There has been an ongoing debate amongst customer success Professionals since what feels like the first customer success team was launched. The question that is guaranteed to generate heated LinkedIn comment threads is: Who should customer success report to, sales or support?
Many SMB organizations will not have the clarity of having a Chief Customer Officer to deliver cohesive narratives on how to handle customers. That role tends to come much later and after a certain level of growth. That leaves many customer functions left to fall under some of the more traditional and foundational departments and functions. This leaves teams with heavy cross-functional teams, like customer success, in a tough place, having to lean more to one function than another. It makes sense that leaders are left with the choice of putting customer success with sales or support.
Whatever answer you choose, you are probably correct, at least for your organization. The answer depends on a lot of other structural decisions around your sales strategy, account management style, product complexity, and even the overall experience of the teams. No matter which side of the argument you land on, customer success drives revenue, though it can look different.
It really isn’t black and white. So let’s talk through some of the reasons to land on one or the other and give you an option few consider that could be the best one of all.
Customer Success as a Revenue Function
In the last few years, it seems that Sales and Revenue teams have won the argument on where customer success can make the most impact, because many leaders grew tired of justifying their existence to executives and knew that keeping their jobs meant learning how to show bottom-line growth through their efforts.
By my estimation, it started with a shift from renewal/retention rates to Net Revenue Retention being the north star for all CSM metrics. This gave customer success teams a way to offset the known issue of inevitable churn. Every CSM knows that some churn is simply unpreventable; a customer goes out of business or gets acquired, they hired a new CTO who can take software in-house, or even that the C-Suite just wants to try something new. The account was well onboarded, priced right, had stellar usage, and advocates in the customer organization, but still there is nothing that could have been done to prevent that churn that the CSM was incentivised on. NRR gave some relief because in a large portfolio, there is always room to grow someone, and if you time it right, that growth can hit at the same time as churn, and you can balance your portfolio to show a positive NRR. Problem solved, right? In that example, maybe, but there is an underlying tradeoff that many don’t consider: Customer Trust.
Good CSMs have a lot of trouble transitioning onto revenue-focused models for one major reason: most of them aren’t natural salespeople. They probably can be; they have the relationship skills, product and industry knowledge, and even the best platform to present new opportunities to the customer. What these CSMs often lack, that sales requires, is motivational alignment. I have had the same conversations with dozens of CSMs during the transition into revenue-focused customer success models. They feel like they are betraying the trust their clients have in them by forcing uplifts.
When every call with their manager focuses on revenue growth, so do their conversations with the client. It is no longer retention, because that is no longer enough. The conversation is no longer about how to add more value or increase customer happiness or even how to drive better adoption; it must involve the latest product’s demo. This shift feels like an assault on why most CSMs pursued the title to begin with. These are people who naturally want to help; they believe in their product, but don’t share the love of the grind as salespeople do. What is worse, as they shift to revenue goals, the compensation model rarely changes. This is where you see the memes of how the salesperson gets a big commission check after closing a deal, and the CSM gets nothing after hard-fought renewals.
Customer success aligns well with revenue functions if done well, though. If you have a weaker sales process, customer success can bolster it and set that account up for real growth. CSMs can nail the timing when growth conversations have the highest rate of conversion through their relationships and communication cadence. CSMs can be the most organizationally aware come renewal time as well, making sure the right points are made to the right people when it is time for negotiations.
The key is having the right people in the right seats, equipped with the proper incentive structures and support to focus on growth, instead of crisis avoidance. The benefit will be that the customer success metrics speak in the revenue terms that sales-focused leaders and investors want to hear: easy-to-see growth numbers. Still, there is a strong case to be made that CSMs with this focus could be better understood simply by branding them Account Managers.
Customer Success as a Support Function
Early in my career, many subscribed to the idea that customer success should offer proactive support, minimizing tickets, maximizing knowledge, and assuring a positive customer experience. This required substantial knowledge of the product, industry, and the customer’s business to be successful. That built a lot of trust in CSMs as the ultimate product expert. This also gave them access to case studies and candid feedback that leveled up marketing and product efforts.
Proactive support wasn’t the only thing they did, though, because with great knowledge comes lots of delegation. CSMs were the product and customer experts, so when support couldn’t help solve an issue, it landed with the CSM. When sales couldn’t build a strong value proposition, CSMs were tapped. When billing couldn’t reach the customer about a late bill, CS was tasked to hunt down the contact that could get the invoice paid. Anything that didn’t neatly fall into a channel was left to the CSM to figure out. This only increased their capabilities to assist and the number of tasks added to them. This became the primary cause of burnout across the customer success profession.
Still, it was great to have these expert generalists as the face of the organization, because the trust was established. The customers relied on their CSMs for everything, because they could make it all happen. They were the one person who knew the customer best, and that made for frictionless resolution of any issues, whether it was their job or not. This made renewal conversations more predictable; favors could be called in because of that relationship. Churn risk also came with friendly warnings directly from the customers. CSMs were almost like coworkers instead of vendors to these customers. That kind of loyalty is becoming rare in today’s world. In this model, leaders struggle to relay value, because the metrics of what was on course to happen didn’t. The support tickets, complaints, and c
hurn simply didn’t happen because of the proactive actions of the CSM. The renewals become a given because of all the value the CSM is adding to the customer experience. Other departments ultimately get to show better response metrics because of all that was delegated to customer success to handle. A 90% retention rate with hundreds of well-documented cases that bolstered every other function of the company doesn’t show up as resources saved. To the C-Suite, it means 10% churn and thus lost revenue that was the responsibility of customer success to mitigate.
Customer success offers more value to the customer whenever they operate as an extension of support. Giving customers direct access to someone who can manage any issue they encounter in one place can remove a lot of product friction, and this is actually what drives referrals; but unsupported by the rest of their organization, CSMs feel the weight of every crack in the offering and spend their days plastering over them. That is a hard job. It is also very hard to quantify. If you are looking to offer the best customer experience, saddling customer success with support can do that. However, it requires understanding from the very top that this is the value they add, happiness is the metric, and hard to get data on. So, if you are expecting to see the number of dollars your customer success team added to the bottom line, this is likely not the direction you want to go.
Have You Ever Thought of Customer Success as Part of Product?
OK, we all get it. Customer success can be a bit amorphous. They are the Swiss Army Knife of customer-facing teams. If that is the case, why not lean into that flexibility rather than make it pick a side? Why not align it with a team that has a more shared interest and a better-understood purpose? Why not put your customer success team with product?
It sounds crazy, but let’s talk about what product teams do. They design and manage products for the business. Their products are what actually drive revenue. A good product sells better than a bad one, and no product is perfect. So designing the best product for customers is in everyone’s best interest, right? Here is where customer success can be a real catalyst, aligned with actual growth, but not tracked in a sales quota way.
We can keep the basic customer success job description intact for this. CSMs can still lead training and implementations, track and drive adoption, be a primary point of contact for an account, offer some support, and lead uplift and renewal efforts. All the same things, but not focused on simply NRR. Instead, their metrics align with product improvement and, get ready for a throwback term: product-led growth.
I have worked with some truly amazing product managers in my time, but one thing that a majority of them had in common was a strange level of disconnect with customers. They knew the data, researched their topics to death, they may have even interviewed a few customers and gone on-site, but they often still missed out on the customer sentiment that could have made an ok product into exactly what customers wanted.
Pairing product manager goals directly with relationship-driven customer interaction can produce magic for a product. Imagine if your product team was fed real-time customer feedback, complaints, and wish lists. How about if you got real and regular exposure to customer sentiment around the problem you are trying to solve? Now, what if, when you launched a product, your product team got to put it in front of every customer to buy with the same passion and expertise your team put into bringing it to life? CSMs can do all that.
Renewals still happen, but they come from that trusted place a support-aligned CSM offers. Growth still happens, but not out of pressure to hit quota. Instead, growth comes from passion and expertise. Your knowledge base becomes stronger because education is part of the mission. Your implementations become better because common roadblocks get resolved faster, as a result of the priority of the product/customer success team to make that the best and easiest it can be. White pages, content marketing, best practices, and testimonials all become organic through the shared processes. Most of all, your customer wins because you are focused on creating the best product and experience as a package deal.
The metrics can still track NRR, NPS, CSAT, etc. It makes sense for customer success to own those in all the reporting models, but they are not the north stars; they are lagging indicators. The metrics become the number of customer interactions, the amount of feedback you generate, and product improvement opportunities surfaced, escalations resolved, and issues reported. All things that drive product improvement and require real customer insight to get. None of these can be generated without interactions, relationships, and data. In our age of AI, think of what you could do with that kind of documented information on every customer, guiding your product’s next move.
We are Entering a New Age of Software. The Old Playbooks Won’t Work Here.
This isn’t about AI, but we can’t ignore it. At this time and surely in the future, the features of your software can be reproduced. AI is your competitor now because anyone can build software that does what yours can do. They can replicate your functionality exactly as they want it, and they can do it fast and cheap. As this type of competition sets in, customers will be looking for not necessarily lower costs but more seamless experiences, and expertise they can’t get on their own. Unless you are looking to compete at the bottom, SaaS must have a degree of consultation to pair with it. This is why you need a strong, human-led customer experience today. A team of customer-obsessed members that can deliver an experience AI cannot replicate to build products that solve problems that aren’t obvious.
Your customers are tired of feeling like every meeting is a sales call for a product they already bought and tired of their point of contact being too busy and burnt out to deliver a fast resolution. They are rapidly growing tired of needing to become an expert in your software because they cannot get the support they need. Your customers are tired of feeling like just another line on a spreadsheet so much that they are willing to pay for a great experience or willing to leave if you won’t give it to them.
CSMs are full of passion that is wasted in support and sales. If they wanted those roles, they would apply for them and do extremely well. Every great CSM I know loves what they do because of the relationships they build with customers and the real impact they can have in those businesses. They simply put up with the sales targets and support tickets, chalking them up as part of a job.
Don’t sleep on that potential by misaligning your customer success organization with goals and metrics that minimize their impact.
If your customer success efforts are delivering the metrics you need and you are looking for help building, growing, or transitioning your customer success teams, we would love to help. Before taking that next step, get in touch with us. https://retrospectiveforward.co/contact/