Customer Success: Buck the Trends

Back in June of 2023, I wrote a LinkedIn article "Customer Success: The Great Decline". In this article I discussed trends that I believed, and still do, were causing customer success organizations to falter. Some of these trends include too much emphasis on scale, tracking everything, reducing customer-facing travel, and outsourcing key success functions to other parts of the company instead of investing in success resources.

These trends are still present in many technology companies and if unabated they will do the exact opposite of their intent. They will lead to more customer churn and lower net revenue retention because these trends erode trust, weaken relationships, and limit the value customers receive from their Success Managers.

Another trend that is gaining some traction in 2024 is having the Customer Success function report into the Chief Revenue Officer. The 2022 Customer Success Leadership Study by ChurnZero shows that 79 percent of survey respondents (Customer Success professionals) are in organizations that report to various C-Suite executives. 36 percent report to the CEO and 17 percent report to the Chief Revenue Officer.

According to the Customer Success Collective and their customer success predictions for 2024 several leaders see the Customer Success function reporting into the CRO at a growing rate. One respondent stated "I see a trend of more CS teams starting to report through Chief Revenue Officers (CRO). This shift underscores the need for CS leaders to effectively demonstrate their team's contributions and the daily efforts made in customer growth and retention, highlighting the value they bring to the organization." Frankly, I hope this insight is wrong. Not because CROs are incapable of running Customer Success organizations, they are completely capable, but because this would take away from their focus on dynamic growth, dilute positioning the right products to address the customer's challenges, and muddy the waters between customer acquisition and customer retention. These functions Sales and Success are separate by design and the separation should be maintained so each function can lean into their strengths.

A blog posted by Dave Kellogg in 2020 explored this very topic and is still relevant today. The post "Should Customer Success Report into the CRO or CEO?" clearly lays out many reasons for the success function to report to the CEO. His reasonings are sound and include:

• Sales being focused on sales. Not account management. Not adoption. Not renewals. Not incidental expansion.
• Checks and balances. A healthy tension between the top and bottom of a bucket leads to stronger customer retention.
• Serving as a training ground. Sales development representatives will have two paths to take depending on their strengths.

I agree with the points Dave Kellogg makes and believe leaders in SaaS organizations would be well served to visit them before making a decision to move the success function under a Chief Revenue Officer. With all the pressure to grow revenue in 2024 do these leaders truly have the time, energy and inclination for another complex function in their mix or would it serve as a distraction from their core mission.

I'll explore other topics include renewals, net revenue retention, business reviews, and the balance between strategic and tactical focus in future articles. If you have thoughts on these topics, want to bounce ideas around, or just want to expand your network reach out and let's chat. 2024 is a year where I hope to be better about building more than just connections and instead build community.