What's the one question people are always asking you about your job?
If I had to stack-rank all the questions I get asked by customer success leaders, the question of who should own renewals bubbles to the top—no contest. But when you peel the onion a little bit, this is actually a layered question. Let's say you decide on CSM "owning" renewals. You still must answer:
- Who should own the renewal number, Sales or Post-Sales?
- Should the CSM execute on the commercial/renewal paperwork?
- Should the renewal and expansion motions be executed by the same person?
This is obviously a hotly debated topic across companies, so I’ll share my framework for how to think about where renewals and expansion can fit in your organizational structure. We also have a very detailed look at our internal renewal process in this webinar. Feel free to adapt it to your business!
In my experience, the two criteria that most dictate your organizational structure and renewals strategy are:
- Product Complexity: Can your product do many things or does it do one or two things really well (and that are used by 80% of your customers)? Is the onboarding process easy or does it take several weeks/months?
- Industry Maturity: How standard are the workflows and processes that your software helps with? How fragmented or concentrated is the industry with regards to vendors? As an example, Data Science could be thought of as a maturing industry, whereas Marketing Automation or Salesforce Automation is relatively more mature along that spectrum.
Depending on these two criteria, the org structure and renewals strategy could be very different.
If we take those two criteria and imagine them as the horizontal and vertical axes of a two-by-two graph, we're left with four general scenarios. This gives us a great opportunity to structure our organizations to better serve our products to our markets. I'll outline those structures below:
1. Industry Maturity is Low and Product Complexity is High
In this scenario, adoption and renewal/expansion need separate owners. CSMs are basically product experts—and in some relatively nascent organizations, the CSMs could be part of the Product Team. Account Executives (AEs) own renewals because the industry maturity dictates heavy correlation to "Land and Expand" motions. AEs and CSMs are relatively high-paid resources because they act as evangelists for the vendor.
2. Industry Maturity is High and Product Complexity is High
Again here, adoption and renewal/expansion need separate owners. CSMs are tasked with driving change management and product adoption. Renewals/Expansions tend to be AE-led for top tier segments (where there's a lot of expansion potential) and more junior Account Managers (AMs) manage renewals/expansion for other segments. Increasingly, the AMs report into the CS organization which tends to own the renewals component end to end.
3. Industry Maturity is High and Product Complexity is Low
In this case, adoption and renewals have the same owner. CSMs are basically Account Managers—they are even called Customer Success Account Managers (CSAM) in a few companies. They manage some adoption motions that eventually lead to renewals. And depending on the dollar value of expansions, they tend to stay with the CSM/AM. Given the lower need for evangelism of the industry, CSAMs tend to be relatively mid- to low-cost resources.
4. Industry Maturity is Low and Product Complexity is Low
Finally, here we typically see adoption and renewals have the same owner. As in the previous scenario, CSMs are operating as de facto AMs, and may have a corresponding title. However, the scope of their work is broader given the need to evangelize the product and the industry in the marketplace. As such, they tend to be relatively high-cost resources.
Let's circle back around to our original question: who should own renewals?
As you can see, the answer is definitively "it depends," but hopefully I've given you enough criteria here to know what it depends upon. I would love to hear from you about your decision-making criteria—is it the same as what I've proposed above? Please answer in the comments below!
Ashvin Vaidyanathan is Chief Customer Officer at Gainsight; feel free to get in touch with Ashvin at firstname.lastname@example.org