A friend of mine asked about differences in customer acquisition cost (“CAC”) relative to new customer acquisition, upsell, and expansion. When I said there’s loads of material on why expansion CAC is less than new logo CAC with respect to marketing costs, he said what he was really interested in were differences in sales comp plans and their effect on CAC.
We narrowed our conversation down to the two comp plans of Account Executive, a role typically responsible for new customer acquisition, and Account Manager, a role typically responsible for upsell and expansion.
I’ve seen a handful of differences between AE & AM comp. Using an AE comp plan as a starting point, AM roles typically have:
- 30-50% of AE on-target earnings (OTE)
- 70-90% of AE quota
- Less-aggressive OTE split with 60-70% going to base
Then there are different ratios in the sales units – e.g. all the people supporting the different sales roles. The AE:SE ratio may be 2:1 or 3:1 while I’ve seen as high as 8:1 for AMs. AE Managers might have 4-6 AEs while AM Managers may have as many as 8-10 AMs. All of this has a major impact on the cost of doing business (inclusive of CAC).
Your company only hires current executives as executives.
Directors have to be 40+ or have 15+ years experience in a single role.
“MBA preferred” actually means required at your company.
Employees can’t progress, or can only move one step up the imaginary ladder at a time.
No one is promoted with less than X time in their current role.
One or more folks in the C-suite has been overheard saying that someone couldn’t work for them because that person isn’t “big” enough.
If you’re in a position of authority at some company and making rules like these, quit.
You’re harming everyone around you and damaging your company’s future success.
If you’re working at a company like this, next year is right around the corner. Get the f*** out now. They don’t deserve you.
Now, in 2019, the CEO of Burger King is in his 30s. His age doesn’t matter. His message does: hire people who are passionate, humble, and will bust ass vs hiring someone for their pedigree.
The return on his strategy?
300% growth since he took over in 2014.
This message inspired by a Twitter thread full of software developers posting about not being hired or passed over for promotion due to any one of the stupid BS reasons from the list above.
Reading “The CEO Next Door”, by Tahl Raz, Kim Powell, and Elena Botelho.
Elena, Kim, and Tahl did thousands of hours of research to produce real data about what it takes to get to the CEO spot, what CEOs actually do and how they operate.
It’s not like what we’re shown by Hollywood and it is fascinating.
Does it matter whether you’re loved or you get results?
“In real boardrooms, results speak louder than charisma.”
Do you need to be outgoing?
“Over a third of CEOs in our study actually describe themselves as introverted, and self-described introverts in our sample were even slightly more likely to exceed board expectations.”
…while the above mean roughly two-thirds of CEOs describe themselves as extroverts, those same folks are less likely to exceed board expectations.
Do you need to be a celebrity, like a Steve Jobs or Elon Musk?
“When looking at CEOs who met expectations, we found no statistically significant difference between introverts and extroverts. High confidence more than doubles a candidate’s chances of being chosen as CEO, but provides no advantage in performance.”
What a seriously fantastic read.
If you’re interested in reading more, get your copy of “The CEO Next Door” on Amazon at https://amzn.to/2Rr2M43