Here’s the uncomfortable truth: your sales comp plan might be the reason your customers keep churning. I’ve seen this play out dozens of times, and there’s a way to fix it.
Radha called me on a Thursday afternoon, and I could hear the frustration in her voice.
“I don’t get it,” she said. “We’ve got product-market fit. Our demo-to-trial conversion is solid. But our churn numbers are terrible, and my sales team seems to care more about closing than actually helping customers succeed.”
Radha’s story isn’t unique. Her startup was doing everything “right” on paper — good funding, decent team, strong early traction. But there was this nagging problem that kept getting worse each quarter.
Her best sales rep had just closed three deals in two weeks. Sounds great, right? Except two of those customers canceled within 60 days. The third was already asking for features that didn’t exist and threatening to leave.
The issue wasn’t her product or her market. It was something most founders never think to examine: her sales compensation plan was incentivizing all the wrong behaviors.
I see this mistake constantly. Founders copy compensation structures from traditional software companies or bigger enterprises, not realizing that SaaS is a completely different game. When your revenue comes from keeping customers happy over years, not just getting them to sign a contract, everything about how you pay your team needs to change.
Let me tell you about my own screw-up. At my second company, we were crushing our new customer targets. Month after month, the team was hitting 110–120% of quota. I was feeling pretty good about our comp plan.
Then I looked at the six-month retention numbers.
We were losing almost half our customers before they hit their first renewal. Our Customer Acquisition Cost was through the roof because we kept having to replace churned revenue. That “successful” comp plan was actually costing us about $2M in lifetime value.