A well structured customer success organization is necessary for any SaaS company to achieve massive growth.
Most SaaS businesses have well defined product, engineering, marketing and sales teams. With this a company can achieve short term growth.
However, recurring revenue and LTV drive long term growth. So, a proper customer success organization is required to provide consistent growth.
Setting Up a Customer Success Organization
Most people know the importance and benefits of customer success but setting up an effective customer success organization is not easy because it is a new field.
Now we all know that to be successful, customer success should be a company-wide effort instead of just being the sole effort of the customer success department.
But someone needs to be responsible and held accountable for the results and ROI of customer success. Otherwise, it will be like a ship without a leader which will lead to wastage of resources.
Before starting a customer success practice, a company also needs to decide what the core objectives are going to be. At the start, it is not feasible to focus on several KPIs like retention, onboarding, upsells etc.
So what should the focus be on? We recorded a video with our Founder & CEO, Puneet Kataria to discuss the same.
The exact structure of the customer success organization depends on the company and the stage in which the company is in.
Here we will discuss the common ways in which a customer success organization can be structured.
For Small Companies:
In small companies or in companies where the customer success division is in the early stages, a customer success leader should directly report to the CEO or COO. In such companies, a customer success leader defines the goals and the metrics that the customer success department has to follow in consultation with the senior leadership.
Should Customer Success report to Sales?
Some early stage companies put the customer success department under sales.
That is NOT a good idea.
Sales is responsible for bringing in new business and has no role to play in the recurring revenue business. This might lead to complications as the sales head would be focused on increasing the sales and not whether the customers will renew or upsell. Also, for the sales head, customer success will not be the priority and at the end s/he will mostly be measured on the number of deals closed. So, s/he would not give the required time or put in the necessary efforts to reduce churn or increase upsells.
In this situation, the customer success team can get stifled and hence may not be able to achieve their goals.
So, if customer success reports to the VP of sales, there might be a conflict of interest as the VP of sales might not have joint accountability.
In that case, it is best that the customer success team reports to the CEO or COO. That way customer success will keep sales honest and vice-versa.
For Mid Market Companies:
As the company grows it is best to have a VP of Customer Success to whom the customer success department reports to.
Once both VP of Customer Success and VP of Sales are there, it will lead to both the sides being represented well. So, sales will actually bring in the customers for whom the product is made and customer success department will be able to retain and upsell.
For Large Enterprises:
As the company grows, both the VP of Customer Success and VP of Sales can report to the Chief Revenue Officer (CRO). Some companies have started having the post of CRO so that equal importance can be given to sales.
Soon, the CCO (Chief Customer Officer) post is also going to become common as more SaaS companies reach the status of billion dollar companies.
Imbibing a Customer Success Culture
The most critical thing is to imbibe the culture of customer success in the company. Everyone in the company needs to understand that the company will grow only if the customers achieve their goals and are happy. Every interaction with customers should be such that they can derive value from the product and love the experience of using it.
This direction should come from senior leadership, preferably from the CEO so that the employees understand how crucial customer success is.
Changing the focus of a company is not an easy task. It requires time and resources like training, conducting workshops, etc. so that everyone has the basic knowledge of customer success.
It will take time and effort to convince and bring all employees on board as this is a new practice. But slowly the company will become a customer success oriented business.
Customer success can be a differentiating factor for your company as there are several alternative products available in almost every industry.
The rise of customer success is inevitable, so we might as well make the most of it.