing on retention metrics themselves. The rationale behind this strategy is to cultivate a proactive mindset among CSMs, encouraging them to take ownership of customer relationships and actively promote the adoption of Deel's differentiating features.
By tying incentives to the successful implementation and activation of key features, Deel aligns the interests of CSMs with the company's broader objectives of delivering value and fostering long-term customer satisfaction. This approach recognizes that retention is often a byproduct of consistently providing an exceptional customer experience and maximizing the value derived from the product or service.
Furthermore, basing incentives on tangible behaviors allows for more transparent and objective performance evaluation. Rather than relying solely on subjective assessments or lagging indicators like churn rates, Deel's model rewards CSMs for their direct contributions to customer success, such as feature adoption and utilization.
Ultimately, Deel's focus on incentivizing behaviors aims to create a culture of continuous improvement and customer-centric mindset within the customer success organization. By empowering and motivating CSMs to proactively drive value for their customers, Deel increases the likelihood of long-term customer satisfaction and retention, while also fostering a high-performing and engaged workforce.
While Deel's approach to incentivizing customer success managers has proven effective in driving desired behaviors and rewarding top performers, there are potential drawbacks and considerations to be mindful of:
To address these potential drawbacks, Deel could consider the following:
By proactively addressing these considerations and maintaining a flexible, data-driven approach, Deel can continue to leverage the power of incentives while mitigating potential drawbacks and fostering a culture of customer-centricity and continuous improvement.
Deel's innovative approach to incentivizing customer success managers is not a static, one-size-fits-all model. Like any well-designed system, it is subject to continuous evaluation, adaptation, and refinement based on real-world feedback and experience.
As the company grows and expands into new markets or industries, the specific features or criteria that define a "golden customer" may need to be adjusted. Additionally, the weightings or thresholds for different bonus tiers could be recalibrated to better align with evolving business objectives or market conditions.
Moreover, the incentive model may need to account for variations in customer portfolios or account sizes. For instance, a customer success manager with a larger portfolio of smaller accounts may face different challenges and require different incentives compared to one managing a few large, complex accounts.
Deel's leadership recognizes the importance of staying agile and responsive. They are committed to regularly reviewing the incentive program's effectiveness, gathering input from customer success managers themselves, and making data-driven adjustments as necessary. This iterative approach ensures that the incentive model remains relevant, fair, and effective in driving the desired behaviors and outcomes.
Additionally, as the company matures and gains more historical data, the incentive model may incorporate more sophisticated metrics or predictive analytics to better align customer success efforts with long-term customer lifetime value or other strategic objectives.
Ultimately, Deel's customer success incentive program is not a static rulebook but rather a living, breathing framework designed to evolve and adapt to changing circumstances and learnings. This commitment to continuous improvement and alignment with the company's strategic goals is a hallmark of a forward-thinking, customer-centric organization.
Deel's approach to incentivizing customer success managers offers a unique and performance-driven model. By tying a significant portion of compensation to the adoption of key product features and the achievement of "golden customer" status, Deel aligns the interests of its customer success team with the company's goals of driving product usage and customer retention.
The multi-tiered bonus structure rewards top performers disproportionately, recognizing and retaining the most valuable customer success managers. This approach acknowledges that not all CSMs will perform equally, and it incentivizes them to strive for excellence by actively promoting the adoption of differentiating features within their customer portfolios.
Moreover, Deel's model shifts the focus from mere retention metrics to the specific behaviors that drive retention, such as feature adoption and customer engagement. By rewarding these behaviors directly, the company encourages its customer success team to prioritize activities that create long-term value for customers and the business.
While this incentive model may not be suitable for every organization, Deel's approach offers a compelling example of how companies can creatively align customer success incentives with their strategic objectives. By fostering a culture of continuous improvement and rewarding top performers, Deel aims to build a high-performing customer success team that drives sustainable growth and customer loyalty.
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