How to compensation Customer Success Managers
November 3 2026 | Edition #36
Dear People person,
Today, I have a special sponsor... Kit
I work at Kit as the VP of People and Operations.
I also write this newsletter and sell digital products and services for HR professionals on Kit, so it's very meta.
If you've ever been interested in monetizing your expertise as a content creator, I encourage you to check us out.
Now, onto the main event: customer success compensation.
In addition to leading HR functions for almost a decade, I've led multiple Customer Success teams with 3 to 30+ people.
Because of that, I've got a lot of thoughts on customer success compensation.
What is a true Customer Success Manager?
βTrue Customer Success Managers (CSMs) should be responsible for retaining and growing revenue from existing customers.
True CSMs should also be compensated for the revenue they bring in.
If a "CSM" doesn't own a revenue target, then they're likely performing a different function (e.g., relationship manager) and should not be compensated for closed won revenue.
So, we should commission CSMs like Account Executives?
βNot exactly. CSMs manage existing accounts and their leader needs the freedom to move struggling accounts to the CSMs who are most capable of saving them.
Adding a commission structure to renewals disincentivizes moves like that and can demoralize your top-performers (if you gave them the hardest accounts that will likely have lower renewal rates).
For that reason, I'm in favor of a team bonus structure for customer renewals.
Why not compensate for Net Revenue Retention (NRR)?
βNet Revenue Retention takes into account both renewals and expansion, or keeping and earning revenue from existing customers.
It's totally possible for two CSMs to hit the same NRR number (e.g., 105%) with very different breakdowns in renewals and expansion.
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And, those two portfolios aren't necessarily equally healthy.
You can see this with something called the quick ratio.
So, renewals matter more than expansion long-term, even though expansion has more short-term upside.
Bonusing or commissioning on NDR treats the two portfolios above as equally valuable when the second is much more valuable to the business.
Separating out a Team Bonus for renewals and individual commission for expansion helps address this while still rewarding upside.
But, only if you have the right ratios.
What's the right pay mix?
βFor CSM roles, you usually want a 70/30 to 90/10 base/variable pay mix.
Personally, I like 80/20 for most mid-market motions.
Within the 20% variable, most organizations will want to weight more heavily towards retention than expansion, but that depends on business stage.
As a starting point to customize, I usually like 75% renewals and 25% expansion.
So, let's say a CSM has a $150k on target earnings (OTE) with an 80/20 pay mix.
That'd be $120k base and $30k variable.
Then, you'd take that $30k variable and split it into 75% or $22,500 expected to come from a team renewal bonus and $7,500 expected to come from expansion commissions.
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While the expansion is the smaller portion, if commissions are uncapped at 4-6% per deal, it still has more upside.
Closing Thoughtsβ
We've been deep into compensation for a few weeks now.
Don't worry, next week we'll be moving on to a new topic.
It's almost no one's favorite, but it is really important... how to conduct a reduction in force (RIF).
Until then,
Melissa
P.S. As always, this newsletter represents the opinions of one People person. It should not be construed as legal or financial advice. If you have questions about compensation plans, consult a qualified professional.
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