Customer Success - Operations Department or Revenue Department?

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Jordan Silverman
Jordan Silverman Member, CS Leader Posts: 109 Expert
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edited January 2023 in Customer Journey
Hey all! We are doing a re-org in 2023 and I wanted to get some advice from others here. Does Customer Success live in Operations? Revenue? Or Both?

Historically we have never had an Operations department, this all lived under Revenue so we are trying to figure out how to split it up.

Two things in reality:
1) SMB Customers
- We are an SMB driven business
- SMB customers make up: 60% of our customer base, 50% of our churn, 25% of our revenue

SMB customers have a 1 to many business model aka an unnamed CSM.

Which department should own SMB customers? We have dedicated roles for SMB CS (customer experience + automation)

2) Onboarding
- Onboarding Specialist + Trainer lives in Operations
- Right now 25% of our customers churn during onboarding
- How heavily should the Revenue team be involved for mid-market and enterprise customers?

Anything I am not thinking of or missing? To me it comes down to who owns Churn - both departments or one.

Jordan Silverman
jordan.silverman@usestarfish.com
(914) 844-5775
https://www.linkedin.com/in/jordansilverman/
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Comments

  • Brian O'Keeffe
    Brian O'Keeffe Member Posts: 205 Expert
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    Customers don't really care about the CSM: they care about getting the help/advice/expertise they need when they need it to get the most value out of the product. (I am ready for the barrage of rotten tomatoes.)

    Calling it an unnamed CSM immediately devalues it and creates the well-known "a named CSM is always better mentality" that is so common. We gave it a very different name internally (defined as CSM via Community and a pool team) and that helped rebrand the concept. 

    Tech touch can and will be every bit as successful as a named CSM model when it is built to be responsive, address customers needs and business objectives and treated as an equal part of Customer Success.
  • Yuya at Commune
    Yuya at Commune Member Posts: 11 Navigator
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    Hi Jordan,

    At commune.us, CS reports to CRO (revenue). CS should sit under the revenue dept as it's one of the biggest revenue drivers IMO. Of course, the CS team needs operational folks, but ultimately they operate to maximize the revenue.
    Hope this helps!
  • Erin Birrell
    Erin Birrell Member Posts: 1 Navigator
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    This article may help if the re-org involves creating CS Ops:

    CS Ops is the 2.0 Leader’s Secret Weapon (nuffsaid.com)
  • jennlgamble
    jennlgamble Member Posts: 2 Newcomer
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    We aligned the CSM team under one leader who had sales, marketing, customer success (CSMs and Implementation/OnBoarding) - sales/marketing dubbed as the GTM team and post sales as Customer Success. If you are churning 25% in on-boarding you need to get alignment between those who are selling and those who are onboarding/implementing - there is a disconnect there. What is operations to you? I think of operations as "running the business" - less about delivery and engineering (though I know people classify it that way also). To me operations ensures all business operations are running smoothly and supporting the teams with data/metrics/materials/strategy execution/etc... I don't really think a customer facing team would "sit in ops". If you classify operations as on-boarding and implementation and support and engineering, then I guess you could put CS there, but I personally feel it belongs under a customer leader or sales leader. The SMB CS should sit with the higher touch resources - at the end of the day - you have a customer journey/framework that should be consistent across ALL customers - how you execute those touchpoints/moments - be it a one-to-one or a one-to-many might vary, but the touchpoints are the same, separating SMB into a different area than the rest of the CSMs really puts them on an island.
  • Bodin Pollard
    Bodin Pollard Member Posts: 7 Navigator
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    There's a pretty good argument to say that Customer Success exists to grow revenue. CS can contribute in so many ways, but first and foremost, you want to see positive NRR from your existing customer base. If you have more customers upselling than churning, it's an almost totally reliable sign of a healthy business.

    Benefit #1 of being "revenue" - close alignment and shared goals with Sales are ultimately good for onboarding new customers, and onboarding sets the tone for the customer's initial experience with your company. Get this right and you drastically improve your upsell and churn numbers... delivering improved NRR.

    Benefit #2 of being "revenue" - where do companies cut first during tough times? Do they cut revenue drivers, or services/operations? Rhetorical question, right? Why would you even want to be considered a "services/operations"-based cost centre if you could avoid it?

    As far as who "owns" churn, that's the responsibility of the whole company. Every part of the prospect-to-customer lifecycle impacts the 25% churn number you're experiencing during onboarding. You didn't create that number alone and you can't solve it alone.

    What's wonderful about being in CS (and having a revenue mindset) is the insights you can provide back out to every other part of your business:
    - Product feedback (for Engineering and Support teams)
    - Testimonials and Promoters (for Sales and Marketing teams)
    - Why customers stay (almost everyone is so focussed on churn, they forget to focus on success!)

    Own revenue. Accept the role you play (alongside everyone else) in fighting churn, but never be afraid to own revenue. The most successful CS teams I've been a part of were incentivised on revenue growth.
  • kmulhalljr
    kmulhalljr Member Posts: 40 Navigator
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    While our organization places it within 'operations' we have been arguing for it to be nested within revenue. I don't see how CS is not an extension of the sales process. Where a CS team, imo, reaches out to collaborate cross-functionally with marketing and finance to communicate (and keep a strong eye on) ROI and other KPI's valued by the company.
  • Ed Powers
    Ed Powers Member Posts: 180 Expert
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    Hey @Jordan Silverman--

    In my view, the CEO owns retention and expansion. It's an enterprise-wide effort, not a Customer Success functional concern, and it can be easily shown by analyzing why customers leave and why others stay and buy more. A well-constructed Pareto chart speaks volumes--nearly every function contributes. 

    In progressive, top-performing organizations, the CEO owns continuous improvement in products, services, and processes. C-level functional leaders reporting to them have clear metrics, end-to-end key business process ownership, participate and lead narrowly-focused breakthrough improvement initiatives, and plan, execute, learn, and lead change using a supporting Strategic Management System. In these organizations, where any function happens to report on the org chart is of secondary concern--the organizational design is based on how well it contributes to more effective workflows, value creation and delivery, and business results. In run-of-the-mill organizations, however, org design is more a function of politics than good policy. 

    If you're interested in learning more, here's a study on structuring process-based, rather than typical functional-based organizations: https://core.ac.uk/download/pdf/6908833.pdf. There's also some very interesting research in Organizational Network Analysis that shows about a 70/30 split in functional/cross-functional relationships between individuals optimizes communication, knowledge transfer, and rapid change. Blending a horizontal process focus with depth in functional capacity and capability very effectively supports this.  

    Happy to chat more about this subject any time. 

    Ed