Customer Success continues to be one of the hottest topics on the mind of the sales leaders and CEO’s we work with. Few will argue against the benefits of Customer Success – driving profitable growth, product adoption and customer reference-ability. The discussion has shifted from “Should we implement Customer Success” to, “How do we operationalize the most effective Customer Success function in our organization?” The #1 decision most organizations continue to struggle with is, where does Customer Success fit and who should the function report to? Read on to better understand how to make this decision.
The short answer to “should the VP of Customer Success report to the VP of Sales” is, it depends. The three most common org designs we see are the Customer Success function reporting to the CEO, the VP of Sales/Chief Revenue Officer or the VP of Customer Operations/Chief Customer Officer. There are pros and cons to each, so let’s dive into the three options and discuss those pros and cons to help you determine where the Customer Success function fits in your org.
If you are still not convinced Customer Success is right for your org , read a previous SBI post covering traditional models vs consumption models.
You can also download SBI’s Where Should Customer Success Report Tool (a one-page cheat sheet that summarizes the pros and cons below).
Reporting to the CEO
- Customer Success has the ear and attention of the CEO enabling the CS function to drive their own agenda and impact cross-functional change. This includes the ability to develop CS specific metrics and KPI’s.
- 360-degree feedback loop from the CEO’s direct reports on all key parts of the business. The Sales and Marketing functions provide market demand and customer bookings details, the Product and Engineering functions provide details on the building of current and future products and the Customer Success function provides a view of into customer experience and voice of the customer.
- Natural checks and balances are in place when the CS function reports directly to the CEO. Aligning the CS function under the sales or support organizations can lead to an imbalance of power and conflict around what the overall goal and focus should be (customer experience vs increased bookings, for example)
- Artificial silos between Customer Success, Customer Support, Sales and Marketing. Conflicting customer communication and a limited view of the full customer lifecycle / customer touchpoints can be a result of these silos.
- Mis-alignment of functional goals for Customer Success, Customer Support, Sales and Marketing can make it harder to align on cross-functional work since each functional area has their own agenda
- One more direct report for a CEO who already has too many direct reports.
Reporting to the VP Sales/Chief Revenue Officer
- All revenue is owned by one person. New-business, cross-sell, up-sell and renewal revenue is all linked tightly together.
- Customer Success is likely a higher priority for the sales leader than it would be for the CEO. All executives are busy, but there is a good chance CS will be a higher priority for the sales leader than it would be for the CEO.
- Tighter focus on the full customer lifecycle from pre-sales, to the sales campaign to the post sales customer experience. Aligning CS under the sales leader means these groups are more likely to work together, resulting in more strategic management of the full customer lifecycle.
- Potential for the customer experience to take a back seat during crunch time at the end of the quarter where the sales leader is focused on closing business.
- Competing priorities, the sales leader must decide what is more important: closing new business or focusing on customer success and customer experience.
- Less CEO Engagement when the Customer Success function does not report to the CEO. In this model the CEO will be brought into key deals to help close them but may not spend as much time with current customers.
Reporting to the VP Customer Operations/Chief Customer Officer
- One executive is tasked with focusing only on the customer, ensuring customers have all the support they need to be successful.
- Clear incentives not tied to revenue or bookings. In this org model the CCO/VP Customer Operations is incented to focus on the customer, their success and nothing else
- Like the con for the Customer Success function reporting to the CEO, reporting to a CCO/VP Customer Operations can create artificial silos between Customer Success, Sales and Marketing which can fragment the ideal customer journey.
- CCO is a new role for most organizations and role clarity and role responsibilities may be difficult for some organizations to define.
As you can see, determining where the Customer Success function should report is not a simple decision.
In addition to the pros and cons above, a few other key considerations should include:
- What % of your business is coming from new logo sales (growth vs maintenance mode)
- Current retention rates
- Is your business a consumption or subscription model?
- What is your proximity to the buyer and user in current org design?
Customer Success can be a strategic lever for your business, but who the function reports to will, in part determine the impact CS can drive.
Once you have determined where Customer Success fits in your org, refer to this SBI blog post to understand how to complete a Customer Success capability assessment to ensure you have the right talent on the team to execute your Customer Success strategy.
You can also download SBI’s Where Should Customer Success Report Tool (a one-page cheat sheet that summarizes the pros and cons above).
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