Tyler Miller helps organizations who want to accelerate their growth trajectory, unlock latent productivity, drive organizational efficiency, optimize sales investments, and augment their go-to-market engine.
As an organization matures from startup to established enterprise, strategic priorities evolve. Organization’s must tailor their deployment model to meet shifting growth requirements through these phases. Failure to do so places an organization at risk: growth rates will falter, and contraction is more likely to occur. Organizations that evolve at the right pace, or an accelerated one, maximize growth rate potential and reduce risk. Role deployment & sales compensation are critical areas that must be adapted to facilitate & maximize growth.
Initially, organizations focus on new customer acquisition with a relatively narrow product / offering set. New logo acquisition and volume growth are the lifeblood of organizations in this phase. Once a sufficient customer base is established, organizations broaden their focus beyond the “land” sales motion and focus on expansion selling as well.
During phase 2, it important to ensure that customers are deriving value from (i.e., adopting) a company’s offering. However, there is less of a need to invest heavily in adoption / value-driving functions and focusing on retention—especially since there are fewer customers to retain and likely minimal renewal opportunities.
Early “expansion” customers inform development of sales motions required to drive adoption and, ultimately, secure renewals. In this stage, CSMs are introduced though their approach is immature during initial deployment. This is because it is difficult for organizations to fully define and operationalize post-sales motions until there is a sufficient customer base and the expansion play is well defined.
In Phase 3, new products and strategic initiatives are introduced – renewals / retention rates, profitability, product orientation, vertical prioritization, contract length, etc. Organizations begin to focus more on profitability, and the efficiency of the sales organization.
Phase 4 brings new markets, and perhaps new sales teams / Business Units. These new teams may “reset” the process, and should be considered Phase 1 initially, and evolve along a similar path.
In addition to deployment model changes, sales compensation programs prioritize new metrics through each phase.
Phase 1 organizations necessarily have a simple and narrow focus on new logo acquisition. Seller compensation plans & programs are typically simple and narrowly focused as well.
Sellers are predominantly focus on new-logo acquisition, so there is no debate around hunter AEs vs farmer AMs vs full cycle AE constructs (a hot topic in the Sales Deployment conversation at the time of writing). Usually, a simple financial productivity metric—bookings (New ARR) is most typical, but Revenue is used occasionally as well—is the primary component of sellers’ sales compensation plans, and a sales comp program.
Advancing to phase 2, organizations increasingly focus on expansion selling. This introduces new complexity as organizations ensure appropriate focus on both new logo acquisition & expansion. It is common to see compensation plans that focus on new-logo volume (every customer counts) in addition to financial productivity metrics in this phase.
To facilitate this evolution, organizations may differentiate between Hunter AEs and Farmer AMs. If they continue using a single resource (full Cycle AE) to cover the entire customer lifecycle, the compensation plan for that role may require multiple metrics to ensure focus on new logo & expansion selling simultaneously. New plans are added to a sales compensation program to ensure appropriate focus on new logo acquisition and expansion selling.
In phase 3, organizations continue to drive new logo and expansion sales, but organizations must also make sure that customers derive value from the offering, and that there is high likelihood of renewal.
At this point, there is a maturation of Customer Success resources, and the post-sales playbook becomes more fully developed. Ideally, organization can access & report on robust telemetry metrics (increasingly so as software / tech providers move away from on-prem solutions). This allows organizations to include adoption-oriented metrics in sales compensation plans. Many organizations struggle with this, however.
Proceeding through phase 3, and entering phase 4, the deployment and sales compensation “playbook” becomes more fluid and less “universally coherent”. Variability across markets, and the introduction of new teams / Business Units (who follow their own growth cycles). Unique sales compensation frameworks may need to be applied across each discrete business area.
Sales compensation is a tool to attract and retain the right caliber of sales resources to execute against a strategy. Across organizations of all sizes and maturity levels, sales compensation plans are a “must-have” for any dedicated sales or BD individuals. But the strategy, expectations, and responsibilities of a sales organizations will evolve drastically as an organization matures.
Failure to appropriately adopt deployment models & sales compensation plans places organizations at significant risk. Especially once organizations start to enter Phase 4, PE transactions & IPOs occur more regularly. Organizations that appropriately accelerate their deployment model evolution improve the likelihood of maximizing ROI of such liquidity events.
