Where's the best place for Upsells to live?

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shamsao
shamsao Member Posts: 9 Seeker
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edited October 2023 in CS Org Conversations

I've found that it's often valuable to keep CS focused on making customers successful and maximizing retention, passing upsell opportunities to sales.  That way, it feels cleaner for the customer as well -- this person is here to help be succeed, not sell me stuff.

I've also used SPIFs to incentivize CSMs to uncover opportunities, that they then pass over to sales.

What are others doing here? Do most of you have opportunities passed to Sales, or do you have CS teams handle upsell, and if so does that create any issues?

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  • Aaron Woods
    Aaron Woods Member Posts: 7 Seeker
    edited June 2020
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    We currently run a shared ownership model with both a Sales Rep and a CSM on each account so that both can develop relationships with the account and work seamlessly to gather info and discuss expansions. For incentive, we run CS on a net retention number tied to a variable comp component.

  • Brian Hartley
    Brian Hartley Member Posts: 185 Expert
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    edited June 2020
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    Hey @Sham Sao we currently have it split between sales/cs:

    CS owns renewals and upgrades

    CS cultivates the expansion and flips to sales for the close

    Similar to you, we have experimented with SPIFs to incentive the CS team.  Overall the CS team can achieve a bonus if they hit a target up-sell/expansion number and/or net churn.

  • Alex Turkovic
    Alex Turkovic Member Posts: 61 Expert
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    edited June 2020
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    I have seen shared responsibilities be very successful - much like @Sham Sao mentioned. CS owning renewals and upgrades and passing expansions to sales.

    Regardless of the process, I think that the CS should approach every QBR with a consultative approach with the intent of driving as much value as possible...and in the process, teeing up the sale. In other words, the sales rep closing the expansion shouldn't have to do all that much to close the deal. 

    In the above scenario, I believe that comp structure and incentives should be aligned to heavily reward the CSM for deals closed after being handed to sales.

  • Effie Mansdorf
    Effie Mansdorf Member Posts: 76 Expert
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    edited June 2020
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    I have seen it all throughout my career. I have found that the best model is that CS is measured on existing opportunities and Sales owns any new opportunities.

    So basically it means, that CSMs are measured on renewals, and any potential cross or upsell should be owned by sales. This way, the CSMs can focus on retention/adoption/value/relationship that should lead to renewals and not focus on bringing in new opportunities. 

    @Sham Sao I like the idea of SPIfing the upsells. Win win for everyone.

  • Jarren Pinchuck
    Jarren Pinchuck Member Posts: 38 Expert
    edited June 2020
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    @Sham Sao this topic always ends in a healthy debate with Heads of Sales and often with CEOs that struggle to see value in Customer Success without metrics that relate to revenue (as if reducing churn doesn't directly effect revenue!).

    I agree with your thoughts and this is primarily how I build out my CS ethos and train CSMs. I always use the example that if a CSM calls a customer, 9/10 times that customer will pick up the phone because they know the call will add value for them. As soon as you start trying to sell something to the customer they stop answering calls as freely.

    There are many ways to have CSMs help sales or Account Managers without them being directly involved and then having to be incentivised. They can sett up the relationship and account so it's ready to be renewed or sold additional offerings. It isn't as easy to track but the odds are that if sales can close that increase easily, it's most likely off the back of the relationship and success the CSMs have built.
     

  • Emmeline Meade
    Emmeline Meade Member Posts: 1 Navigator
    edited June 2020
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    My experience of Sales owning the renewal number and Customer Success owning the retention has worked well. Adding an upsell incentive for CS can also work but it needs to be well thought through. I like team incentives but it doesn’t work in every business. The difficulty of compensating CS too much on revenue and upsell numbers is that they can become more commercially focused and try to upsell to the wrong customer rather than focusing on the customer needs and success.

  • David Ellin
    David Ellin Member Posts: 170 Expert
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    edited June 2020
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    @Sham Sao, this is a great topic. I've seen companies flip-flop on this for many years - especially when sales leaders want their reps to "own" relationships.

    IMO, CS teams should have some commercial skills (IE: ability to identify new opportunities and lead the renewal process through closure with executive support where appropriate). I'm with @Alex Turkovic in that every QBR should be a consultative process where the CSM takes the lead. 

    Having done it multiple ways, my experience is that CS should renewals and up-sells. CS should identify cross-sells and partner with sales, sales engineer, or product expert on the expansion bringing in expertise where appropriate.

  • Jeff Breunsbach
    Jeff Breunsbach Member Posts: 266 Gain Grow Retain Staff
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    edited June 2020
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    @Sham Sao Here's a starting point that we like to show our customers as we go into an engagement. This is not a one-size fits all and you need to adapt this to fit but we like the way that this can help organizations start to align. 

     

    image
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  • Andreas Knoefel
    Andreas Knoefel Member Posts: 74 Expert
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    edited June 2020
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    Exactly, @Jeff Breunsbach . @Jay Nathan and @Boaz Maor posted a great article on Gainsight on where to draw the line: https://www.gainsight.com/blog/who-should-own-renewals-and-upsells-sales-or-customer-success/.

    Customer Success is all about the commercial success of the customer, and has therefore also a Sales component. If you view yourself as a cost center, not a profit center, you are among the first to get cut.

  • Steve Beaumont
    Steve Beaumont Member Posts: 3 Navigator
    edited June 2020
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    Andreas, I agree with this profit centre view of CS. If you are having outcome focused, strategic discussions with your customers then you will usually talk about business expansion and/or additional departments adopting the software/service. I have found that the need for X additional licenses naturally extends from this. This should be an easy process for the CSM to manage without having other players involved.

    If you find that a complete new division is interested in their own instance, with different ways of working and desired outcomes, then that is passed over to Sales to manage and close. The CSM would stay involved and support this, ultimately taking them on as another customer within the same organisation

  • Marcus Sparks
    Marcus Sparks Member Posts: 11 Contributor
    GGR Blogger 2021
    edited June 2020
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    Love this line of thinking Alex. when considering career progression within CS, does this model change for Sr CSMs working with a handful of high-value clients? perhaps more reliance on the CSM to partner with sales when needed vs being required to pass the expansion. I’m thinking specifically about my CSMS who are wired for sales...

  • Marcus Sparks
    Marcus Sparks Member Posts: 11 Contributor
    GGR Blogger 2021
    edited June 2020
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    Thanks for the link and there is a lot of wisdom in this quote “If you view yourself as a cost center, not a profit center, you are among the first to get cut“. a great way to communicate the “we are all in Sales” message to skeptical CSMs

  • Alex Turkovic
    Alex Turkovic Member Posts: 61 Expert
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    edited June 2020
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    I'm sure there are differing opinions here, but I don't think the process should be any different for a Sr/more tenured CSM than a junior team member. In reality, the selling is actually being done by the CSM regardless - by having sales actually close/book the deal, they are likely having a quick confirmation call and taking all of the administrative hassles of actually booking the deal off the hands of CS. 

    I think it's a win-win because it's an 'easy sell' for a sales rep, and frees the CSM up to conduct more QBRs or take on a larger remit of clients. 

  • Kate Current
    Kate Current Member Posts: 9 Seeker
    edited June 2020
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    We have a similar model, offer a flat dollar spiff to any CSMs who open cross-sell opportunities. It is used more as recognition than as a motivator.

  • Andrey Tirel
    Andrey Tirel Member Posts: 15 Thought Leader
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    edited July 2020
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    IMO, while this needs to be a team effort between Sales and CS, IMO, CS should not have a quote or financial upsell goals as it comes to their account. If I, as a CSM, am responsible for driving value, advocacy and customer relationship and my clients trust me for honest and best strategy and plan, I cannot have an ulterior motive to sell to them. You can measure CS based on planning for upsell, renewals and common account goals and not "selling".