How to decide who does what.....

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Jared Scoubes
Jared Scoubes Member Posts: 16 Contributor
edited August 2023 in CS Conversations

Looking for input regarding who should be responsible for renewing contracts? Many were signed 12 months prior - before current sales or acct. managers were in place - so no one owns the original relationship. New people aren't compensated / bonused / incentivized so there isn't much urgency and new sales guys aren't either and claim "it's not their job - they need to sell". How does your organization handle this?

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  • Griffin Fuller
    Griffin Fuller Member Posts: 10 Contributor
    edited June 2020
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    Good question.

    Perhaps if you offered an incentive to the sales team, they'd jump at the chance to handle renewals!

    I'd have the CS/AM team handle the renewals.  Even if they didn't have a relationship with the client 12 months ago, now's the perfect time to begin a new relationship with the customer and make it a priority to develop that relationship throughout the customer journey. 

    It's easy to illustrate the importance of ARR and retaining current customers, so I'd make that known not only to the CS/AM team, but throughout the organization. 

  • [Deleted User]
    [Deleted User] Posts: 0 Expert
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    edited June 2020
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    In most SaaS companies, account execs should be out hunting new logo business. Not renewing existing contracts. 

    Renewals are most often handled by either an Account Manager or a Customer Success Manager. For Enterprise SaaS, it's common to have both an Account Manager and a Customer Success Manager on an account. 

    The AM owning all commercial transaction related items, and the CSM owning customer value mapping, day to day relationship management and adoption. 

    As accounts get smaller, i.e. SMB SaaS, it's more common for the CSM to own the renewal as well. Ideally the contracts are auto-renewing and the CSM has proven the value along the way so that renewal really becomes a non-event. 

    As the company scales, it's common to introduce another role, the Renewal Manager, whose job it is to manage the commercial aspects pertaining to renewals. They work closely with the Account Manager and / or CSM to understand the account status and execute accordingly. 

    There are scenarios where the original salesperson also handles renewals and upsells, but this is typically for mega-sized customers (think multi-million dollar accounts) that take years to develop.

    Boaz Maor and I recently wrote an in-depth article on it that you can reference for more detailed thoughts and some data on this topic. Check it out here

     

     

  • Kevin Mitchell Leonor
    Kevin Mitchell Leonor Member Posts: 248 Expert
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    edited June 2020
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    Money talks like you are already seeing. Personally, I think it is an opportunity to own that process or at least have it under the Customer Success wing as its own position. Sales is very busy and so is Customer Success. The only way for us to carve out time is for it to be a part of the compensation.

    However, we need to be aware of our bandwidth. Putting another book on CS arms may cause the system to topple. So we need to look into the cost to give responsibility or the cost to hire the responsible.

  • Samma Hafeez
    Samma Hafeez Member Posts: 24 Expert
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    edited June 2020
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    Not all contracts are created equal - something to consider.  Strategic account renewals or high ACV renewals usually require more effort, value plays, and ingenuity to win. Executive teams are often heavily involved in such cases in addition to a CSM, RM, or AE, particularly if a possible expansion is in the mix. I am a fan of driving renewal automation for smaller customers, particularly those that exhibit strong health signals and are actively engaged, reminding them well in advance so that any potential renewal risk can be flagged early and mitigated against. I agree that AEs need to be focused on winning new business, but should be ready to assist and serve should their expertise or relationships need to be leveraged to win the renewal. I prefer CSMs stay out of contract negotiations personally, but I know that company size and stage often doesn't allow for a dedicated RM role. 

  • Jared Orr
    Jared Orr Member, CS Leader Posts: 52 Expert
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    edited June 2020
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    The Customer Success team at my company is just over a year old so we are dealing with this right now. I cover the west coast so any contracts that are within my territory are immediately under my name and my responsibility. This works well for us since when a contract "expires" the client just stars rolling month to month so that gives us some time to get to all the expired contracts without anything significant changing for our clients. 

    I spend a lot of my time with renewals but that will soon start to plateau. 

    Jared Orr

    Customer Success Whisperer

  • Jason Noble
    Jason Noble Member Posts: 5 Seeker
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    edited June 2020
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    I've seen the same in a few companies I've been with. Given the situation with you guys being in the position to set this up the right way now, my preference would be to have the renewals as part of the customer success function, and depending on size and scale, either part of the CSMs role and remit, or have dedicated AMs to handle the commercial piece. The gold standard for me, is commercial CSMs who look after renewals and up-sells and cross-sells (but with the reference to "sells" not there).

  • Brian Hartley
    Brian Hartley Member Posts: 185 Expert
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    edited June 2020
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    We are a relatively small shop.  CSMs handle renewals and upgrades while they help cultivate expansion efforts which can then be handed off to sales.  So far it works well.

  • Jared Scoubes
    Jared Scoubes Member Posts: 16 Contributor
    edited June 2020
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    I agree 100%. An incentive for the sales team would be great. My challenge is that many (most actually) of the accounts do not have contracts on file so it is literally like starting over as far as the relationship goes and requires a sales skill set that CS/AM's may not have (they're not being compensated either). A bit of a quandry but we'll figure it out! Thanks for your input!

  • Jared Scoubes
    Jared Scoubes Member Posts: 16 Contributor
    edited June 2020
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    Fantastic article!! Thanks for sharing - super helpful! :)

  • Jared Scoubes
    Jared Scoubes Member Posts: 16 Contributor
    edited June 2020
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    Yes @Kevin Mitchell Leonor! I've been pleading this case for awhile. Good to know I'm not alone in my thought processes! Thanks for your input!

     

  • Jared Scoubes
    Jared Scoubes Member Posts: 16 Contributor
    edited June 2020
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    Thank you for this input! Our situation involves much of what you said. The dilemma stems from the fact that in many instances, the contract would be under negotiation for not just an extension in terms of length, but also (if the portfolio/account has performed well) involves additional locations/properties/services. In such cases, (and there are several), I agree with your thoughts - an AM or CSM may not be best, especially if an AE would or could receive compensation for "re-closing" the deal. Likewise, an account manager could be tasked with this, but execs are not willing to compensate them. Is their relationship building and follow up/training during the term of the contract worth a little kickback to thank them for a job well done? Are they the ones responsible for the "increase" or sales? I'd love to see a split here as teams work together to accomplish this since we're all trying to accomplish the same thing.

  • Jared Scoubes
    Jared Scoubes Member Posts: 16 Contributor
    edited June 2020
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    Awesome! Ours are the same -- month to month after end of contract. I like the division by geography approach. We'll see how we keep ourselves organized as we grow. Growing pains hurt sometimes!!  :)

  • Jared Scoubes
    Jared Scoubes Member Posts: 16 Contributor
    edited June 2020
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    Thanks @Brian Hartley! I think the key here is to get everyone on the same page to work together to accomplish this. Onward and upward!

  • Brian Hartley
    Brian Hartley Member Posts: 185 Expert
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    edited June 2020
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    Yes, that did take a bit of time.  I am fortunate that I have good team members who understand the goal and objectives up front.  Initially it didn't start that way - good luck.

  • Jeffrey Kushmerek
    Jeffrey Kushmerek Member Posts: 96 Expert
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    edited June 2020
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    Jared brings up a good perspective- it depends where your company is in its lifecycle. Smaller companies under 10MM in revenue may just have the "catch-all" role where CSM's onboard, renew and everything else (including burnout). It's only when you get larger that you have the budget to start specializing. 

  • Lauren Mecca
    Lauren Mecca Member Posts: 29 Expert
    edited June 2020
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    @Jared Scoubes and @Jared Spencer Orr you both work with contracts that automatically convert to month-to-month. What does winning a renewal look like, then? Are you asking customers to sign up for another term?

  • Jared Scoubes
    Jared Scoubes Member Posts: 16 Contributor
    edited June 2020
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    Hi Lauren! We're trying to figure that out. Previously we were selling as a "hands' off - automated approach" but due to churn, we recognized that we weren't sticky enough to keep customers around and in many instances, when the "renewal call" happened, we were met with, "Who are you guys again and what am I paying for?" That being said, we have had to shift to a conversation 30 to 60 days prior to renewal to start the conversation. We're not at a point to allow the AM the opportunity to negotiate (for example, "we can keep your rate if you lock in that price for another year by signing a new 12 mo. contract") nor is there be a commission/bonus involved). This is where we are at now.....is it a conversation w/sales or AE's because there is negotiating and selling skills involved or is it just a quick "here's the new contract" from an Acct. Mgr.?? Long story short, we are trying to define this process and I'm not sure what a WIN looks like yet.....the fact that they continue paying us?Sorry, hoping to gain new perspectives and ideas to implement from this very forum.  :)

  • Samma Hafeez
    Samma Hafeez Member Posts: 24 Expert
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    edited June 2020
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    In my experience, CSMs are often motivated by SPIFFs which do not need to be substantial, while AEs tend to expect a more handsome compensation. Ultimately, I think it's up to you to decide what level of skills and effort will be required to close the deals in question and how much budget you have to work with to compensate these individuals. We established a $200 spiff for CSM-originated leads that generated closed won opps. AEs tended to own larger, hairier expansion deals that required more sales-know-how (typically MRR of 1000K or more). Ultimately, important to weigh the pros and cons of utilizing each team's time, consult your CS and Sales leadership, and pilot to see what lands with your team and customers. We eventually allocated a dedicated AE to expansions to work side by side with a dedicated RM as we went from a startup to a scaleup. Good luck Jared!!

  • Jared Orr
    Jared Orr Member, CS Leader Posts: 52 Expert
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    edited June 2020
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    So our product is virtual data rooms (like Dropbox but better!) The vast majority of our clients use us when they are going through a merge or an acquisition, or working on an on-going project that requires data to be stored and distributed securely. How our contracts work is the client pays upfront and that will cover them for the term they signed up for and the amount of storage space (GB) they will need. 

    Let's say someone singed a 12-month contract and they are up for renewal within the next few weeks. I will reach out and inform them that the contract will expire soon and that will result in monthly prolongation fees. 60%-70% of the time, they will ask me to send them a new contract or some additional information. Other times, their project will be close to being done so they will close their data room or choose to roll month to month until they no longer need it. Either way, we still get paid but it makes it a lot easier on our billing team to send our clients one invoice rather than monthly invoices since we have so many clients. 

    Jared Orr

    Customer Success Whisperer

  • Kevin Mitchell Leonor
    Kevin Mitchell Leonor Member Posts: 248 Expert
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    edited June 2020
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    all customer facing positions should be involved and some overlapping ownership by different departments. Then, we must make them measureable and even compensatable. For skillset, we need to do a gap assessment on our own internal departments, then either hire based on those gaps or train based on those gaps.