CUSTOMER SUCCESS AND

SALES …Stephanie Bell, Brian Harp

April 28, 2016

Agenda for Tonight• Some basic definitions• Describe our relationship with Sales• Discuss Challenges and solutions

Definitions• High Touch• Low Touch• CS reporting

VP of Sales or CRO

VP of Services or CCO CEO

Organizational Structures

Each org has its own goals…• Sales: New Business ARR• Marketing: MQLs• Customer Success: Gross Renewal

Rate and Upsell ARR• Support: Ticket Resolution Time• Services/Onboarding: Project

Completion Time, Services Gross Margin

CS org…• Ensures Support Teams are not just driving

time to resolution, but also driving toward the right resolution from the customer’s perspective

• Gives feedback to the Sales Team • Works with the Services/Onboarding Team to

help overcome any negative sentiment during onboarding and ensure value is delivered

Describe your relationship with Sales • One word• Who owns renewals?• Who owns upsells?• Whose responsibility is it to map out and communicate the customer’s org

structure and build broader relationships?• Does Customer Success need anything from Sales after the deal is

closed? • Does Customer Success have any input into the Sales process? • Are there circumstances where Customer Success brings Sales back into

an existing customer?

DISCUSSION TIME

APPENDIX

Organizational Model #1: Carve Out Silos• This solution argues that if Customer Success is to be a peer to Sales and other departments, it has to be fully accountable

for its own metric – i.e. take full credit and blame for it, even if the team’s influence is limited.

• In this world, every department is accountable for one to two key metrics.  For example:  

• Sales: New Business ARR

• Marketing: MQLs

• Customer Success: Gross Renewal Rate and Upsell ARR

• Support: Ticket Resolution Time

• Services/Onboarding: Project Completion Time, Services Gross Margin

• This is what most SaaS businesses look like today. In this model, every department head fights for resources to achieve his/her metric. At Gainsight, we call this model the “Team of Rivals.”  

• The benefit? Every metric is well-represented in a cross-functional debate.

• The downside? There are often significant negative externalities from each department’s actions. For example:

• Support strives for faster resolution time to the detriment of the customer experience, hurting the gross renewal rate that the CSM team is responsible for.

• Customer Success strives to improve the renewal rate, but doesn’t make the effort to convert happy customers into advocates, which is a missed opportunity to drive the Marketing Team’s MQL generation.  

• Marketing strives to boost the volume of MQLs to the detriment of the Sales Team’s average selling price.

• In this model, the only person who (a) has an incentive to care about all metrics and (b) is capable of minimizing the negative externalities of each team’s effort is the CEO. The CEO spends his/her time prodding each department head to “keep the other department’s goals in mind,” organizing off-sites to alleviate friction between teams, and slogging through cross-functional initiatives.  

• This is one major reason why being CEO of a typical SaaS company is a very difficult job, and also a reason why many CEOs are hiring a Chief of Staff to do the dirty work.

Organizational Model #2: Make Customer Success the Glue

• At Gainsight, we know Solution #1 isn’t the best way to run a company. That’s why we’ve written so much about the role of the CSM in serving as the quarterback - on behalf of your customers - to hold other departments accountable for their role in customer success.

• This model takes for granted that other departments – Sales, Marketing, etc. – are largely focused on their own one-to-two metrics and operating in their own silos. The CSM’s role is to prevent the resultant inefficiencies from affecting the customer experience.

• In this model, the CSM…

• Ensures that Support Teams are not just driving time to resolution, but also driving toward the right resolution from the customer’s perspective.

• Gives feedback to the Sales Team when they sell to customers that aren’t ready for the product (see our Readiness Risk).

• Works with the Services/Onboarding Team to help overcome any negative sentiment during onboarding and ensure value is delivered (see ourImplementation and Sentiment Risks).

• Etc.

• The detriments of this model are as follows:

• Your CSMs have to be strong – they’ll be expensive.

• Your head of CS also has to be strong.

• Ideally, non-CSM teams keep customer happiness in mind even when the CSM team isn’t monitoring them. When CSM has to monitor, opportunities to drive customer happiness are inevitably missed.

• Pattern recognition will invariably slip through the cracks. Your CSMs might succeed in tactically resolving cross-functional issues that arise, but they won’t be in a good position to identify patterns that require functional expertise. For example, they may not recognize that a product enhancement would fix some of the issues they’re working through precisely because they’re not product experts.