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Should Customer Success Own Subscription Renewals?

Barry: Russ wrote this really interesting article titled CSM + Renewals. After reading it, I took a deep dive and saw other articles that he was working on and they’re all really interesting, and that’s why I invited Russ to this podcast. I thought he’d be able to contribute and really teach us all so much. Russ, tell us a little bit more about yourself.

Russ: I’ve been with Zeplin for just over a year and a half now, previous to that, I was at another similar company called InVision, doing customer success there. And then prior to that, I was at a company called Workfront for 10 years. They just got bought by Adobe last year, and that was a great journey. And my role right now is I head up customer success globally for Zeplin. And we also have a solutions engineering team, that comes under me as well.

For those who might not know, Zeplin is a design delivery platform that helps multidisciplinary product teams deliver on the promising design. So, once a design for a screen-based product has been complete, whether that’s an app, a website, a SaaS tool, it typically gets handed over to an engineering team to go and build it. And then you’ve got product managers and QA testers, and everyone else involved. And we are the glue that sits in between that helps all those folks deliver the work to the end customer. So, that’s a little bit about me.

Barry: Well, thank you. I think all the marketers listening to this podcast can relate to those pain points that you mentioned. So, let’s get started. I think we could even use your articles as a guide to our conversation because they’re so well done.

Should Customer Success Own Subscription Renewals?

Barry: One of the first topics you talked about in your articles was, who should own the renewals, customer success or not customer success? And the pros and cons of each one, because maybe there isn’t a one-size-fits-all. So, who should own renewals, Russ?

Russ: Like all good answers, I think it starts with the words, “It depends.” It really does depend. For me, I think it depends on a couple of main things. The first thing is the size of the company that you’re in and more specifically the life cycle stage or the evolution stage. It really depends on how big that company is as to how much specialism you have, how many folks you have, maybe even what the priority for you is right now. Is it growth? Is it capturing revenue? Is it capturing logos? So, that does depend, right? That makes a big difference for a lot of people.

The other one for me that really makes a difference as to who owns renewals is what type of company you are. And specifically, I think about my past experience and the companies I’ve been at, and where I’m at now, and I often contrast enterprise software or enterprise companies and product-led growth software companies as well.

And I think that really makes a difference because the nature of the work that the customer success manager is likely to be different and call a spade a spade, the size of the deal is likely to be different as well. And so, just as kind of an intro to this conversation, I would say it definitely depends on those two things. I’m sure by the end of this conversation, you’ll push me to say whether I think CSM should own a renewal, but I think I’ll reserve that until a bit further down the conversation.

Pros and Cons of Customer Success Owning Renewals

Barry: All right. I saw other podcasts send alcohol before the call so maybe that’s what I have to do for the next one so we can get that answer early on. So, perfect. That was actually the answer I was expecting for now. So, we’ll dig deeper soon and get to what you believe.

So, let’s talk about what are the pros and cons of customer success owning the renewal. And when you explain that, maybe explain the background of that company that you’re talking about because if it does matter about the size and it does matter about their go-to-market function, I guess we would need to understand a bit about that when explaining the pros and cons.

Russ: Sure. I think from the perspective of owning the renewal, sometimes it can make a lot of sense because it’s part of a natural cycle of engagement that the CSM is already in. It’s certainly in large companies, the CSM tends to have very regular engagements compared to a smaller company or a lower value company where it might be harder to get those engagements with the customer.

There is, unfortunately, also a connotation that when you talk about anything commercial, there is a salesy undertone to it. And some people tend to clam up when talking about numbers, dollars, sales. And so, a CSM who is not salesy, who by their very nature tends to be more focused on the product, the adoption, and so on, can come across the renewal conversation as less salesy. So, I think that’s definitely a pro as well.

If we take a step back, I’m sure many CS professionals will have heard this at some point and have felt this, sometimes you’ll get C-suite executive leaders say, “Well, what does customer success actually do?” And for an inexperienced organization, defining the value of customer success can be a hard thing when there’s no dollar amount assigned to it. So, owning the renewal can give the CSM some sense of contribution to that wider business, and it gives you something to really hang your hat on.

So, from a pro perspective, there are a few thoughts and ideas there, especially if the renewal transaction is fairly straightforward, there’s not necessarily a need to involve lots of other people. From a con side of it, I’ve seen a couple of these, certainly at my last company where CSMs did own the renewal, they have a very myopic focus on a very short-term timeframe and a very quarter-to-quarter rhythm and cadence in what they do. And there’s nothing inherently wrong with that, but certainly, you can lose the vision of the longer-term pains and challenges that you’re hoping to solve for the customer, strategic outlook with that customer if you’re always focusing on a quarter-to-quarter motion.

And developing that idea a bit further, by and large, customer success managers are there to help customers become successful. And so, if you introduce a sales element to it, when they have that renewal ownership, there are conflicting priorities. They’ve got to serve two masters, so to speak. One being the commercial and one being, actually, the success and the adoption. So, that can be pretty tough.

The other thing that I always consider is the individual that you’ve got involved in it as well. The customer success manager is a very different character profile and personality to a salesperson. And so, if you are giving the renewal opportunity or transaction to someone who is not naturally comfortable with challenging sales conversations or just any sales conversation, you can find, potentially, some suboptimal conversations. And when you’re in a revenue-led business where you’re trying to expand and grow, giving that to someone who doesn’t feel comfortable or natural in that area, you could be leaving money on the table. You could also be under-serving your customers from a revenue perspective.

So, again, few thoughts there as to why I think, perhaps, owning the renewal is not a good thing and why perhaps it might be better to sit with an account manager. Those are some of my thoughts on owning the renewal piece.

The Customer Success vs Sales Personality

Barry: I think there’s a lot to unpack for that. One, let’s break up the profile of the customer success versus the salesperson profile. What percentage would you say, again, obviously, this is your opinion, of the customer success profile are people that don’t feel comfortable talking about sales or at least when they first started their career, don’t want to be in those types of conversations? Is that a big percentage, a small percentage?

Russ: Yeah, that’s a good question. I think it all comes down to the propensity you have towards commercial conversations. When you’re working in this kind of business, you have to have an awareness, an understanding of commercial drivers and levers, and things like that. However, I do tend to find that a high proportion of people who really thrive and enjoy customer success are not commercially motivated or driven.

On the one hand, I mean, we all like money. We all like to be paid well, but there are folks who are not necessarily as driven by that. And on the other hand, there are people that don’t like the risk and reward of that as well. And I think that why good salespeople thrive and enjoy their role is because they like solving problems for customers and being motivated, and quite unselfishly, I don’t think it’s a bad thing to be talking about money, they’re motivated by money. And I think there are some people in this world who typically operate in a customer success role who don’t have that natural tendency and that’s totally fine. But that’s where the two roles separate from me.

I’m not going to put a number on it, but a higher proportion of customer success people prefer not to have that commercial element to the role, because it just doesn’t sit naturally for them.

Barry: Yeah, no, that makes a lot of sense. As SaaS, what I’ve seen as the software industry, as cloud has become more mainstream in sales, people do have a different opinion on what a salesperson is.

About 10 years ago, I was thinking about going into sales. And the only person I was thinking of was the car salesman with greasy hair, the person trying to get you to buy something that you don’t want to buy. And now it’s become a lot more value-based selling. It’s a lot more positive, but there still are some stark differences, as you mentioned. And what’s your driver? Is it the money? You could still be a nice person and do value-based selling, but care more about money than a customer success rep. So, I just think that’s interesting that that still is relevant even in a value-based selling community.

Russ: Totally. And for anyone listening to this, please don’t misunderstand me. I think some of the most successful and the best salespeople I’ve ever worked with are not primarily driven by money. They are definitely customer-centric and focused. And I can name you a list of people who I admire as salespeople in the industry. But the nature of someone is that money does help and money does motivate people, and I think that’s where a healthy balance between the two gets you a brilliant salesperson.

Customer Success Focuses on the Relationship with the Customer

Barry: Yeah, absolutely. The other thought point I wanted to hone in on was that you mentioned specifically that characteristic (a focus on the relationship) is a “pro” for the customer, because they don’t feel like a salesperson is being brought in. They’re just continuing the conversation and they feel much more comfortable. So, I thought that was really interesting as that exact characteristic has multiple effects, also depending on who the customer is, I’m sure.

Russ: Yeah. I’ve got a member of my team right now who I’ve actually brought in having worked with them previously as well, and they are the kind of person that develops truly natural relationships with the customers that they work with, to the extent that the customer success manager on my team, she would find out that people were leaving the company before that person’s boss ever would. They had almost like a close relationship where it was like this more than a trusted advisor. It was a trusted friendship. Now, as long as that is never taken advantage of, that can be a really strong asset in a business relationship where you have someone that trusts you and looks to you for guidance. And yeah, as I said, that can be a really strong advantage.

Growing Revenue Through Upselling and Expansion

Barry: Absolutely. And then with regards to expansion, like upselling renewals, is, I guess, easier than expansion. Just to give the audience some context, when I’m referring to upsell, and I think this is how the industry refers to it, please, correct me if I’m wrong, it’s more like selling more seats or selling something that you’ve already sold, just more of it versus expansion is new ways to make revenue in a more creative way, if you will, like by selling new products and getting people to buy into something that they didn’t buy into before. So, I guess that would also play a difference in the person feeling comfortable versus not comfortable. Is that correct?

Russ: I definitely agree there. I think one of the pros that I mentioned in my article is about the transactional or fairly straightforward renewal. If you tend to have, heaven forbid, a fairly flat renewal, obviously, we want to see growth in the business. But if you have a fairly straightforward transaction, that’s something that can easily be handled by a non-salesperson.

However, in a very fast-growing or aggressive business that does strive to grow its business, as you say, the upsell, the cross-sell, the upgrade, whatever you call it, the expansion part of that, sometimes there’s a fair bit of mastery involved in actually having that come to pass. And so, having someone who does have that sales experience will likely yield you a greater result. And I know, having spoken to and worked with a number of people, that’s their fear. CSMs fear leaving money on the table because it’s not in their natural instinct to go after a bigger sale, whether that’s from the commercial negotiation or identifying greater opportunities. So, that is definitely a consideration as well.

The Renewal Manager Role

Barry: Absolutely. And then I think my last follow-up question for this part, is it possible to make some people that you know wouldn’t be good at sales not do renewals but the rest of your team do renewals, or that would cause strategic organizational headaches by splitting up the role of the customer success?

Russ: Yeah, that’s a really interesting one. I think what this reminds me of very much is how you can differentiate the role. Again, for customer success, you can differentiate the role. Where I’ve seen that work really well is actually that there is a renewal manager role. And this concept of renewal manager role is someone who is not out there selling new business, is not out there helping adoption and customers be successful, but they purely sit in this role of renewing. And for some people, that sits in their sales organization but I’ve seen a good amount of renewal managers and renewal management teams sit within customer success. Some have been broken off from customer success managers. Some have been hired as a completely new team bringing in individuals. So, it can create a bit of a division within a customer success organization.

So I think you have to be careful, but there is also a natural selection that kind of goes on where some people like that, some people don’t. So, you’re giving them a development opportunity. And if you’re thinking about the longer-term career path, it also gives them a step into sales.

So, one of the things that I have seen, we’ve got a great sales rep in our company right now, who actually made the conscious decision to go from customer success to sales. And so, she made that career path for herself. And so, providing that opportunity can be an incentive to some people who do have a natural tendency towards the commercial side of the relationship.

Pros and Cons of Customer Success Not Owning Renewals

Barry: Absolutely. Cool. Perfect. So, now, let’s talk about constant CSMs that don’t own the renewal, the pros and cons. Maybe they were reflected in what we already spoke about, but things that we haven’t spoken about yet.

Russ: Yeah, and this is difficult because, obviously, a pro and a con can often be fairly balanced and it’s either one or the other. I think the pro of not having the renewal is it gives the CSM a sense of freedom to think and act differently, as I said before, about this quarterly motion that you tend to get yourself into owning a renewal. When you take that away, it does give the CSM a lot more freedom to act and certainly, hopefully, act with a longer-term vision as well so that you can not just be focused on, “Okay, I’ve got a renewal in three months. How am I going to make them happy?”

But you’re thinking, “Right, I’ve got this customer for next year. What are the things I’m going to do over a 12-month or 11-month period to make them happy?” And that leads to another part of the CSM relationship is by not having the renewal, you can focus on all of the different stages that a customer would touch you within a life cycle or a customer journey.

So, you can truly and properly think about the onboarding, the post-onboarding which is the early phase of adoption. You can then think about the strategic building of that customer once they’ve become really engrossed in your product. And it does give you that opportunity to think longer-term.

From a customer perspective, let’s think back to the customer as well, about how they interact with you, there is a really clear delineation of roles. And one of my sayings used to be when introducing members of my team, when we didn’t have the renewal was, “You speak to John, let’s say, the account manager for anything that’s got a dollar symbol against it. Anything commercial, legal, purchasing, finance, that’s John. Sally, the customer success manager will deal with everything else for you, as it pertains to usage, product adoption, and feedback around the product.” And so, the customer, in their mind, then knows who they should go to, because that can be a challenge for customers is, “Man, I know four people at this company. Who should I be talking to?” If you delineate responsibility and say, “Commercial is the commercial manager and everything product-focused is the customer success manager,” that makes it a lot easier for people to work with.

Who Should Manage Subscription Renewals?

Barry: Absolutely. Makes a lot of sense. I think it’s important for us also to understand who would… So, the people in this scenario, would it be the sales reps that sold originally? Would they be the people that would be owning the renewal or is it, you mentioned that there’s a renewal manager for some companies, who’s owning it if it’s not CSM?

Russ: Well, and again, the answer starts with, “It depends.” So, it goes back to my very first point in the conversation. But it does depend on the size of the company, the type of the product, so on and so forth.

Again, I’ve seen a few different ways of it working. The renewal can typically have one of three owners. As you just mentioned there, Barry, the first owner would be the person who originally sold it. So, if you have that clear delineation, then the account exec or the account manager, or whatever you call that person who sold the deal on day zero, they get to keep it for at least the first renewal, if not beyond.

The second type of structure that I’ve seen works well, but this works well more in enterprise customers where there’s higher volume, larger teams, larger revenue, is that within the sales organization, there is an account management function. So, the account executive would sell the new deal. The account manager would then hold the renewal and the growth, and expansion number for future years, and they would account manage that customer.

And then the third scenario that I’ve seen is this renewal manager function that I talked about, where their sole purpose is to renew the customer. So, if it doesn’t sit with the CSM, it’s either the AE, the person who acquired it, or the AM, the person who’s going to manage the account, or a very specific function that is solely focused on renewal, that’s the RM, the renewal manager.

Barry: That makes sense. And then could we break those down into percentages? Like how much you think the CSM, how much you think is the account executive, the account manager, and renewals?

Russ: Oh, that’s a tough one. I think most organizations will typically have an account manager. I think when they get to a certain maturity and certain size, there’ll be a new acquisition sales team, the AE, and most of the renewals will be handled by the account manager.

As I say, with customer success, it’s really difficult because I think people go through phases of evolution. They go through cycles. And just when I was at Workfront for 10 years, we went through various phases and cycles where for one or two years it would be owned by the AE and then it would switch to the AM. In the very early days, it was the CSM. So, I don’t think there’s a definitive answer there, unfortunately, and I hate to disappoint anyone who’s looking for one, but I think it really does depend on the size of the company and the evolution stage.

Who Manages Account Managers?

Barry: Absolutely. So, I’ve spoken to a number of account managers in my day of just working with technology and that’s pretty common. Sometimes I view them as customer success and then they would view themselves as a salesperson. I think for me, they were usually helping me with some strategic initiative so I viewed that as a type of customer success, but their boss was probably a sales manager, I guess. Are Account Managers ever managed by customer success or they’re always managed by sales?

Russ: I think that’s one thing I can give you a definitive answer on is account managers are always managed by sales leaders. Customer success is a completely different role and skill set and that the core of customer success, whether it’s got the renewal as part of that role or not, customer success should be focused on the customer’s success in achieving what they wanted to buy your product for in the first place. And ultimately, the metrics to measure that internally are a lot different, typically based around some kind of adoption metric or time-to-value-metric, or something which is more product-focused or customer-focused.

Account managers in that respect, they’re driven by a number, whether that’s NRR, gross renewal, ARR acquisitions, quotas, whatever. So, that does tend to always report to a sales leader in my experience.

Characteristics of a Good Customer Success Manager

Barry: What are the characteristics of a good customer success manager?

Russ: There are two characteristics that I look for in a CSM. One is urgency and one is ownership. Someone who is able to act today on something rather than leaving it two or three days, that’s the urgency part of it. And then the ownership is, if you’re working with a CSM and they have an assignment, or you give them an assignment, or something comes up with a customer, you are able to trust that they’ve got it. They’ve got it today and they’re able to run with it. And you know that they’re going to come back and give you feedback.

Now, urgency and ownership aren’t unique to customer success. As I say, they can appear in a sales role or any other role as well. However, what I do think in addition to that, layered on top of that, is a healthy desire and inquisition of the customer to know, really, what makes them work, what makes them tick, what challenges them, and a healthy concern to resolve that.

What I also see is that the best CSMs have a very forensic mind when it comes to trying to uncover problems and using data to analyze a situation. So, the urgency and ownership part is part of the character of many people you would want to hire, but layer on top of that the intrigue for a customer’s business and how you can help solve that with data, that’s where I see great customer success managers. And typically, and I’m generalizing here, that’s where they might differ from an account manager or a sales exec. Urgency and ownership are two key characteristics.

Barry: And can you teach urgency and ownership to your team members?

Russ: I think you can. You can definitely coach for it. If someone does not have urgency and ownership, and does not have a desire to learn, that’s where it’s very difficult to coach someone on it. But I think when you’ve got hungry individuals who want to thrive in their role, coachability is definitely something that you can have on those two characteristics, for sure.

Coaching Customer Success Managers

Barry: What are three things that you could coach for urgency? I can imagine you can explain the importance of urgency and explain why it’s helpful for a customer, but what else can you do? What are some other tips and strategies that you could work on?

Russ: Well, I think empathy is a big part of it, is helping an individual understand how your urgency can be positively received and positively seen by the customer. And by demonstrating empathy, if a customer brings you a concern or a problem, or something, putting yourself in their shoes and having empathy for why that might be a problem, that is a really good skill to learn.

I guess similar to that, but I kind of say separate, is impact, helping an individual to understand the impact of urgency, again, in a very positive way, can really give someone an illuminated view of why they should act with urgency and conversely, what’s the impact if you don’t act with urgency. So, I think that empathy and impact are two very strong factors to help coach somebody.

Beyond that, I think it’s just helping people through a situation, general coaching and feedback cycle of working through whether it’s situation, behavior, impact, the SBI, which is typically something we use for why something is important. That’s another good approach to take with someone as well. But yeah, certainly the empathy and the impact are key for us.

The Stages of Renewal Ownership in the Go-to-Market Motion

Barry: What are the stages of renewal ownership?

Russ: Again, it very much depends on how old the company is, how long they’ve been operating, what kind of motion they’ve been in. Essentially, what we would call the go-to-market strategy, right? It depends where they are in evolution.

From what I’ve seen, different companies may be different so don’t take this as gospel, but in the early stages, you tend to have the renewal sit with the sales function, whether that’s because of the velocity of deals or just the nature of the sale. Everyone tends to do it in sales and also, that’s because customer success might have other responsibilities that they probably shouldn’t have, like a support function which absolutely should be in its own world. Support and success should not be the same thing but it, never the twain, shall meet in the early days because you’re running so fast.

Once you develop and you also have some repeatable business, right? In the first couple of years, you’re trying to acquire business. You might have a lot of falls. And so, actually, you might not have too much renewal business. In the next stage, once you actually have so much new business that it becomes difficult to do that and renewals, that’s when, typically, it might start to separate out. And so, having customer success, perhaps, taking on renewals is like this middle ground for, “We’ve got too much work. Sales can’t manage it. Success, it would be good for you to manage it. Can you do that as well?”

Growing on from that, it then gets to the point where you’ve built out your sales organization. You’ve got good deal flow. You’ve got good supporting functions, perhaps solution engineers, perhaps deal desks, and rev ops, or all the stuff that goes around the sales function, and they can start to model and structure things, and understand that, actually, in the next stage, it’s going to be more valuable to have a specific role. And we talked about renewal managers, it could be an account executive, but that’s typically in the third stage where you start to get real specialism in the roles that you have.

And so, that typically tends to be a pattern that I’ve seen repeat itself through companies I’ve either talked to or worked in. But again, Barry, it’s not a specific map of how it should go. I think every company is different.

Barry: I’d be curious to see a tracking of companies like, “Where are they now? Where did they start? Oh, they have this many employees, this many customer success reps and that much responsibility or different types of responsibility.” I think it’s really interesting, the first stage where everyone’s not doing what they’re supposed to be doing so it doesn’t even matter.

Russ: And I’m going to give a quick plug to another article that I wrote that’s on Medium as well, about the evolution of customer success, because that talks very much to that point that you just said there. I think it is fascinating to map out where someone is in that evolution life cycle, because you will see natural rhythms tend to occur.

And I’d love someone to do a study that’s a bit more scientific than my Medium post to analyze SaaS companies over their years and look at, at what point did they change, and at what point did certain things move around, because I would hypothesize that there probably is a pattern that occurs across SaaS companies and there are inflection points where it makes sense to change the ownership of certain things. I know we’re talking about renewals today, but I think there are natural points in time where these things fall into different roles. So, if anyone is aware of any more scientific studies, I’d love to read that because I think that does become a very natural cycle in a SaaS business.

Who owns Customer Advocacy Marketing?

Barry: One thing I’m curious about on a personal level, who is in charge of customer advocacy marketing? Who should be in charge of customer advocacy? Who’s in charge of getting G2 reviews? Who’s in charge of asking people to be in the case study? 

Russ: Really good question. And again, it does depend on the life cycle of the customer. In the earlier days, in my experience, customer success has been the owner of customer advocacy and we’ve partnered very closely with the likes of product management to get the voice of the customer back into our organization, and to get it back out again to the market.

So, I think you’re right. Customer marketing, product marketing, or any variant of that in-between, marketing would be the ideal place for customer advocacy to sit. And in larger organizations, certainly, when I was at Workfront, it was within marketing. But where has it not been? It’s always been held by customer success. And more importantly, it needs to be sponsored, supported, and run by the executive in customer success, which would ideally be the chief customer officer. And so, if that person owns the advocacy, that’s ideal.

Barry: All right. NPS. What are your thoughts on NPS (net promoter score)?

Russ: That’s funny you should say that, that’s a passion and a topic of interest in mine. I could talk for another whole half an hour about that. But NPS for me, again, should sit within customer success and, again, owned by the chief customer officer. That’s where it sits within our organization but on a slight tangent, it’s actually technically run by customer support because they have the interaction points with the customer.

However, a significant stakeholder and, I guess, co-owner of NPS should be the product organization. And if you have a CEO or chief product officer who recognizes that, then the feedback loop and the output of NPS will become so much more valuable to you and ultimately, to your customer. So, products are the ones that are going to be able to help you positively impact an NPS result so if you don’t have them on board, get them on board. But in terms of ownership and execution, personally, I’d say customer success.

Barry: And NPS for you is just that email, 0 through 10, or is it more than that?

Russ: Very good question. I’m a big fan of the Harvard Business Review and in last month’s issue, they talked about net promoter 3.0, which I love the concept because, yes, that it’s fundamental, NPS is the, “0 to 10, would you recommend this to a colleague, friend, or associate?” And someone responds to that.

However, what we’re fundamentally asking there is, “Would you refer us to another person?” And if you can’t measure that referral, then how valuable is that? And it often gets called as a vanity metric and it gets abused. But Harvard Business Review goes on to hypothesize that if you can measure that in terms of earned growth and actually attribute new revenue to whether that is a earned channel or a bought channel of revenue, then you are able to actually identify the economic impact of your NPS score.

Now, in order to do that, I think you have to have a super-evolved business and a super-evolved sales organization and marketing operation. We’re not there yet, but I’d love to know if people are actually capturing that earned growth rate alongside the NPS score.

Barry: I just spoke with Ziv just about that so definitely, it’s on his mind and I’m glad that HBR is showing that to the masses. Everyone, check out Russ online, on LinkedIn, on Medium. Anywhere else? If people have any questions on CS ops, where can they reach out to you?

Russ: LinkedIn is great. I do, occasionally, post on Medium as well but certainly, if you do want to have a chat, reach out to me on LinkedIn.

Barry: All right. Perfect. Well, thanks again for your time and looking forward to continuing the conversation. And I’ll definitely let you know if I find a scientific article on the size of the growth stage for customer success.