Customer Reward Structures

I made a $1M ARR mistake in 2024: treating my customer journey as a line & not a flywheel. My revenue flywheel didn't start (& we couldn't have done $500k last month) until I treated our customer journey as a loop. When you first start you think you have it all figured out: Lead -> Warm Lead -> Sale -> Customer. But I was missing a step & it cost me. Then I turned that line into a loop by feeding the customer back into our sales process. It's not rocket science: find your happy customers & amplify them. But adding process to it is actually hard. Look at the incentives: - sellers are comped on closing customers - CSMs are comped on keeping customers Whose job is this - Product Marketing? Customer Marketing? the Founders? It's everyones job. If I were a VP of marketing today I would make sure (even with a small marketing team) you're incentivizing someone to surface 5 customers wins/day and cycle them back into the top of your lead funnel. Here are 3 plays we started at Warmly that would have earned me another $1M ARR if I started them a year ago: 1/ Micro grants to customer advocates Find happy champions and offer them $2k in mico grants to be an official advocate. Compensate them for 2x referral calls per month & ask the to be 100% truthful even if its doesn't always make you look good. Push them to screenshare & show *how* they're using you - not just wax about you. 2/ Public posts about wins with independent audits/reviews I think case studies are kind of dead. Can't remember the last time a prospect truly read or referenced one. Real posts from real people are the way to go. We invite agencies and reviewers to get full access to what we sell to give their honest opinion even if its not 10/10. We strive for honesty & transparency as core to our brand and that is recognized in the buying process vs our peers. 3/ Customer love wall in TINY font Screenshot all wins and add them to a never ending scroll page for your reviews (get permission of course). No one trusts G2 anyways, but they will trust an actual public post with their name tied to it On Warmly's page you can literally click into ANY of the LinkedIn posts and go read it for yourself, including the comments. You can connect with the person and double verify they meant what they said. And the best part? TINY font. I have no proof but but we make the font small to fit in more reviews. My hypothesis is that prospects scroll down and are impressed at the sea of happy champions and think "Dang I need to zoom in just to see all these great reviews!" Check out our customer page on our website! Warmly, Max #marketingtips #marketing

IMO more orgs should tie AE comp to what happens AFTER signature. I mean, your reps get paid at close. Then they tend to disappear. CS inherits an overpromised deal. Customer realizes 8-week implementation was actually 16 weeks. ROI projection was complete bullshit. 6 months later customer submits their churn notice and your rep's already spent their commish on a bunch of On Clouds and a fancy humidor. Comp plans reward the signature. Period. Doesn't matter if customer goes live. Doesn't matter if they hit their goals. Doesn't matter if they expand or churn. Just get the signature and move on. So that's exactly what your reps optimize for. You can easily set up a 4-tier commish structure that fixes this: Tier 1 - Base commission at signature: 8% of ARR. - Rep closes deal. - Gets baseline comp immediately. Tier 2 - Go-Live bonus (+1%): Total 9%. - Customer completes onboarding within agreed timeline. - Must be actively using core features. - CS confirms product deployment. Tier 3 - Success metric achievement (+1%): Total 10%. - Customer hits outcome from business case within 90 days. - Examples: cost savings target, efficiency gain, revenue goal, etc. - Must be documented and verified. Tier 4 - Expansion unlock (+2%): Total 12%. - Customer adds seats, upgrades tier, or buys additional product within 12 months. - Minimum 20% ARR expansion from original deal. - Rep also earns standard 8% commission on the new expansion ARR. So, what changes with this? Reps start asking different questions during sale: - "What does success look like 90 days after launch?"  - "Who's responsible for implementation on your side?"  - "What would cause this to fail internally?" They stop overselling. They qualify harder. They care about customer readiness because their comp depends on it. They stay engaged post-sale. They check in with CS. They help remove blockers. They build relationships that lead to expansion. An SA member we worked with rolled this out a bit less than 18 months ago. Churn dropped 22%. Implementation time dropped 31%. Expansion revenue doubled. Same reps. Same product. Different incentives. Some reps pushed back: "Why should I get penalized if customer doesn't implement properly?" The answer: you're not getting penalized. You're getting baseline commission at close. Bonus is for making sure they succeed. If you're consistently selling to customers who can't implement or won't see value, that's a qualification problem. Fix it. Best reps loved it. They were already doing this work. Now they get paid for it. Mediocre reps weren't huge fans. They were used to dumping deals on CS and running. Suddenly they had skin in the game. Three of them quit. Fine. Don't let the door hit you in the ass on the way out. If you pay reps to care about customer outcomes, they'll start caring about customer outcomes. Plus, your CS team will appreciate not inheriting disasters anymore.

🔥 Rethinking Channel Partner Incentives for 2024! 🚀 As an industry leader in channel strategy and transformation, I’ve witnessed firsthand how the landscape of channel incentivization is evolving rapidly. With rising competition and a shift towards a digital-first approach, traditional cash rewards are no longer enough to keep partners engaged. Here are some of the strategies that are resonating and driving real impact: Experiential Rewards Over Cash Bonuses 🌍💥: Incentives like international trips, exclusive events, or unique experiences (think Queenstown, New Zealand!) are making a significant impact. It’s no longer just about monetary rewards; it’s about creating unforgettable experiences that deepen emotional connections with the brand. Real-Time Digital Rewards Through Apps 📲: Leveraging CRM and loyalty apps, many companies are now offering instant, real-time rewards. Channel partners can earn points for hitting milestones and redeem them instantly for products, gift cards, or special perks. This gamified approach boosts engagement and accelerates sales. Recognition and Social Validation 🏅: Channel partners today value recognition as much as they do rewards. Publicly celebrating top performers on social media, featuring them in brand stories, or awarding them exclusive titles creates a sense of prestige and drives a stronger sense of loyalty. Tiered Incentive Structures 🏆: Building tiered programs with escalating benefits (e.g., Bronze, Silver, Gold) motivates partners to strive for the next level of recognition and perks. This healthy competition fuels performance and fosters deeper commitment. Sustainability-Focused Incentives 🌱: As sustainability becomes a core focus, aligning incentives with eco-friendly initiatives (like reducing carbon footprints) is gaining traction. It’s a way to show that we care about both business growth and the environment, creating a win-win for everyone. Partnerships Beyond Sales 🤝: It’s time to look beyond pure sales metrics. Companies are now rewarding partners for collaboration, customer feedback, and brand advocacy. Building a culture of shared success strengthens relationships and sets the stage for long-term loyalty. My Take: Having implemented these strategies, I’ve seen how they not only drive engagement but also transform channel relationships into true partnerships. The key is to make your incentives meaningful, memorable, and aligned with the values of your channel partners. It’s about creating a shared journey towards success. 💬 What strategies have you seen working in your industry? Let’s discuss and learn from each other’s experiences! 👇 #ChannelIncentives #SalesStrategy #CustomerEngagement #LeadershipInsights #Partnerships #Transformation

I recently conducted an informal poll about commission splits between Customer Success Managers (CSMs) and Sales teams, and the results were insightful. Over 95% of companies reported that Sales typically does not take a commission on renewals unless the renewal is especially challenging, often termed a "bounty renewal." In these cases, the Account Executive (AE) receives a commission percentage that does not impact the CSM’s compensation. Other key findings: Commission on upsells and renewals generally represents about 30% of a CSM's total compensation. Companies usually calculate the exact commission percentage by dividing this 30% target compensation by the total Annual Recurring Revenue (ARR) managed by the CSM. How should you determine the right metrics for compensation? Most organizations follow an evolving model: Early-stage Customer Success teams often base commissions on leading indicators like product adoption milestones and completed Executive Business Reviews (EBRs). More mature teams shift to lagging indicators like retention rates, expansion revenue, and Net Revenue Retention (NRR), once they've established effective leading-indicator processes. Examples of Metrics to Consider: Leading Metrics: Scheduled vs. completed Quarterly Business Reviews (QBRs) or EBRs Achievement of specific product adoption milestones Lagging Metrics: Net Revenue Retention (NRR) – the most commonly used metric Customer Retention Expansion Revenue Advocacy (typically better suited as annual or SPIFF-based metrics due to scalability challenges) To illustrate, here’s a clear and simple compensation structure example: Criteria for Achieving 100% Bonus: 90% Renewal Retention (50% weighting) 125% Net Revenue Retention (50% weighting) This approach focuses clearly on two primary goals: retaining customers and expanding revenue. Separating the retention goal ensures that significant churn isn't obscured by substantial upsells. For example, a CSM achieving 85% retention and 115% NRR would achieve approximately 93.22% of their total bonus goal. This simplified structure provides clarity and alignment, motivating CSMs to prioritize both customer retention and growth.

I've seen many loyalty programs end up dead on arrival. But I've also seen the top 10% that drive business-changing LTV.   These are the 3 best-practices that differentiate DOA programs from winning ones:   1/ Match the program to your financials   A merchant recently came to us stressed after their loyalty program (not using Smile) nearly bankrupted them. They were giving away 10% back on every purchase because "generous rewards mean happy customers," right?   Wrong.   Their margins couldn't handle it, and they were losing money on every sale.   On the flip side, we see some brands go the opposite direction—offering 1% back and wondering why nobody cares. Well, nobody cares because they are getting better rewards from their credit cards.   You need to strike the right balance and build a program that protects margins while incentivizing customers enough and making them feel valued.   That starts with analyzing the financial profile of your brand and modeling a program around it:   • AOV • Purchase frequency • Profit margin • LTV drop-off points • Number of purchases before churn   Your loyalty structure needs to work within these realities. Without this, your program’s either too weak to drive behavior, or too costly to sustain.   2/ Don’t hide your program - flaunt it   We worked with a brand that had an incredible loyalty program. Amazing rewards, perfect structure, the works. But there was one problem: their customers had no idea it existed.   They'd buried the program signup in their footer and wondered why adoption was at 3%.   As harsh as it sounds, if your customers can’t see the loyalty program, it might as well not exist.   Visibility drives adoption. That’s why we encourage brands to surface their program at every key touchpoint:   • Product pages • Checkout • Thank you pages • Customer accounts   Your loyalty program should feel native to your brand, not like some bolt-on afterthought.   3/ Communicate promptly   This is where most brands drop the ball: they launch the program, send a welcome email, and then…radio silence. No follow-up emails. No loyalty promotions. No reward reminders. No updates on point balances.   Sorry to break it to you, but out of sight, out of mind. And no, the banner you put on your website doesn’t count.   What you really need to do is set up world-class loyalty flows in your marketing automation:   • Emails after their first purchase • Notifications when they have enough points for rewards • Updates during bonus promotions or double points weekends • Regular reminders about their growing point balance   —   At the end of the day, loyalty programs either make you money or they don't. These three fundamentals are what tip the scales from expense to investment. 

ManoMano just dropped something 🔥 and every marketplace strategist should take notes. 🛠️ A loyalty program... for DIY and home improvement shoppers. 📣 Say hello to ManoClub, and it’s smarter than most retail programs out there. Here’s why this move is strategically brilliant: 🪜 Two-tier structure keeps buyers coming back 👉 "Member" after your first order = €10 reward. 👉 "TopMember" after just 4 purchases = 3% cashback, free returns, and VIP support. Yes, they’ve gamified trust. And it works. 📲 App engagement built in You earn extra by… downloading the app, reviewing products, and choosing ManoExpress delivery. They’re literally rewarding customer behavior that improves their bottom line. 🎯 Hyper-personalisation with data at the core This isn’t just cashback. It’s a full-funnel strategy to increase LTV, lock in loyalty, and gather granular insight on what customers actually value. 🚀 It’s a marketplace loyalty program done right And it’s rare. Loyalty isn’t easy when you’re not the seller-of-record. But ManoMano is showing how marketplaces can own the customer relationship anyway. 🧠 Takeaway? If you run a marketplace, it’s time to think beyond transactions. Design for lifetime value. Build community. Reward wisely. 👷♀️ Because even in DIY, retention is not a side project, it’s your growth engine. #MarketplaceStrategy #EcommerceInnovation #CustomerLoyalty #ManoMano #LTV #RetailMedia #DIY #MarketplaceGrowth

𝗥𝗲𝘄𝗮𝗿𝗱 𝘁𝗵𝗲 𝘁𝗲𝗮𝗺 𝗮𝗿𝗼𝘂𝗻𝗱 𝗯𝗼𝘁𝗵 𝗽𝗿𝗼𝗰𝗲𝘀𝘀 𝗮𝗻𝗱 𝗼𝘂𝘁𝗰𝗼𝗺𝗲𝘀. "You get what you incentivize for." - Warren Buffett Dr. Scott Blackman transformed a single location medical practice into a thriving operation across two markets. His practice generates twice the revenue of typical orthodontic practices. Private equity firms use his model to scale across multiple sites. Most doctors pay their teams hourly wages. At 5:00 PM, staff lock the doors and stop answering the phones. Dr. Blackman does something different. His team shares monthly bonuses based on patient experience and practice efficiency. When a patient calls at 4:45, his staff takes the call even if it means staying 20 minutes late. They don't care if it runs past 5:00. Their reward system values taking care of that person calling, not watching the clock. This creates a team that takes pride in their work, something many medical practices don't have. Dr. Blackman has very modest staff turnover while the industry averages 20-30%. His team gets nothing but accolades from patients, and there's no fuss or drama because everybody knows their role. Scott's shared bonus system shows what happens when you align incentives with both process and outcomes. Most organizations get this backwards - they build a strategy but their compensation rewards the wrong actions. They'll spend months crafting customer experience strategies, then pay people to optimize for efficiency and speed. They'll talk about going the extra mile, then reward people for leaving at exactly 5:00 PM. This misalignment isn't unique to healthcare. It's everywhere. Call centers measure call duration, then wonder why customer satisfaction scores plummet. Engineering teams get rewarded for tickets closed, then act surprised when customer complaints increase. 𝗧𝗔𝗞𝗘𝗔𝗪𝗔𝗬: When you pay people by the hour, they watch the clock. When you pay them for patient outcomes, they take the late calls. The difference is in what you reward. - - - P.S. If you liked this post, you'll love my 2-minute newsletter. Subscribe here > https://lnkd.in/g2T7Htfw

Why are we surprised when people follow the money? Incentives work exactly as designed. In a fascinating study by Harvard Business School, researchers examined over 200 companies that implemented targeted sales incentives. The findings were striking yet predictable: organizations achieved precisely the behaviors they rewarded, often at the expense of unintended consequences. You get the outcomes that you build the incentive structure for. It's remarkable how many leaders express surprise when sales of specific items surge after implementing incentives for those exact products. The research revealed three critical patterns: • Companies that rewarded volume saw dramatic increases in transactions but declining profit margins • Organizations focusing on specific product categories witnessed 40% higher sales in those areas while other products languished • Teams with balanced incentive structures maintained steady performance across all metrics The lesson is clear: incentives are powerful behavioral architects. They don't just influence what people do - they fundamentally reshape how entire organizations operate. Design your incentive structure with the same precision you'd use to engineer a bridge. Every reward creates a pathway, and people will inevitably follow where you've built the road.

Winning Loyalty Strategies for EDLP Retailers – and the Pitfall to Avoid! I recently shared how Canadian retailer Loblaw Companies Limited successfully combines an Everyday Low Price (EDLP) proposition with its PC Optimum personalised loyalty programme. In this follow-up, I share my perspective on which types of personalised offers align with EDLP principles – and which do not. EDLP retailers like Aldi UK, Bunnings, IKEA and Walmart thrive on customer trust. Shoppers know they’re getting great value, without needing to search for coupons or wait for deals. But in today’s digital world, where competitors are increasingly engaging customers one-to-one, EDLP retailers face an existential challenge: how to personalise without undermining the low-price promise? This tension explains why many EDLP retailers are cautious about loyalty programmes, fearing they could dilute price credibility. However, not all loyalty mechanics are equal. The common “1 point per $1 spent” structure seems harmless, but is effectively a deferred discount. Whether redeemed now or later, the retailer gives a fixed percentage back. This passive model does little to shift behaviour or drive loyalty. It’s a discount in disguise – and, in my opinion, misaligned with EDLP. However, here are three offer types that uphold EDLP principles while driving incremental spend: 1. Personalised Brand "Challenge" Offers Products like EagleAI's Personalised Challenges let retailers issue tailored offers that only reward incremental spend. The product, spend level and reward are all personalised – but the base price is unchanged. These offers drive extra activity, often funded by suppliers without altering trading terms – a key EDLP requirement. 2. Personalised Continuity Offers These reward ongoing engagement. For example: “Spend £10 on snacks three times this month to earn £5.” No change to shelf price – just a reason for customers to return or build new habits. The reward is behaviour-linked, not a flat discount. 3. Personalised Stretch Offers These encourage increased spend in a category or across the store, e.g. “Spend $100 in clothing this weekend and earn $5.” They target customers likely to respond, preserving overall margin and driving growth without adjusting prices. If your loyalty scheme is just a disguised discount, it’s not supporting EDLP. But with the right data and strategy, personalised offers can enhance your value promise – driving real behaviour change, unlocking additional supplier funding, and delivering measurable returns. I’d love to hear some examples of EDLP retailers implementing personalised offers without compromising their principles. Or please let me know if you disagree with my perspective. #RetailLoyalty #EDLP #PersonalisedMarketing Eagle Eye

Modern partners programs are undergoing radical transformation as vendors shift from rewarding transactions to driving long-term customer value. Most major vendors are in the midst of evolution. This is impacting every partner type. The channel has seen significant impact among some of the largest programs, such as Microsoft and Cisco, but in fact Omdia analysts are tracking hundreds of vendors re-imagining their programs. Sharing some highlights from our leading Partner Program Analysis. If you are one of the hundreds of vendors making a change - or the thousands considering it - get in touch. PROGRAM DESIGN Program design is shifting from transactional to transformational. This approach prioritizes long-term customer value over one-time sales. Here are some of the key characteristics: • Increasing focus on partner specialization: Encourages partners to deepen expertise and deliver high-value services. • Better enablement: Provides stronger training, enablement, certifications, and resources. • More customer-centric metrics and rewards: Rewards partners based on customer outcomes. • Simplified program structures: Streamlined processes and a focus on core competencies. • Tailored incentives: Tailored rewards for partner business models and capabilities. • Focus on collaborative go-to-market motions. INCENTIVE DESIGN There's shift from margins to diverse set of incentives across customer journey that encourage: • Learning, enablement, training, certifications • Collaborative GTM motions, such as co-selling and co-marketing • Customer engagement and success • Performance metrics • Examples: consists of partners earning points for participating in sales engagements, meeting customer retention targets or completing advanced training, attending key events/conferences and more. • Includes monetary and non-monetary rewards from front-end discounts, back-end rebates, funding for programs, training, certifications, SPIFFs, and more. • Includes personalized incentives and awards to different roles and activities.