Debate is what drives industries and ideas forward, and everyone has their own opinions. In this From the Experts roundup, we asked CS leaders what their opinions are on some of the most discussed customer success topics. Nate Fiedler, Phil O’Doherty, Elizabeth Italiano, and Adam Joseph lent their ideas.
All four individuals were asked the same question:
What do you think is one of the most hotly debated topics in Customer Success and what’s your opinion on that topic?
Many of the answers revolved around how the role of customer success manager should work.
Who should customer success report to?
Adam Joseph, CEO of CSM Insight, sees the position of the customer success team in the hierarchy of the company being debated. As a customer success consultant, he’s worked with companies of all shapes and sizes that each have their own structure. Between these diverse companies, he’s noticed that “whilst their Customer Success ethos is allied, each has a slightly different interpretation of exactly what it means and where it sits within their business. I have personally seen Customer Success report into groups as diverse as Sales, Operations, and Marketing.”
Adam doesn’t believe this is how it should be, though. “In my opinion, however, these operating models will become relics from the early/teenage days of Customer Success.” He argues that customer success is far too valuable to report to anywhere but the C-Suite.
“Given that it is commonly accepted that the average cost of acquiring a new customer is 5 to 25 times more than retaining a current one and that 80% of future profits will come from 20% of your existing clients – Customer Success cannot be a sub-part of an existing function.”
“Simply put, whoever leads your Customer Success function – be that a Chief Customer Office, VP of CS or “Head of” role should report directly into the CEO. They should have responsibility for owning Net Retention – in other words, if you never sold to another customer, is your customer-base a growing entity?”
Another hot topic in customer success revolves around if, and how, CSMs should be compensated for renewals and upsells.
Should customer success “own” a revenue number?
Elizabeth Italiano, Founder at WnTD, believes that “in the vast majority of cases it does make sense for CS to own renewal revenue and churn targets.” However, “expansion revenue is not so clear cut.”
There’s no one-size-fits-all attribution model, Elizabeth adds. So how should a company determine if the decision to let customer success own revenue is right for them? “When determining your organization’s approach you need to solve for two things: 1) What is going to provide the optimal customer journey, and 2) What is a scalable process for your organization that will help lead to overall economic success?”
When it comes to attributing expansion revenue to customer success teams, Elizabeth has a few pointers. “You have to consider elements such as, whether expansion sales are through cross-selling, up-sell or a combination of the two. How complex is the expansion sale process? Does it provide a better customer experience for the CSM to work with customers on expansion opportunities? Or should value and outcomes based relationships be preserved between the CSM and the customer while having a sales executive focused on pricing and negotiation discussions. It’s important to look at this from the outside in and from the customer’s perspective and not just from an internal perspective.”
Phil O’Doherty, Senior Manager, Services EMEA at Hubspot, also believes that attribution of upsells or account expansion to customer success depends on a few criteria.
“There are a number of factors you should consider that are unique to your company before making this decision such as the level of onboarding/implementation required by your CSMs, how technical your product is, the growth stage and maturity of your company, the importance of selling to your base to hit revenue goals, the sophistication of your customers, the skillset of your team (the list goes on).”
Phil also adds that “in order to inform a decision, it’s important to list these requirements along with the pros and cons and get cross-functional support to ensure CS or sales have the resources they need to be successful with account expansion.”
Elizabeth and Phil both see a path to revenue metrics being tied to customer success managers, but what about incentives?
Should customer success professionals get bonuses for upsells and renewals?
Nate Fielder, a Field Customer Success Manager at Box, gives a resounding “Yes!” to the question of whether or not CSMs deserve a financial reward for revenue they help bring in.
He recognizes that not everyone agrees with his preference for blurred lines, adding “‘Boo, hiss’, say the purists who believe in the separation of relationship and wallet.” He understands why some people hold this belief, stating “There’s a tendency to trust people who don’t constantly hit us up for more money, which is why I’m already distrustful of my children. When we know there’s not an ulterior motive behind time and energy that’s given to us, it’s easier to accept help/guidance/advice from other people.”
Despite this, Nate still feels there’s good reason for CSMs to be rewarded. However, there are conditions. First, the customer success manager has to truly believe in the value of the service. Second, the CSM has to act as a true advisor and only suggest upsells when it will truly help. The final stipulation revolves around how compensation is calculated:
“The compensation should be bonus driven: a commission based structure doesn’t work because you’ll inevitably drive the same type of behavior as sales folks. Rather, 100% should be salary with bonus incentives for selling to drive adoption and subsequent business outcomes.”
With a growing and changing specialty like customer success, it’s no surprise that many in the field are still trying to nail down the logistics, expectations, and operations of the role. Determining who customer success managers to report to, whether or not revenue metrics are tied to CSM actions, and how performance is rewarded are topics that many in the customer success field are still trying to figure out.
What are your opinions on where customer success fits in the company and how their impact is measured? Let us know in the comments or on social media @UserIQ.
Bonus: Learn what makes a great customer success leader in the eyes of CS experts.