In the world of enterprise SaaS sales, one company stands head and shoulders above everyone else when it comes to keeping customers happy and churn low - Box.com.
With that in mind, there isn't a better person to talk to about how you should approach structuring/building your Renewals & Customer Success team, than the Box executive in charge of that.
The below is a guest post by Daniel Farkas, Vice President, Customer Success & Renewals at Box.
I have been researching this for a while now and unfortunately there isn't a silver bullet here. The models largely differ particularly due to the nature of your SaaS business.
AT Box, our model is based around three GTM pillars: Account Executive (AE), Customer Success Managers (CSM) and a Renewals Manager (RM). It has to do a lot with the type of solution we provide, which is horizontal and has stakeholders spread across many functions, including IT and LoBs. That typically requires a lot of relationship building during the sales cycle and follow on account management, especially when it comes to serving large enterprises. We therefore need a model that introduces continuity to our ongoing sales and CS efforts.
In short, this is the split:
The AEs manage the accounts long term, i.e. net new logos and upsells to existing customers. AEs get paid on any new ARR generated on their accounts, regardless who identified it.
The CSMs are accountable for customer health and you could consider tying their comp to Net Retention (i.e. net growth of existing customer base). It is key that CSMs are incentivised by contributing, even if indirectly, to a tangible and easy to measure outcome that is clearly aligned to your company’s goal. Customer health has to do with user deployment, activity and customer's sophistication index (CSI). There is a number of leading metrics we measure to support the CSI score. This again will vastly differ on the type of your business. I’d strongly suggest you don't purely look at usage, as it often doesn’t closely correlate with the customer’s perception of value.
The Renewals Management function is separate from the above, although in our case it still reports to Sales. Their job is to deliver 3 outcomes - renew on time, maximise the renewal amount and (most importantly) set the customer for success in the next contractual period. This has to do with the optimisation of SKUs, commercial terms, understanding of customer's value levers, etc. We then hand this back to the CSM to go and deploy.
Before you decide, which model suits your business best, I strongly recommend to go back to the very meaning of the renewal event to you and to your customers. For many SaaS businesses, the renewal event is an opportunity that allows them to re-engage with their customers in a full review of the success of their relationship to-date and define the objectives for next contractual year. Renewal is an event in which most customers will want to engage, even those that remained silent most of the contractual year.
There are three outcomes of a renewal transaction. Churn (not good), expansion (great) and a flat renewal. If you believe a flat renewal is good for you, then you need to ask yourself why. Typically a flat renewal tells you that the customer doesn’t see a reason to grow your partnership (unless they already expanded mid-term or bought everything you have to offer). Every customer wants to grow their own business, and so they typically need to grow relationships with their suppliers too. And if they don’t do it with you, they will do it with someone else ... so think twice.
And this takes us back to the beginning. You need to optimise your efforts towards upsells. It matters a lot where your new revenue comes from. Net new logos are as important as revenue from existing customers. I therefore feel the answer lies in the guidance that whatever system you choose, someone absolutely needs to be incentivised to keep the growth of your install base a priority.
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