- Evaluate your organization’s needs. If customer service is a critical component of your business, incentivize sales reps who excel at it.
- Measure success appropriately. When basing part of sales representatives’ pay on customer success, make sure that the approach to measuring success is sound, clearly understood by the representatives and consistent with company strategy.
- Tying the metric to sales compensation. Once an organization begins to track customer satisfaction data, tying pay to the metric is one of the best ways to encourage employees to focus on increasing customer satisfaction.
- Constantly review the plan. World-class organizations regularly review customer service’s role in sales compensation plans and makes decisions periodically about how best to improve overall levels of satisfaction and financial results.
In today’s services economy, buyer experience is a key sales differentiator and a driver to future sales. That fact is all-important to customer success, but how can your organization best influence the key factors – consumer confidence and customer satisfaction -- that power it? One beneficial strategy is to consider making customer success metrics a component of the sales incentive compensation plan.
As a first step to examine whether customer success should figure into incentive design, answer these three questions:
- How important is customer success to the sales organization?
- What is the best way to measure this success?
- Where does this success or satisfaction fit in with the organization’s incentive plans?
Gauging the Importance of Customer Success
Focusing on customer satisfaction requires investment in resources and a financial commitment.
To weigh the cost/benefit ratio of a customer success component, consider the organization’s strategic objectives. If improved customer success helps achieve strategic goals, targeting a customer success measure is more likely to pay for itself in terms of higher sales usage, service consumption and repeat sales.
Measuring Customer Satisfaction Success
Once the decision is made to base part of sales representatives’ pay on customer success, it’s crucial to make sure the approach to measuring success is sound, clearly understood by the representatives and consistent with company strategy.
Measures of customer success should be accurate and timely, focus on areas that are key to the company’s overall success and provide a line of sight between an employee’s efforts and the incentive payout. Specific measures will include:
- Organizationwide customer feedback. The clearest measurement of satisfaction and the most direct feedback comes straight from customers. Surveying current customers about their experience and understanding of the product and service they just purchased can provide a great deal of information about the quality and alignment of the organization’s buyer and seller journey. Using a scoring mechanism and then tying a portion of target incentive to the scores gets immediate attention from the sales organization and will affect the bottom line. This works well when you can’t track success to an individual-seller level.
- Analysis of customer-purchase data. Customer habits and purchase data can be used to measure satisfaction. Customer behavior is typically a strong indicator of overall sales process satisfaction. Product returns, repeat purchases, cancellations and length of the buying cycle are all strong proxies for satisfaction and dissatisfaction. This approach can be more accurate than others in the long run because it measures customer behaviors rather than opinions. Additionally, it targets the focus on a particular process step in the customer experience. When an organization considers individual sales process steps and subsequent customer behaviors, it makes it easier to tie a representative’s effort, and in turn their pay, to customer satisfaction and success.
- Individual contribution and customer success. The most effective and comprehensive approach a company can use to measure satisfaction is to link a sales representative’s role requirements to a direct customer’s satisfaction scores. Accountability for tasks or outcomes that affect customer satisfaction becomes clearer.
Examples of such tasks may include:
- Providing easy-to-understand product descriptions.
- Clearly explaining pricing and order processing.
- Responding to customers’ follow-up questions within 12 hours.
- Visiting the customer site to facilitate communication and ensure customer needs are being met.
- Overseeing delivery — formally or informally — to monitor contract progress and customer satisfaction.
If the representative completes the assigned tasks and the result is a positive outcome (high customer satisfaction), their performance is measured positively. If the results are negative (low customer satisfaction), so too is the performance measurement.
Selecting the right measurement approach requires understanding the amount of direct impact a single contributor has on the customer’s level of satisfaction. Additionally, after selecting an approach, an organization needs a benchmark against which to compare its performance. Benchmarks might include higher retention rates, deeper product penetration, higher overall customer satisfaction or loyalty scores for customer-facing personnel.
Linking Customer Satisfaction to Pay and Performance
Once an organization begins to track customer satisfaction data, tying pay to the metric is one of the best ways to encourage employees to focus on increasing customer satisfaction.
Making the link can be done by either tying a share of target incentive to the satisfaction of its customers, or by decelerating or accelerating pay based on scores. Either method must be carefully considered based on the level of strategic emphasis placed on the measure and the organization’s ability to measure customer satisfaction.
By creating a separate measure and linking a share of target incentive to it, customer satisfaction and success becomes one of the most important strategic items for both the organization and the representative. Using customer satisfaction scores to trigger an accelerator or decelerator places less emphasis on the initiative but it can still be effective.
Accommodating Other Options
To incorporate customer success measures into the sales incentive plan, evaluate how consistently and at what interval scores are obtained. For instance, if data aren’t available, not easily linked to a representative’s performance or can’t be gathered on a regular basis that coincides with other measurement and payment periods, it may not make sense to hold a representative accountable for aspects of customer satisfaction that go beyond expected job performance.
Instead, the organization may decide to design a district- or corporate-level measure. With this option, it is important to remember that the representative has less influence and, therefore, less pay should be tied to this measure.
Always Evaluate
World-class organizations regularly review the connection between customer success and performance pay – and it’s much more than a one-time decision. Periodically evaluating the importance of customer satisfaction, the best ways to measure it and its potential to drive customer satisfaction and sales performance can clarify the impact of adding a customer satisfaction measure to the incentive compensation plan.
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