RevOps Co-op Weekly #13 - Who Should Own Renewals?
Whether you assign renewals to sales or customer success will depend on several things. But whether or not the team succeeds depends on the infrastructure you put in place to support them.
RevOps Co-op provides resources, content and community for those who ❤️ revenue operations. This weekly newsletter features collected tweets, posts and thoughts on a variety of RevOps topics. We also have a private Slack community with > 800 RevOps pro’s - click here to join.
🤨 Who Should Own Renewals?
Few topics get a reaction faster than asking:
“Who should own renewals? Customer success or sales?”
Whether you assign renewals to customer success or sales will depend on your company culture, business strategy, the complexity of the product, and the sales cycle's length. Whether or not the team succeeds depends on the infrastructure you put in place to support your objective.
Strategy
Companies have different priorities depending on what stage they are in. Companies fresh out of their seed round are focused on obtaining new customers. This attitude continues through at least the first few funding rounds. By the time a company goes public, they should have transitioned to focusing equally on retention and acquisition.
When new customer acquisition takes priority over expansion, sales compensation will be structured to favor net new sales over any other business stream. The sales profile used in hiring will favor “hunters” over “farmers.” Hunters are skilled at acquiring new targets and selling them on product features and success stories. Farmers, on the other hand, prioritize relationships over opportunistic selling. They know that in the long run, a customer will be more likely to churn if they feel like they’re tricked into buying something they don’t need, and they’re cautious about upsells.
While there may be a few farmers in the young startup’s sales crowd, they typically don’t last long.
The hunter mentality doesn’t lend well to renewal management. They know they can only manage so many opportunities and prioritize the sales that more efficiently add up to hitting quota.
Culture
Sometimes companies are structured with customer success reporting into sales. This may change their priorities and encourage upselling. Or it may set them up for being largely ignored by a sales executive who is under pressure to hit new logo targets.
Company culture will play into whether or not your plans for renewals are accepted or rejected. Leadership will have strong opinions, and it’s wise to measure how strong they feel about the topic. I’ve watched leaders sabotage efforts because they felt the wrong team was selected for the role. They either de-prioritized the order to upsell or made it very clear to their subordinates that they thought the decision was foolish.
Either of these attitudes poisons the well before your plan has a chance to take hold.
Complexity
If your support organization is structured to run lean, adding complex sales to their current responsibilities doesn't make sense. If a sales engineer needs to be called in to explain elements and handle a technical review, consider leaving the sale with the sales team.
Splitting responsibilities is perfectly acceptable if you incentivize the teams properly, and there are clear roles and responsibilities defined upfront.
If the salesperson is compensated for upsells and renewals, they should be responsible for communication, organizing meetings, taking notes, and structuring proposals.
If customer success is running point with a difficult customer, they should take the lead and only rely on the salesperson to suggest the deal structure and create contracts. Compensation should be split, heavily favoring the customer success representative.
Sales Cycle Duration
Product complexity often determines how long the sales cycle will take. Upsells for complex products can take months, while renewals can merely require the customer to click a button. In the case of simple renewals, customer success may be responsible for merely reminding the customer and following up as the due date looms.
Suppose a considerable amount of time is spent scheduling, tailoring pitch decks, and recruiting the proper technical experts to present during a complex build. In that case, it doesn't make sense to have a customer success representative run point. Consider how many customers they could be assisting during those hours.
A Recipe for Success
We’ve outlined considerations that may make or break your plan for renewals. If you don’t put as much energy into planning the supporting infrastructure, you may as well leave everything as it is today.
Compensation Planning
Compensation plans are excellent at driving behavior. Unfortunately, what the person writing the compensation plan intends to be motivating may backfire.
Plan on people talking about what they make. If a customer success manager has a higher base salary and lower commission rate than sales, they may still protest if you aren’t extremely clear about why your rates don’t match the sales plan. Then again, they may only focus on the fact they aren’t making the same amount in that one instance.
If you split responsibilities for renewals and/or expansions across sales and customer success, make sure to structure their compensation accordingly.
Don’t make the mistake of not compensating your customer success team if you expect them to sell, even if it’s an easy renewal.
Before rolling out a compensation plan, make sure their management teams agree with the plan. They’ll need to meet one-on-one with employees to review the plan and get sign-off from the representative. The last thing you want is an angry leader suggesting they don’t sign the plan because it’s unfair.
Clear Roles & Responsibilities
Once the leadership teams agree on the new renewal and expansion plan, they should be asked to help define each step of the sales cycle and who is responsible for what. Customer communication, scheduling, presentations, contracts, and follow-up tasks should be given a clear owner.
Make sure people are thinking from the perspective of a customer. The fewer contact points, the less confusing a sales cycle will be. When possible, make one person responsible for seeing the sales cycle through.
Clear Communication
Make sure everyone involved in renewals and/or expansions understands exactly what is expected of them, can easily see how commissions are calculated and split, and is kept informed of any exceptions.
Finally, keep the feedback loop on the process open. If there are problems with the model, it’s important to understand the cause as soon as possible.
🐦 This week in #RevOps Twitter
For those like me who struggle with time management, here’s a tip…new year = clean slate
One take on the SFDC <> Slack purchase 💰
It’s coming… 🧟♂️
📚 Your curated #RevOps reading list
Deal desk: what does success look like? from the RevOps.io blog
Many companies have already bought into the value of implementing a Deal Desk in their organization to help align the process of non-standard deals. These companies understand that deals of this sort require an alignment across multiple deals that other deals do not.
The goal of Deal Desk is to find agreement regarding the appropriate pricing of a particular deal. This decision is based on the summary presented through discussion with all involved teams.
In order for a Deal Desk to succeed, there are some things that are table stakes. However, a Deal Desk could be meticulously planned and still fail.
Why?
Because “success” was not defined from the outset.
How can you know if you are succeeding if you don’t know what success means?
A breakdown of TOPOs 2021 predictions for revenue teams, from 6sense
Last month, TOPO held their three-day virtual summit for sales, sales development, and marketing practitioners focused on their new framework for revenue growth: Stabilize. Reinvent. Grow., with a focus on the growth stage. With sessions spanning resilient sales forecasting strategies, methods to improve live call execution, advancing deals with high-value offers, and more, there’s a lot for revenue teams to consider as they look toward the new year.
Key predictions for 2021 include:
2021 will be unpredictable
Demand is not about demand creation — it’s about demand identification
Revenue teams will need to balance precision and volume
Headcount will slow in marketing, grow in sales enablement, and maintain or decline in sales development
16 sales podcasts to help you level up your skills, from BuiltIn
To help you get started in navigating the landscape, BuiltIn has highlighted some of the top sales podcasts around. Whether you’re a sales manager, an entry-level SDR looking for new ways to spice up your cold emails or a veteran account executive trying to improve your relationships with buyers, this list should have something for you.
Some interesting ones on the list include:
Reveal: The Revenue Intelligence Podcast
Sales Enablement with Andy Paul
The Sales Hacker Podcast
Funl is an operating system for your GTM team that provides end-to-end, full funnel analytics and insights that keep marketing, sales and customer success teams aligned and working seamlessly together to drive more revenue growth for your business.