Customer success (CS) is one of the hotter topics heard across the sprawling sales and marketing universe today. But does anyone know who those CS folks report to at the office?
You'd think so. Thousands of marketing, customer support and sales people have flocked to customer success conferences this year. There are about 250 CS jobs currently listed on Monster. There's a well established Customer Success Association. And there's a growing list of data, analytics and cloud vendors pitching their wares to flush Chief Customer Success Officers.
However, when it comes to structuring the CS staff within a company, it gets a little fuzzy. Everyone seems to agree CS is essential to generating -- and potentially increasing -- revenue from existing customers by helping to assure they succeed when using your product or service. Simple enough.
So does that make it a sales function? Marketing? Customer support? Or is it a new division that reports straight to the corner office? We asked the CEOs of four customer success companies what they think and, sure enough, there's nothing carved in stone about this.
Should a customer success team be part of the sales team, a customer support function, a marketing effort or something different?
Guy Nirpaz, CEO, Totango
Nirpaz is the CEO and co founder of Totango. Before starting Totango he worked in the real time big data space as executive vice president of engineering at GigaSpaces and chief architect at Mercury. Tweet to Guy Nirpaz.
The customer success team should not be a sales, support or marketing function, but a separate unit that works across the company. In some (typically smaller) companies, it may fall under the sales or services group from a practical organizational standpoint, but the nature of the customer success role should not be seen as sales, support or marketing.
In fact, customer success is really a cross functional role and should be seen as the internal champion for the customer across the organization. Customer success should partner and work closely with not only sales, support and marketing, but also products and other critical functions.
Given the focus on renewals in subscription businesses, most people associate the customer success role with managing churn and renewals. But churn or renewal is really only the outcome. The customer success role should not be focused on managing the churn or renewal event (which I would argue is more of a sales function). Rather, it should be managing the ongoing customer journey and making sure the customer is seeing value and getting the business results they expected to achieve. They should be helping the customer with best practices and better ways to use the product, identifying red flags when a customer is stalled or not making adequate progress and making sure the customer is utilizing what they have bought so that when the renewal comes up, it is a non event.
To effectively help customers across their journey or lifecycle, customer success should also partner with other teams. Take marketing as an example. Ideally, customer marketing should be well grounded in facts and data, so that you are communicating with customers in a contextual, relevant and personalized way, versus sending generic updates. This is something that customer success is well positioned to partner with marketing on. The same when it comes to products. Customer success has a unique vantage point into understanding customer requirements and use cases. They should be able to use this to champion for their customers internally.
Overall, customer success should be a function that works cross functionally and truly makes an organization “customer centric.”
Nick Mehta, CEO, Gainsight
Before joining Gainsight as CEO in February 2013, Mehta was executive in residence for Accel Partners. He was the CEO of LiveOffice before its acquisition by Symantec in 2012. He's also worked at Symantec, Veritas, XDegrees and Chipshot.com. Tweet to Nick Mehta.
As expected with any new job area, a few things are happening:
- People are changing their org/job title to customer success, sometimes without changing what they do day to day.
- As a result, the day to day activities of customer success teams are all over the place.
- Some cynicism will inevitably come up about the precision of the term itself.
The common thread in customer success is pretty simple: driving proactive success for your clients, which results in success for your business. No matter what, customer success should not be considered a support function. Support teams are so critical but are fundamentally about responding to client needs. Customer success, by its definition, is proactive.
We find that average selling price (ASP) tends to determine where customer success reports:
- Marketing: Very low ASP and low touch businesses (less than $1,000/year) tend to put customer success in marketing, since all of the customer success activities at those price points will be one to many (e.g., emails, webinars, etc.).
- Sales: Mid level ASP businesses ($1,000/year - $20,000/year) often put customer success in an integrated sales org, where you have the customer success team owning revenue from existing clients. Some of these businesses like having sales own both new and existing revenue. Note that earlier to mid stage (and sometimes larger) companies sometimes keep customer success separate to preserve the status of the CSM as a "trusted advisor."
- Service: High end ASP businesses ($20,000/year or higher) often put customer success in the client services or chief customer officer group. These teams then often collaborate with the sales group on renewals and up sell. This model works in high ASP businesses since there is often a significant post sale service and touch component.
As with any rule of thumb, your mileage might vary, but think about the questions above in planning your own org. No matter what you do, don't just change your job title and think your job is done -- though changing your job title to customer success might still get you a raise.
Tom Krackeler, CEO and Co-Founder, Frontleaf
A serial entrepreneur, Krackeler co-founded Frontleaf in March 2013. Previously, he co-founded GetActive Software and created the Common Ground product line, a CRM that nonprofits use to raise funds. Krackeler has also worked with Cleantech Group, the Environmental Defense Fund, and as a senior analyst for Accenture. Krackeler serves on the board of the nonprofit technology network NTEN. Tweet to Tom Krackeler.
In my view, the customer success team should be an independent group, with its leader reporting directly to the CEO. It should have direct responsibility for customer engagement, satisfaction and retention. The existing customer support, training, on-boarding, and even customer marketing functions should then roll up under the customer success VP, who sits as a peer to the sales VP.
Why? Because customer success represents a new and crucial mindset, and leverages an evolving set of activities and skills. It's 100 percent aligned with helping customers achieve value and thereby retaining and expanding recurring revenue, and so it represents as growing part of the top line as companies mature.
The trickiest part of the equation is determining whether the sales or customer success teams should take responsibility for renewals. My rule of thumb is that for single product companies with low friction sales models, customer success should handle renewals. As renewals get more complex and potentially more lucrative due to cross sell/upsell opportunities, it makes sense to pull in a dedicated renewal team from the sales department.
Don MacLennan, CEO and Co-Founder, Bluenose Analytics
MacLennan co-founded Bluenose in Nov. 2012. He serves as an advisor to LiveHive, TrustedID and Bitzer Mobile. Previously, he worked with AVG, RSA Security, SAP, Calico Commerce, Viryanet / RTS Software, Pure Software / Pure Atria, Programart and Computer Associates International. Tweet to Don MacLennan.
First, let’s define customer success as a company level objective, a culture and a way of working. If your business is a recurring revenue model, customer success is inextricably linked to your financial success.
There’s a set of capabilities you need in order for your customers to succeed. The most prevalent gaps I observe are:
- Ensuring successful on-boarding and early adoption;
- Monitoring customer health to drive timely interventions;
- Running intelligent campaigns in your customer base to nurture adoption and advocacy; and
- Managing the annual renewals as a project, not an event -- if you have annual agreements.
The department of customer success is often designed to be the gap filler for missing capabilities. But because it’s part of a company wide effort, every other customer facing team must still have incentives and goals that are aligned to the desired outcome of customer retention and growth.