Many customer success leaders in the SaaS space are faced with the same question: who should own customer renewals? It’s an important question to answer, as it can make all the difference in customer retention and long-term success. In this blog post, we’ll explore three different ownership models that help define roles between sales and customer success teams when it comes to customer renewals. So if you’re looking for answers on how best to manage customer renewals, then read on!
Model 1: Sales owns new logos, expansion and renewals
In model one, the core sales team maintains ownership of all sales (or “commercial”) aspects of the relationship. The Account Executive (AE) that closed the initial – new logo – sale continues to collaborate with the CSM throughout the relationship and owns any expansion opportunities and the renewal. The CSM manages the day-to-day relationship and is primarily responsible for driving value for the customer and broad adoption of your product. If the right collaboration is fostered, the CSM should be the best expansion lead gen source for the AE, surfacing many opportunities from her assigned customer base.
Model 2: Customer Success owns expansion and renewals
In model two, the customer success team is not only responsible for driving value and adoption, but they also own all expansion opportunities and renewals. The sales team is focused primarily on new logo sales and may get credit for any expansion within a period of time (first quarter, 6 months, year), but they transition out after that period of time and the customer success team takes over from there and only draws on the sales team as needed for complex expansion deals or renewals.
Model 3: A separate customer-focused sales team owns expansion and renewals
In model three, the core sales team handles all *new* logo sales, the customer success team drives value and adoption, and a separate customer sales team owns expansion and renewals for the *existing* customer base. I’ve seen several titles associated with this role – Account Manager (AM), Renewals Specialist, Customer Account Executive, Client Executive, etc.
So, which renewal ownership model is best for your organization?
Things To Consider…
- How complicated are your contracts?
- How competitive are your typical negotiations?
- How complex is your solution?
- Are you satisfied with the amount of time your sales team is spending on closing new logo sales?
- How experienced is your CSM team?
Another way to evaluate your renewal approach is to use the CURE framework.
Contract size — When it comes to renewals, keep it simple and think ‘transaction’! Lower ACV agreements usually come with consistent pricing tiers for all accounts that can be set up via auto-renewal language. If your needs are a little more complex or tailored though, then you should consider getting an account manager or sales team on board for ultimate success.
Upsells and cross-sells — Do you have upsells to offer your customers? Consider Model Two if they’re mostly operating on usage-based pricing. But, when things get a bit complicated or need extra customization, it’s time to switch up and try another model.
Resources — Every organization’s approach to customer renewals is different, depending on their size and availability of resources. In the early stages of growth, it makes sense for new business representatives to take a more hands-on role with existing customers; however as companies expand this could become too much of an obstacle in achieving sales goals and objectives.
Enterprise — Enterprise deals are far from a walk in the park. With various stakeholders involved and white space opportunities to explore, it’s no wonder these arrangements require plenty of time and effort – often an entire sales cycle with competition can enter into the mix. Ownership from nn account manager or sales exec is typically essential for navigating complex contractual procedures.
In conclusion, understanding who owns customer renewals is a complex issue that varies based on many factors. To find what works best for a company’s unique situation, customer success leaders in the SaaS space can evaluate their own circumstances and consult with internal teams to come up with a renewal strategy that works for them. Learn more with our Sales, Marketing & Customer Alignment Toolkit.
Ultimately, it’s crucial to have open conversations with internal teams to decide what ownership strategy works best for a particular business so that all stakeholders can benefit from improved customer relationships and achieve goals more quickly. Evaluate your current renewal ownership today and take one step closer to optimum customer success!
Check out our resources below for more customer success best practices and insights for how your organization can build strong customer relationships:
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