How to Balance CS, Renewals and Upsells
Who should manage renewals and upsells?
This question becomes more important as your company scales.
Here’s how you can find the right balance between Customer Success and Sales:
The Evolving Role of Customer Success
Customer Success Managers handle many responsibilities.
This includes managing customer relationships and driving strategic conversations to name a few fundamentals.
But the role is evolving fast.
As Esteban Kolsky, a customer experience strategist and founder of ThinkJar puts it well:
"Customer Success is where 90% of the revenue is.”
According to a 2024 study by Gainsight, 55.2% of CSMs predict an increased focus on upsells and renewals in their roles.
This shift highlights the growing importance of CS in revenue generation.
It also underscores the need for mastering the CSM role in any company.
The Traditional Case for Separation
There are several historical arguments for separating Customer Success from these sales-related activities:
Focus on Core Competencies
CSMs are often hired for their relationship management skills rather than sales abilities.
Avoiding Conflict of Interest
Asking for money can complicate the relationship between CSMs and customers.
Specialization
Sales teams can handle the economic aspects of renewals and upsells better.
Workload Management
Removing sales responsibilities allows CSMs to focus on delivering exceptional customer experiences.
A study by TSIA found that 30% of companies adjust their customer health scores based on changing business conditions.
This highlights the need for CSMs to focus on customer health rather than sales metrics.
This approach aligns with the importance of customer health in CS strategies.
The Trending Argument for Integration
But today, there are many compelling reasons to involve Customer Success in revenue-generating activities:
Relationship Leverage
CSMs have deep knowledge of customer needs.
They have their customers' trust which can be valuable in natural expansion conversations.
Holistic Customer View
CSMs have a deeper understanding of customer health and growth potential.
Involving them in renewals and upsells is key.
Career Growth
Revenue responsibilities can provide CSMs with opportunities for professional development.
It can also drive increased job satisfaction.
Seamless Customer Experience
Having CSMs handle renewals and upsells can create a cohesive experience for customers.
💡According to a Customer Success Trends Report, 93.7% of companies that measure the impact of CS are using a revenue target (GRR, NRR, or both).
This shows a strong link between CS and revenue goals.
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Finding the Right Balance
So, there's no one-size-fits-all approach to structuring Customer Success and Sales teams.
The optimal strategy depends on different factors:
Company Size and Stage
CSMs might wear many hats in smaller companies.
Yet larger organizations might prefer specialization.
Product Complexity
More complex products may need dedicated sales expertise for upsells and renewals.
Customer Base
B2B enterprises might need different approaches compared to B2C or SMB-focused companies.
Contract Structure
Annual contracts may need strategies that are different from monthly subscription models.
Regulatory Environment
Different industries face unique regulatory challenges that can impact CS strategies.
For insights on balancing these factors, my guide on balancing sales and customer success in SaaS gives you valuable perspectives.
Additionally, PaletteHQ provides a comprehensive process for determining if CSMs should own renewals and expansion.
Regulatory Considerations in Customer Success
It's key to be aware of these industry-specific regulations when running your CS strategies.
This can affect how Customer Success teams operate and engage with clients.
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Financial Services
Regulations like GDPR in Europe or the Dodd-Frank Act in the US can impact the way you handle data and communicate.
Customer Success teams must be vigilant about:
Data privacy and protection
Transparency in customer communications
Compliance with anti-money laundering (AML) and know your customer (KYC) requirements
Healthcare
For healthcare-related SaaS companies, HIPAA compliance in the US is paramount. Customer Success teams need to consider:
Strict data security measures
Limited access to patient information
Secure communication channels for discussing sensitive health data
Telecommunications
Telecom companies often face regulations around service quality and customer protection.
Customer Success teams should be aware of:
Service level agreement (SLA) requirements
Mandatory reporting of outages or service disruptions
Fair billing practices and transparency
E-commerce
In the e-commerce sector, regulations often focus on consumer protection.
Key considerations include:
Clear return and refund policies
Accurate product descriptions
Compliance with data protection laws for customer information
Software and Technology
For software companies, especially those dealing with cloud services, important regulatory considerations include:
Data residency requirements in different countries
Export control regulations for certain types of software
Compliance with industry-specific standards (e.g., SOC 2 for cloud service providers)
So it's key to understand and adhere to these regulatory requirements.
It will help you avoid common customer success mistakes and ensure compliance.
In doing so, you’re not just helping customers achieve their goals.
But you're also protecting them and the company from potential legal issues.
CS strategies need to be flexible enough to adapt to changing regulatory landscapes.
All this while still delivering value to customers.
Besides, consider how these approaches can vary across global markets and cultures.
💡Looking to improve your Customer Success strategy? My Ultimate Customer Success Plan Template provides a comprehensive 14-step guide for SaaS and B2B companies.
Global Perspectives on Customer Success
As companies go international, here are some key considerations:
Cultural Nuances in Communication
Different cultures have varying communication styles that can impact customer success interactions:
For example, in the United States, communication often involves:
More indirect and diplomatic phrasing
Use of softeners and qualifiers
Emphasis on positivity and optimism
In Germany, communication tends to be:
More direct and straightforward
Focused on facts and specifics
Less concerned with cushioning criticism
In many East Asian cultures (e.g. Japan, China), communication is often characterized by:
High context and indirect expression
Emphasis on maintaining harmony and saving face
Non-verbal cues and implicit meanings
For example:
A US customer might say:
"The product is interesting, but we might need some help getting started".
It could actually mean they are struggling and need immediate help.
A German customer could say:
"This feature doesn't work as expected". They likely mean exactly that.
There is a specific issue that needs a fix. And that’s it.
It’s just factual. Nothing less, nothing more.
A Japanese customer may say: "We will consider your proposal" or simply remain silent after a demonstration.
This could be a polite way of expressing disagreement or dissatisfaction, rather than actual interest.
So understanding these nuances is key to interpreting feedback and taking appropriate action.
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Relationship Building Across Cultures
The importance and methods of building business relationships vary globally:
In the United States, relationships often develop through business interactions.
In many Asian and Latin American countries, personal relationships are key.
They need more face-to-face interactions and social engagements outside of business settings.
Decision-Making Processes
Understanding how different cultures make decisions is fundamental for CSMs:
In some cultures, individuals make decisions, fast.
In others, involving many stakeholders is the norm. This can extend the decision-making process.
Adapting Success Metrics
What makes up "success" can vary across cultures:
Some markets may focus on rapid growth and innovation.
Others might value stability and long-term relationships more.
So align your success metrics with local cultural values and business practices.
Technology Adoption Rates
The pace of technology adoption differs globally.
It affects how fast you can deploy CS strategies:
Some markets may be more open to AI-driven CS tools and automation.
Others might prefer more traditional, high-touch approaches.
Regulatory Considerations
CSMs must be aware of local regulations that can impact CS strategies:
Data privacy laws (e.g., GDPR in Europe) can affect how you collect and use customer data.
Industry-specific regulations may influence the level of support and engagement CSMs can provide.
Consider these global perspectives and adapt to resonate more with diverse international markets.
This will drive better outcomes and stronger customer relationships worldwide.
For more insights on global customer success strategies, read my article on Digital Customer Success Trends.
Key Considerations for Making A Decision
When choosing the best approach for your organization, consider the following:
Team Structure
Explore different team configurations:
Such as dedicated customer growth teams.
Or hybrid roles that bridge Customer Success and Sales.
Enablement and Incentives
Renewal and Upsells:
Make sure CSMs get proper training and that you incentivize as expected.
A study by CSM Insight found that only 12.8% of CSMs receive incremental bonuses based on performance.
This suggests room for improvement in incentive structures.
Workload Optimization
Use technology and automation to improve your processes.
This will free up CSM time for high-value activities.
The Global Customer Success Platforms Market is estimated to reach $3.1 billion by 2026.
This shows a growing trend towards technology-enabled CS operations.
Clear Handoff Processes
Separating responsibilities from Sales:
Set clear protocols for when and how CS should engage with existing customers.
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Customer-Centric Approach
Focus on the customer experience in all decisions.
Make sure any changes improve rather than detract from customer satisfaction.
A Microsoft study found that 58% of customers will switch their service to a competitor because of poor experience.
Flexibility and Adaptability
Update your approach as your company grows and market conditions change.
Lincoln Murphy, a renowned customer success consultant and author, states:
"Customer Success is when your customers achieve their Desired Outcome through their interactions with your company."
Murphy further emphasizes the need for adaptability in his blog post on Sixteen Ventures:
"The reality is, as you grow and evolve as a company, your Customer Success strategy must evolve, too."
💡Need help with customer onboarding? My Ultimate Customer Onboarding Template provides a 10-Step Success Roadmap to boost your onboarding strategy.
Effective Communication is Key
No matter which CS model you choose, developing strong customer success communication skills is fundamental.
This is especially true for renewals, upsells, and expanding your customer relationships.
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And That’s It
The debate over owning renewals and upsells is nuanced.
There are valid arguments on both sides.
But the key is to find a balance that works for your specific organization and customers.
What’s clear is that Customer Success must own targeted revenue goals to some extent.
You need to leverage your relationships to expand into the accounts.
You also need to be a strategic partner to Sales on larger deals as the company scales.
So it's not an all-or-nothing approach.
But a balanced one that maximizes the CS expertise in the field and drives revenue growth.
Your company evolves.
So should your approach to Customer Success and Sales alignment.
Stay flexible and laser-focused on your customers.
This will help you create a strategy that drives both retention and expansion.
The ultimate goal is to fuel sustainable growth for the company.
For more insights on this topic, check out Gainsight's perspective on who should own renewals and upsells.
For more about building a successful Customer Success career, explore my comprehensive Customer Success Career Guide.
The Customer Success Trends Report shows that 'Delivering Value to Customers' is the top challenge for CS leaders in 2024 and beyond.
This highlights the importance of keeping customer outcomes at the forefront of any decisions you make.
For those looking to stay ahead of the curve, my article on AI-Powered Customer Success offers insights into the future of the industry.
To further enhance your skills in managing renewals and upsells, explore SuccessEve's guide on mastering the art of renewals, which provides valuable insights on balancing customer success and sales skills as an expansion manager.
💡Want to take your Customer Success career to the next level? My guide on Transitioning to a Customer Success Career can help you revive your career and find new opportunities!
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