Alignment with Sales is a critical component of the long-term success of your Customer Success team. If you assume that Customer Success owns the company retention number, then the combination of Sales and Customer Success drives the total subscription bookings number for the company. That’s interesting to understand because, in many ways, the two organizations could not be more different.
There are several different organization structures I’ve seen for Customer Success. In general, the choices are to have Customer Success report up through the a) VP of Sales or CRO, b) VP of Services or CCO, or c) CEO. Alignment with Sales is intuitively easier if Customer Success reports to the VP of Sales or the CRO but some of the inherent challenges may be easier to overcome in a peer-level organization structure. Regardless of the structure, there are several items that often cause questions and confusion:
- Who owns and should be compensated for renewals?
- Who owns and should be compensated for upsells?
- Whose responsibility is it to map out and communicate the customer’s org structure and build broader relationships?
- What does Customer Success need from Sales after the deal is closed, in order to make the customer successful?
- Should Customer Success have any input into the Sales process and, in particular, which deals should be done or not done?
- Are there any circumstances, other than a new Sales opportunity, where Customer Success should bring Sales back into an existing customer situation?
Each of these could, and will, be a separate blog post at some point. For now, just know that there’s no perfect answer for any of these and the bar for communication between you and your VP of Sales is very high regardless of the answers to these questions.
In some ways, Customer Success and Sales are at odds with one another. For example, the VP of Sales might be trying to get a new feature prioritized in order to make his number while, at the same time, the VP of Customer Success is working the Product team to focus on performance so as not to lose some key customers.
Ultimately, everyone is a shareholder and wants the best for the company, but we’d be kidding ourselves if we think that selfish interests and job preservation don’t come into play. In the end, it’s often these organizational tensions that drive the company forward in positive ways and the right leadership will find a way to work together but it’s not always easy. This is no different than the ongoing battle for headcount. Any head I get is one less head available to you. It can feel like a zero sum game.
As is often the case, the best way to solve some of this tension is through compensation plans. As I’ve written before, an executive bonus structure that puts equal importance on new business sales and renewals can go a long way. There are variations of this that can accomplish similar goals – paying Sales (even if they do not stay involved with existing customers) for at least the first renewal – will disincentive signing customers who have a low probability of long-term success.
As a quick aside, I will contend that your Sales Reps have a very good idea about which customers are likely to be successful and which will struggle. I saw the results of a recent study, which found that the best predictor of churn was Sales’ analysis of the customer’s chances for success at the time of the deal.
There’s no simple answer or magic bullet here. The best thing we can do at this point is to force the conversation into the public square so we are talking about it. I think this is very analogous to what has happened between Sales and Marketing over the past 10 years with the explosive growth of Marketing Automation. It forced a frequent and at times, very contentious, conversation between Sales and Marketing. For those of you who think Sales and Marketing have always been 100% synergistic just because “Sales and Marketing” rolls off the tongue so nicely, think again. Figuring out the lead scoring model, when deals should be passed over to Sales, how many are required to make the number, etc. are not easy conversations. But today’s healthy companies have them weekly.
The relationship and alignment between Customer Success and Sales is the logical follow-on to the Sales and Marketing alignment in a recurring revenue business model. If the top of the revenue funnel is working well, the spotlight will naturally turn to the lower part of the funnel (which is really an hourglass by the way). Customer Success and Renewals (if they are separate teams) are naturally aligned by their goals. Both groups are typically incented to maximize renewal dollars. In fact, you can think of them as the Sales and SC teams for existing customers. One could argue, and I have a proofpoint, that they should be in the same organization. This appears to be happening more often as “Chief Customer Officer” becomes a more common title having ownership of the company retention number (and perhaps upsell as well).
The bottom line here is that, much like Sales and Marketing have come together, Sales and Customer Success must do the same. Regardless of organization, this will require frequent discussions and collaboration on challenging issues such as the ones mentioned above. Let me reiterate a couple things I said earlier and leave you with a couple more practical suggestions for making this work:
- Make sure your comp/bonus plan equates renewals and new business
- Schedule regular meetings with your Sales VP
- Review churned customers with your Sales VP
- Share (but don’t publish) churn rates by Sales Rep with your Sales VP
- Force an assessment of the customer’s chances for success, by the Sales Rep at the time of the deal
- Ensure that the handoff from Sales to post-Sales is thorough and includes specific business use cases