Determining if sales or customer success should own customer expansion and renewals is the age-old SaaS question. And not to spoil this article for you, but I don’t have the answer.
Sorry. I know everyone wants a definitive verdict on this, but the good news is that either approach can work well.
If you are a SaaS founder, sales, or CX leader you have probably spent a lot of time thinking about this topic. It might be one of the most common things I get asked to weigh in on.
There just isn’t a right or wrong way to structure it. It comes down to preference really. I am fine with either approach. You can be successful when sales owns expansions & renewals, and you can be equally successful having customer success own it. Where it sits in the organization doesn’t matter. What matters is leadership, clarity, and team composition.
- Leadership. You need to design the right leadership structure. If sales will own expansions and renewals, you need a leader who understands the importance of the customer experience and will play nice with CS. If CS will own it, you need a revenue-minded leader who wants to be held accountable to a number. The right model with the wrong leader at the helm will fail.
- Clarity. Each team needs to understand what they are responsible for, where there is or isn’t overlap, how they are expected to work together and what they are measured on. Leadership must be clear about the model and create incentives and processes to support the model.
- Team composition. This is what matters most. Who you recruit will impact the success of the model. Create your model, and then hire for that model based on ideal candidate profiles of who you need in each role. You may need hunters for new logo acquisition. Farmers for renewals and expansion. And something entirely different for success and support. Or some other combination talent and skill. Just be clear about who you are hiring and what you need them to do so that you can recruit the right people.
Let’s look at the three different models a little more.
Sales owns expansion and renewal
The concept of sales owning expansion and renewal feels very natural because salespeople are skilled at selling, and expansion and renewal are inherently sales motions. In this model, there is often a selling team that closes new logos, and a different team in the sales organization that is responsible for account growth and retention. This can be a really, nice clean approach.
The challenge can be coordinating the customer relationship and creating clear lanes between sales and customer success. What is a customer success activity versus a sales activity? How do the two teams coordinate communication and customer touchpoints? Who owns what? There are some blurry lines that need to have clear direction for the sales-driven model to work well. But it can work and is worth exploring. In this model, you need a strong sales leader who understands the difference between land and expand motions and can run different types of teams under one common organization.
Proponents of this model really like the specialization of roles which helps with scalability. The downside can be a confusing experience where customers don’t really know who their main point of contact is, and who they should reach out to for what.
Customer success owns expansion and renewal
The great thing about this model is that ownership and accountability are very clear. Customer success owns the entire relationship, all interactions, and as a self-contained unit for the customer experience (as it relates to expansion and renewal). This model can create a great experience for customers because they aren’t bounced around to different contacts with confusing titles. However, a core challenge to this is finding staff who are customer service oriented and comfortable owning a revenue number. Recruiting the right people is key.
Hybrid approach to expansion and renewal
I personally love the idea of a hybrid approach to expansion and renewal, especially in a product-led organization where a lot of expansion is happening organically and renewal rates are already high. That said, it’s not easy to implement and the right culture has to be created. There need to be clear lanes for both teams, and incentives need to be aligned to be collaborative with each other. That’s a tall order.
In a hybrid model, sales and CS work together in a natural way with pre-defined roles & responsibilities. For example, CS can own reactive, organic expansion (that were the customer reaches out to expand), and sales can own proactive, sales-driven expansion (where there isn’t an expansion opportunity until sales develops it). CS can own most renewals but have the option to tap into sales for large, complex renewals.
This model can be very natural for the customer, and create a great customer experience, but requires a high degree of coordination and collaboration between sales & CS. They can’t compete with each other and need to incentivized to work together to expand and renew customers.
Picking the model that’s right for you
When it comes to the often-debated question of who should own customer expansion and renewals, remember: There is no right or wrong way, there’s just what is right for you.
This account coverage model from Desired Path is a great tool to help you sort out what’s right for your organization.