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>>There’s a trade-off to this commission plan: the company may pay both the customer success managers & the AEs for expansion. Also, if customers expand by them
by toss1 4y ago
>>There’s a trade-off to this commission plan: the company may pay both the customer success managers & the AEs for expansion. Also, if customers expand by themselves, salespeople may receive commissions without expending more sales effort.
Managers often try to minimize these trade-offs, and it is insanely myopic.
Just because a customer increases their spend without an explicit action by your rep does not mean that you should pocket the commission for yourself/dept/company. Even if the rep actually did absolutely nothing, allowing an occasional "unearned" commission will build loyalty & motivation. More likely, it'll get your reps to focus more on customers who are likely to eventually expand, and also doing the kind of ongoing 'soft' follow-up and account maintenance/monitoring that makes customers more likely to up-convert.
Management, if anything, should be about seeing the long view and incorporating it into the plans. Why it is so rare to do so continuously amazes me.
- carlineng 4y agoFor businesses where a significant percentage of customer LTV is in the expand phase, I'm surprised it's not more commonplace to have AEs take on the role of customer success. The AE usually has a lot of context about the customer that is likely to be lost in the transition to a CSM. Doing this also has the benefit of not needing to pay two people for the expansion.
- notahacker 4y agoThere should be someone tasked with doing the ongoing 'soft' followup and account maintenance in most businesses of this scale anyway. It's just often a different person. Hence the authors' point that compensating two units of the sales team can work out if there's more revenue generated overall (otherwise it probably works out by the initial commissions offered being smaller...)