Who owns the renewal - Sales or CSM?

Alan Rudolph

All - There seems to be quite a bit of debate in today's SaaS organization as to 'who owns the renewal'?  I'd be curious to start a dialogue with folks that have passionate ideas to share on this topic.  Thanks, Alan

Kevin Mitchell Leonor

The long term growth of our field is going to come from proving ROI. We see it today in the Covid-19 world where Customer Success was cut because it was considered a nice to have. That is very misguided but may also be our fault for not thinking about how our internal stakeholders value CS.

So, we could accomplish this by owning renewals and upsells.

With a renewal, a CSM is more equipped to re-sell the value than the SDR that sold the product in the first place because we know what value was extracted, we know the current and future initiatives of the customer, their current value campaigns and what actions are still pending that the customer probably wants to see through it all.

To me, this is no longer a negotiation anymore. It is a simple question. Did we provide you value and do you want to continue to receive that value?

We should also own upsells and cross-sells because if we are developing a value story, it would create a natural interest in continuing the value. Think of it this way.

A bookstore never has to sell you on buying Harry Potter and the Chamber of Secrets. The value was already realized from Harry Potter and the Philosopher's Stone and they want to keep receiving the value they experienced from the first book. They also are engaged in the "value story" that they want to see the payoffs from the earlier "problems" that have improved but are not fully resolved.

We beat Voldemort once. But we know he is still out there, I want to see where this story goes. That should be our approach to creating a journey for our customer. For example,

I was able to solve my needs for a dynamic pricing model through Duetto. But now, I am interested in how to take it a step further by understanding my data to make more informed decisions and Kevin showed me that he is justifying the pricing recommendations based on the tool he has. I want that tool also. If they see value, but they need to be closed by a sales rep. Then we could tie in the rep as a warm lead.

By owning these pieces we can unequivocally show that our actions in the Adoption phase has payoffs in the expansion/renewal phase. That is where we extract our value and ROI and that is the key to longevity in the Customer Success Field.

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Kevin Mitchell Leonor
Customer Success Manager
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Original Message:
Sent: 08-07-2020 11:33
From: Alan Rudolph
Subject: Who owns the renewal - Sales or CSM?

All - There seems to be quite a bit of debate in today's SaaS organization as to 'who owns the renewal'?  I'd be curious to start a dialogue with folks that have passionate ideas to share on this topic.  Thanks, Alan




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Alan Rudolph
Senior Vice President and Executive Technology Leader
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Matt Myszkowski

HI @Alan Rudolph,

I am not a massive fan of the term "own", so to be specific are you asking who is accountable for the renewal?

At SAP, the account management function is accountable for the renewal transaction but the Customer Success Management team are accountable for the value realisation of both software & Customer Success services, driving outcomes - and this ensures alignment to the ultimate goal of renewal (and hopefully expansion).

BenB

Building out the Account Managment team as we speak.  That response perfectly outlines what I had in my head... copy and pasting into internal docs thx.

Elizabeth Bukys

@Matt Myszkowski Where does the account management team fall in your org? Are both under Success or does "accounts" fall into Sales? I'm curious in how that's broken down in other areas with both an accounts team and a CSM team, for example in how QBRs/EBRs are run. Would both teams be expected to participate or would the CSM essentially prep/equip the accounts person to run them effectively?

Aaron Woods

We've got this structured where Sales and Customer Success have shared responsibility for our accounts and are aligned under the goals of our Revenue organization. With that tee'd up, the renewal responsibility lands squarely on Customer Success organization and we leverage a specialized role of Renewals Manager to drive those discussions. Even if Sales is working an expansion, we in CS are responsible for on-time renewals. For context, we are a company that is roughly 200 in headcount, with 11 CS ICs.

gurd3v

The renewal process lies strictly within our Customer Success Management team. We have a single CSM team that owns post activation relationship. It holds our CSM's accountable for driving value for the customer which, in turn, should be measured against renewal rates. This probably depends on deal size, industry and sales cycle. 

Hope this helps!

Matt Myszkowski

Hi @Elizabeth Bukys

Since earlier this year we now are both under a board level area called "Customer Success", but prior to then we were in different silos.

In terms of our QBRs it is the account management function (we call them Customer Engagement Executives) who should drive them but the CSM contributes significantly. If for whatever reason the full QBR is not happening then the CSM is empowered and encouraged to deliver their component in isolation rather than not at all. We must continuously be keeping score of the value delivered and if this isn't happening then the churn risk increases.

Anna Alley

Hi All,

Does anyone have an existing chart or visual that they like demonstrating the separate responsibilities between CSM and account management?

David Jackson

@Elizabeth Bukys

As Matt suggests,  it is not primarily about ownership and reporting.  Ownership can only be considered when the work has been defined.  Figure out what has to be done then you can pinpoint the skills require and then who does what. I can guarantee that you will find that multiple roles will be involved and that fostering team work is far more important than ownership.  Team work is very difficult to draw on an org chart but critical nonetheless.

Brian Hartley

+1 to @Gurdev Anand post.  CSMs own renewal and upgrade (existing customer and increasing contract value - i.e. more licenses).  CSM helps to broker any expansion effort in which the sales team owns (existing customer but new instance/business unit/etc).  So many variables at stake though - I suspect there are many different iterations out in the world.

Rachel Jennings

@Alan Rudolph This is what I feel is a never-ending debate between our CSMs and Account Executive.  At Domo, the CSM is responsible, accounted and compensated on renewals whereas the AE is compensated on new logos and upsells. It does create friction and even though I am grateful for the commercial experience I have gained in the last 2 years of managing a book of business, it is something I find that distracts me from being that advisor to the customer. 

In my ideal world, I would keep the commercial discussion with the AE or AM. I think the CSM definitely should be accountable to influence the renewal by ensuring they are adopting the software but not responsible for running the negotiation and going through.

David Jackson

Here's a radical idea - the customer owns the renewal!  Owning suggests that you have something in your possession and only the customer can give you the gift of their continuing business. 

OK that's not what you wanted to hear.  I do however think that if we spent half the time we currently spend on thinking about ownership and used that time to think more about how can we help customers so that they want to give us that renewal, we'd all be better off.  Who (ownership) only matters when you have figured out what has to be done.  Leave your function at the door and focus on the customer.

DJ

veronique-montreuil

Hi @Matt Myszkowski,

I'm curious, in your structure, who forecasts and report on churn? Is your churn forecasting done with risk predictors or is it more "art"?

Thanks!

Matt Myszkowski

Hey,

Our CEE forecasts it based on the "art", but the indicators are also there to lead them to that decision.

Rod Rinker

Hi Folks,

When I led Customer Success for Hewlett Packard Enterprise, I had CSMs "AND" Sales working together on the Renewal.  The Sales team retired quota for renewal so in the "formal sense" the "ownership" was with Sales.  HOWEVER, I my opinion is that this is not an "OR" for the ownership, it's an "AND".  Certainly, Customer Success Managers, by definition, are accountable for Adoption, Retention, Reduced Churn, and Revenue Expansion.  The Sales teams are responsible for Retention and Growth.  In my opinion, it's a "team sport" and both Sales and CSMs should feel responsible ensuring the best customer experience with the products and services to ensure Retention and to Reduce Churn.

Jeremie Halimi

HI @Alan Rudolph

Here at Cloudinary, the Account Manager is accountable for the renewal, however most of the time, CSM involvement is a must. 
Reason being: The CSM knows best what is the current Customer challenges, financial health, future plans & goals.

This is why we have automatic internal trigger to reach out one to the other towards (2 or 3 months ahead) the renewal date.

Hope that helps.

Dan Conroy

Rachel, I've been in sales (AE/AM) throughout my career, and what you described in terms of the various elements of the shared roles of CSMs and AMs seems very logical. AMs focus on what they have the most control over - the sales element of the process. CSMs focus on what they have the most control over - adoption rates of the software. And the closer these two players in the system work, the more likely success will be - measured by retention rates, upsell/cross-sell, etc. It also may depend upon the solution being sold as adoption rates are easier for some solutions and harder for others. One last thing that is likely important as well is who owns identification of and calculation of ROI as that is getting more and more important especially for large SaaS purchases. I'd be curious to hear your thoughts on what part of the team you feel would be best to have responsibility for that element?

Dan Conroy

This makes great sense - very smart and logical.

Kelli Shea

@Rachel Jennings- I appreciate your comment about managing a book of business as being a distraction when trying to be an advisor to the customer. It is difficult enough working with our customers in establishing a program with clear-cut KPI's and ROI goals.   In my experience, customers tend to lean towards Customer Success for that guidance and expertise and see our Sales team as valued relationships, but still a Sales role with an ultimate focus on growing the account.  While this is in no way a lesser part of the relationship, I find that customers can "write off" our sales partners and place more trust in our Customer Success Managers.   I think it's so important to have a team approach where Sales and Customer Success are very aligned on how to best serve the customer, but with each role having distinct responsibilities and outcomes.   We're both driving towards the same end goal but in very different ways.  The more aligned the Sales/Customer Success partnership is, the more successful our customer's programs tend to be. 

Justin Oberbauer

I think this is such a hot topic because of the perceived value differentiation of Sales vs CS to the BUSINESS (not the customer). There is a pecking order in companies and I find they are almost always sorted relative to the direct impact on the revenue stream. If CS is a revenue owner, its not a cost center. In good times and bad, revenue drivers get invested in and cost centers get rationalized. 

But its also about resource efficiency. If a CSM is doing. great Job at driving adoption and demonstrating value (with the ultimate goal of renewal and expansion) then why not own the renewal also. It suggests duplicity and lack of ability on the CSM side to negotiate a renewal or take an upsell order. 

I also appreciate the sentiment about taking a shared ownership approach. From that lens, there are multiple owners across sales, product, CS, etc, that all play a role in customer experience and delivering value. But from an accountability  perspective, there really needs be one ultimate owner of the renewal. 

Justin

Gwendolyn Radsch

I am curious, does anyone have a specialized team that is part of either the AM or CS orgs that are purely focused on ensuring Renewals are executed on excellently?
In execution this could be a team that allows the right "owner" to run point on the Renewal based on what makes sense for the Account but where that standard doesn't make sense (e.g., lack of trust from the Sales side, lack of maturity around commercials on the CS side, etc.) they are Customer facing and help provide the strategic renewal support that ensures both the customer and the business find a successful path forward. Additionally where this is a clear CS or AM owner, they can assist from a transactional (almost a Deal Desk type of role) or provide additional guidance (e.g., ensuring that we are capturing all contracts collectively, doing what we can to drive smooth business, etc.).
Curious if this role exists or if others have a similar team to help bridge the gaps that were raised by having one team "own" the renewal? (Own in quotes since I do agree with the description of this being a team sport)

Bree Pecci

I firmly believe the renewal should be owned by the CSMs as opposed to the sales team. When customer success is done right, CSMs have already built a strong foundation with their customer. Conversations about the value and ROI should be happening all the time, including outside of the renewal cycle. This should lead to a very natural conversation about renewing, as opposed to bringing in a sales team member to have a transactional conversation.

ChurnZero's marketing team actually held a webinar on this very topic. Both sides make some very interesting points and it's worth a watch!

Customer Success Should Own the Business Relationship: An Oxford-style Debate (watch here):
Should Customer Success or Sales own the business relationship (renewals, up-sells and cross-sells) after a company becomes a customer? Listen to this Oxford-style debate, featuring two teams of experts arguing for and against the most debated topic in Customer Success today on who owns renewals and expansion opportunities. This lively dialogue was moderated by ChurnZero's CEO You Mon Tsang and included the following debaters:

 

For the Resolution (Customer Success should own the business relationship):

• Mike Davis, VP of Customer Success and Sales, TaskRay
• Kassie Anderson, Director of Client Success, GrubHub

Against the Resolution (Sales should own the business relationship):

• Amanda Ingraham, Director of Customer Success, 15Five
• Shawna Vandenheuvel, VP of Client Services JMartech

OliverTaylor

I don't think it's as clear cut as a right way and a wrong way - it depends on the business. For example, in a fast growing biz with complex customers in a low maturity market where land and expand is a key element of growth, a flat renewal is not the goal - we want to be in a position where the renewal is a good opportunity for an expansion conversation (assuming the value has been demonstrated for the Customer). So in that scenario, If you put renewal with CS, Expansion should likely go there too - and then the debate moves to CS being a sales role or not.

I see this question a lot and it's important to clarify the 'ownership' part and the 'renewal' part as there are a number of components that can go into each depending on complexity. Complex Enterprise non auto-renew has different elements to low value monthly cc evergreen for example.

There is also an element to be mindful of which is that Customer Success wants to establishing itself within a business as a revenue driver with a seat at the big table and that's often easier when it 'owns' a number regardless of if that's the most appropriate way to organise.

Sana Farooq

@Gwendolyn Radsch our team is evaluating this exact scenario right now. The deal desk type of role is really appealing to us as we look to scale, but curious how to determine the role they play with the CSM and how comp would be restructured as a result. Would love to chat with anyone who has seen success with this approach!