Sometimes when people hear the question, “Who should own renewals and expansion?,” they roll their eyes. It's probably the most hotly debated—and long-debated—CS topics of the decade. Some people are tired of talking about it. But others are in the thick of making this decision on ownership at their company. (Will this chapter resolve the question once and for all? Time will tell.)
Let the games begin! To represent the side in support of CSMs owning renewals, we'll bring in time-honored champions Christina Kosmowski of Slack and Samuel Lee of KeepTruckin. To represent the side against CSMs owning renewals, we'll bring in Jane Graham at Kronos, Inc. and Anthony Reynolds of Altify. Then we'll have an overtime match to determine who should own expansion.
We've gathered three major arguments: (1) ensuring accountability for the CSM, (2) giving renewals a focus that Sales wouldn't give them, and (3) keeping a single point of contact.
Kosmowski, the global head of Customer Success at Slack from the previous chapter, believes that the CSM should do renewals.
Kosmowski says,
She believes Salesforce wouldn't have been as successful if Sales had owned the renewal, because they're more interested in closing new business (due to the typical sales culture, skill sets, and executive focus) and would have inevitably deprioritized renewals.
Some thought leaders in Customer Success say that introducing too many different people from the vendor to the customer can confuse them, and that a single point of contact can also execute more effectively given their knowledge of the relationship. This is Samuel Lee's view. He's head of Customer Success & Support at KeepTruckin, a fleet management SaaS company that's on a mission to modernize the transportation industry. Lee explains, “CSMs are with the customer through the lifecycle. There's nobody else in the company who has the understanding of the client's pains and challenges, their business goals, and what it's going to take for them to renew next term. So the CSM should own the renewal. That said, if there is a heavy negotiation piece to the renewal, or there's a large upsell opportunity that coincides with it, then it can make sense to bring in the salesperson.” (We'll add: Finance teams may also get excited about the idea of reducing specialization. Combining workflows into a hybrid role may result in lower headcount costs.)
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These are compelling arguments from Kosmowski and Lee, but there's always another side to a debate. Let's explore the counterarguments next.
We've gathered three major counterarguments: (1) preserving the coveted “trusted advisor” status, (2) reaping the benefits of specialization, and (3) allowing CSMs to focus on upfront efforts that pay dividends later.
Some CS professionals believe that giving the CSM commercial responsibilities could risk compromising their position as trusted advisor to the client. Jane Graham is VP of Customer Success and Renewals at Kronos, Inc., overseeing both the Customer Success and renewals teams, for about $1 billion in recurring revenue and over 15,000 customers. CSMs at Kronos don't manage renewals, but the team that does reports into Graham as the head of Customer Success. “The renewal is a transaction that can muddy the waters between what the CSM is there to accomplish, which is helping the customer achieve business outcomes, versus what your company wants to accomplish, which is getting them to renew.” So Graham sees the benefits from separating the renewals team from the CSM team at her company.
Anthony Reynolds, CEO at Altify who appeared in Chapter 8, endorses that argument. “I'm a big believer that CSMs should not be selling to the customer. Salespeople should sell to the customer and Customer Success should focus on the customer's success. The CSM should be driving the adoption, the enabling, the engagement, the training, and all the things to enable value realization. I don't believe Customer Success people should have a motivation to drive cross-sell or upsell opportunities. Those will be the result if they do their job effectively and win the hearts and minds of customers.” In his view, contributing to renewals and expansion doesn't require owning them.
Reynolds knows the downside of giving CSMs selling responsibilities, as a client of some vendors himself.
Jane Graham believes that specialization between the CSM and Renewals owner helps to optimize workflows, especially when a company reaches around $200 to $300 million in recurring revenue. That's the point when she believes the two functions should diverge.
There's a third reason why it can make sense to give renewals to Sales or a Renewals team instead of the CSM. In order to set up the renewal for success, the CSM needs to be “at cause”—doing the things early on in the customer's contract that bring them to an Outcome and a terrific Experience. If the CSM is asked to also manage the renewal, too much of their focus could be diverted to the transaction itself—given the typical focus on dollars from their managers and executives—and away from the early-stage activities that will actually ensure successful transactions months or years later. Therefore, the time horizons that both a CSM and a renewals person need to focus on are different and it's hard for a single person to operate on both time horizons.
Sometimes the CSM team won't own renewals, but an Account Management team reporting into the head of CS will. (This is the structure of Jane Graham's organization, for example.) In addition, sometimes the CCO will be held accountable for the Gross Retention Rate, even though renewal execution is handled by the Sales team. Alexis Hennessey, the executive recruiter from Heidrick & Struggles, observes, “The majority of the time the sales leader still owns the revenue. I'd say maybe 20 or 25% of the time, we see chief customer officers owning renewals even if they don't own the execution of the actual transactions.” We've seen that percentage increase over time.
Kevin Meeks from Splunk is an example of an executive owning both. As VP of Global CSM and Renewals, Kevin sees the value in both specialties. First, he sees the CSM's role as being all about business outcomes. “If the CSM does their job the way they should, really managing that customer post sales experience and managing toward outcomes and success that they're looking for, the renewal should be a non-event.”
For Kevin, the renewals team then becomes a natural complement.
And Kevin sees a strong argument for having these teams under one leader. “So the reason that we brought these two teams together recently was we needed to have a really fluid motion between the two organizations. They need to be talking, they need to be collaborating. The RSRs should hold the CSM accountable to that renewal readiness. And the CSM should hold the RSR to accountability of closing the renewal. There needs to be a really tight partnership between the two organizations.”
We see two scenarios in which it makes sense for CSMs to own upsell: (1) when the product and pricing model result in normal CSM activities leading to upsell and (2) when CSM ownership is limited to upsell lead generation.
Let's bring back Kosmowski (from Slack and Salesforce):
Kosmowski does see the value of bringing a salesperson back in for a different kind of upsell: “In situations where there's a new sales cycle with a net executive who has a whole new value proposition, it's more like acquiring new business. So it makes sense to bring sales back in.”
Similarly, for Brent Grimes at MuleSoft, adoption and proliferation of MuleSoft's technology are key to both retention and expansion. Brent's team is uniquely impacting expansion revenue: “This is something that we focused on figuring out for a while, but I think we cracked the code a few years ago and it's allowed us to accelerate our net retention rate.”
Some companies hold CSMs responsible not for an upsell quota, but for developing a pipeline of upsell opportunities for the Sales team to close. That's how Sam Lee divided up ownership at KeepTruckin. Lee explains, “CS is responsible for identifying the upsell opportunity within customers and then passing that lead over to sales so that sales can then close that down. Sales has a new logo revenue target as well as an expansion target, and the CSMs have a target for leads (CSQLs).” CSQL stands for “Customer Success Qualified Lead,” analogous to the Sales Qualified Leads that a Sales Development team (pitching to new logos) is often responsible for.
What's the bottom line? In Figure 21.1 we bring back the three types of CSMs that we explored in an earlier chapter.
CSMs for Value Capture are responsible for revenue generation (renewals and expansion) in existing clients. Whether you can have this type of CSM depends on your answer to this question: How much CSM effort is required to get clients to achieve value from your product?
If the answer is “low,” then CSMs should be able to handle renewals and likely also expansion. Typically the effort required to get clients to value is low when both (A) and (B) are true:
| CSM for Value Gaps | CSM for Value Delivery | CSM for Value Capture | |
| Product | Early | Robust | Mature; possible multiple |
| Services Sold | Few to none; or else CSM is a paid TAM role | Well-developed | Core competency, or else none needed |
| CSM Profile | Technical | Strong exec presence | Sales/“Farmer” |
| Cost | Cost of Goods Sold (COGS) | Retention (part of Sales & Marketing) | Expansion (part of Sales & Marketing) |
When (A) and (B) are true, the CSM has the time and mental bandwidth to fulfill some of the criteria that our champions mentioned above. They're able to:
And they achieve some of the benefits mentioned above:
But, it's important not to force this. If (A) and (B) aren't true—which is likely in a huge percentage of companies—keep the specialization.
One other point: Many companies change this ownership over time as their business matures. In the early days, it may make sense to launch a CSM organization with a singular focus on adoption and value. Over time you may be able to layer on renewal responsibility. As an example, many private equity firms now have a playbook where they move renewal responsibility to the CSM team post-deal.
Let's parse it out: What is upsell, exactly? If you ask CEOs what upsell means to them, you'll hear a wide range of definitions:
From supersizing your fries to getting premium floor mats in your new car to buying a bigger island, upsell covers a lot. But if everything is upsell, how do you determine how to handle it? Who does the upsell? Who gets comped on it? How do you comp? These questions are impossible to answer if upsell is such a big bucket.
So we're proposing an expansion taxonomy:
Note that the levers for each type of upsell are totally different:
Broken down like this, questions about “who owns what?” become easier to answer because the answer changes for the situation. Let's take a look at who might handle upsell in each of the following circumstances:
In any of these cases, the CSM could be responsible for CSQLs.
We do think it's absolutely critical for clients to consider CSMs to be trusted advisors. In vendors where there's a strong emphasis on execution in transactions that doesn't take into account the success of the client, having a hybrid CSM/Renewals/Expansion role can compromise the relationship. That said, many of the best salespeople in the world have always functioned as trusted advisors, keeping their clients' long-term interests in mind. As such, there is no reason to think that owning revenue and being a trusted advisor are at odds as long as companies and individuals have a long-term orientation.
In this chapter, we discussed one of the age-old debates in Customer Success: Who should own renewals and expansion? We explored divergent points of view on this topic in order to showcase the full breadth of opinions in the industry, then offered frameworks for how to consider which points of view are most relevant for your situation. We don't believe there's a universal right answer—but we do believe certain patterns of thinking can help you make the right decision for you. In addition, over time the clear trend is for Customer Success to own more overall revenue.
In the next chapter we'll explore how much money to spend on Customer Success—and when you can't get your desired budget, how to do more with less.