SaaS Sales and CS Models: Who should own Renewals and Expansions?

The age old debate of who owns the customer’s expansion and retention in a SaaS company continues to be a hot topic and fairly controversial. There are several Sales and Customer Success operating models that SaaS companies utilize to manage customer expansion and renewals that vary in ownership.

As we dive into this topic, let’s discuss the most common models used today to manage expansion and renewal bookings. There may be others used in the SaaS market, but these are the most common approaches I have observed across dozens of SaaS companies.

A. Sales owns both Expansion and Renewals

B. Customer Success owns Expansion and Renewals

C. Sales owns Expansion, Customer Success owns Renewals

D. Sales owns Expansion, CS owns renewals and provides Expansion leads to Sales

The most common terms I hear in the SaaS industry when referring to expansion sales are cross sells and up sells and contract expansions or contractions. Sales usually owns the cross sell and up sell and CS owns renewals and smaller transactional changes in the contract related to adding more units or contractions due to budget cuts. Many SaaS companies see the smaller contract changes as transactional, managed by CS.

The challenge with this thinking is that the customer could be provided with conflicting messaging around what the right strategic plan for them should be. If CS owns the strategic plan, it will lay out how the customer will go deep and wide in operationalizing the solution, thus the expansion plan is already embedded into the plan. Most Sales teams lack the product and industry expertise to develop a strategic roadmap plan for the customer. Therefore, if they own upsell and cross sell, then they have to develop a business case and ROI impact plan that the customer buys into in order to agree to an upsell or cross sell. The alternative is for the customer to come up with their own plan and contact the Sales or CSM to ask for what they need when they need, which is a risky approach.

What Sales and CSM models work best to manage renewals and expansions?

In order to determine the best model for your company, I recommend reviewing what is required to deliver the best customer experience that enables customers to operationalize the solution at a mature optimized state that generates value and ROI and creates a loyal following of your brand. How easy is it for customers to achieve a value with your solution in a short period of time?

The following chart summarizes how to review the product’s complexity requirements that include evaluating how much services lift is required to guide the customer to an optimized state where the technology is operationalized and attached to some business critical processes. Compare the complexity requirements to the ease of use from the customer’s perspective. Is the product easy for customers to onboard and implement into a production state in a short period of time and achieve value and ROI on their own? What would it take to get the customer to a mature state where the solution is embedded into their daily, weekly or monthly business critical processes?

A. Sales owns both Expansion and Renewals

The SaaS companies using this model where Sales owns both expansion and renewals usually have a SaaS product that is fairly intuitive and easy to implement with a minimal lift and can expand across the organization organically or with a minimum sales effort. The solutions are easy to use and require low technical expertise.

These types of solutions are recognized by customers as a solution that can be utilized across business units, teams, and processes easily and become the standard technology for their business.

The Sales team can be trained to pitch the vision and end game solution for how the solution can be operationalized across their company without having to be too technical. A common approach is the freemium or trial models that lead to the sale.

The user community can follow an online guide to onboard and are able to learn and incorporate these technologies easily into their daily operations and ask for the expansions as they need them. The expansion becomes more of a pull from the customer base in the expansion of their usage of the technology. They do not require consulting best practices and recommendations nor technical expertise to figure out how to utilize and operationalize the solution.

From the customer’s perspective; they see the sales executive as the person to handle issue escalation and their contract changes quickly and easily. They don’t utilize a CSM or see the need for services. This is what we call a light “Lift” services requirement. The technologies are easy to adoption and integrate into their business operations.

These solutions work well with a Sales hunter and farmer model or with a Sales Executive being both the hunter and farmer. Customers still get the benefit of having one person as their point of contact that understands their contract, requirements and future needs.

B. Customer Success owns Expansion and Renewals

The SaaS companies using this model where Customer Success owns both expansion and renewals are usually when the SaaS product is complex and not as intuitive to implement. These solutions require a higher services lift and a specific strategic roadmap plan to be designed for the customer to show them how to expand across the organization to achieve the value and ROI. The solutions can also require a business transformation of people and process in order for the technology to enable the new processes and standards to be effective in achieving the cost savings, productivity improvements, innovations and/or revenue growth.

These types of solutions are recognized by customers as solutions that require a business transformation and engage with these technologies to achieve a new state of innovation and efficiencies within their business operations. Customers tend to ask for a best practice with consulting expertise and guidance on how to implement the solution across business units, teams, and processes to become the standard technology for their business.

The Sales team can focus on bringing in new customers within their ICP and usually have expertise in the specific industries or process areas in order for customers to relate to how the solution will benefit their business. They will usually include CS in their sales process to present the best practice approach and scope the implementation project to recommend the right services program offering or develop the right custom services program, price and timeline that is included in the contract.

The user community can be offered a formal implementation program and plan with a focus on deliverables and high value outcomes, rather than “brain power by the hour” approach. The plan will guide customers on how to incorporate these technologies into their daily operations. The CSMs can provide the strategic roadmap plan that defines the expansion plan as well. They usually require consulting best practices and recommendations as well as technical expertise to figure out how to utilize and operationalize the solution.

From the customer’s perspective; they see the CSM as the person to provide a strategic plan, handle issue escalation and manage contract changes quickly and easily. They utilize a CSM and the services teams to support the execution of their strategic roadmap plan. This is what we call a heavy “Lift” services requirement. The technologies are more complex to adopt and integrate into their business operations.

These solutions work well with a Sales Hunter model. The CSMs ensure the customers have the benefit of having one person as their point of contact that can develop a plan and manage their contract, requirements and future needs focused on executing the strategic plan and delivering value and ROI.

C. Sales owns Expansion, Customer Success owns Renewals

The SaaS companies using this model where Sales owns the expansion and CSMs own the renewals usually have a SaaS product that is fairly intuitive and are not too complicated to implement with the support of a medium level of services, but have the ability to expand across the organization organically. These solutions require a medium services lift and some guidance using a strategic roadmap plan to show the customer how to expand across the organization to achieve the value and ROI. These solutions usually don’t require a business transformation of people and process in order for the technology to enable the new processes and standards.

These types of solutions have a good online self help center with in product knowledge base and AI to assist the customer to achieve a new state of innovation and efficiency within their business operations. Customers may ask for a best practice with consulting expertise and guidance on how to implement the solution, but the solution lends itself to be self implemented without too many complications. Customers tend to develop their own plans to expand the solution across business units, teams, and processes to become the standard technology for their business. Therefore, customers can work with their Sales Executive to discuss their plan and obtain the right pricing and contract terms to support their plan.

The Sales team is responsible for building the relationships across, up and down the customer’s organization to find the expansion opportunities. They can develop the vision and usually will have some expertise in the specific industries or process areas. They also may include CSMs and Services in their sales process to present the best practice approach and scope the implementation project to recommend the right services program to verify the plan the Sales Executive is recommending.

The user community would be provided options for an online self service onboarding approach or a formal implementation program and plan with a focus on deliverables and high value outcomes, depending on the complexity of the software and processes it applies to. The expansion can be driven by sales to lay out the plan for how the customer can go deep (indispensable) or wide (engagement) across their company. If the customer has a more complex company , they could ask for an assist from CS. They can be solutions that allow for online guidance and support or require consulting best practices and recommendations as well as technical expertise to figure out how to utilize and operationalize the solution.

From the customer’s perspective; they usually refer to their CSM as the person to handle issue escalation but refer to their Sales Executive for the strategic plan, contract changes and expansions. They utilize a CSM and the services teams to support the execution of their implementation plan. The technologies are generally less complex to adopt and integrate into their business operations.

These solutions work well with a Sales Hunter and Farmer model. The CSMs can still ensure the customers have the benefit of having one person as their point of contact that understands how to get the most from the software to benefit their company, but will utilize the Sales contact for the visionary plan, contract management and future needs.

D. Sales owns Expansion, CS owns renewals and provides Expansion leads to Sales

The SaaS companies using this model where Sales owns the expansion and CSMs own the renewals but provide guidance and lead opportunities for expansions, usually have a SaaS product that is tend to be more complicated and involved to implement with a medium to heavy lift but have the ability to expand across the organization with minimal guidance. These solutions require a medium to heavy services lift and some guidance using a strategic roadmap plan to show the customer how to expand across the organization to achieve the value and ROI. These solutions usually don’t require a complex business transformation of people and process in order for the technology to enable the new processes and standards, but could require some minimal changes. I’m a fan of this model because it allows for the CS expertise to be utilize to help design the right strategic plan for the customer using the partnership with Sales to help build and maintain stakeholder relationships and obtain buy in to commit to the plan.

These types of solutions have an online self help center but still requirement guidance and a plan from CS to know how to achieve a new state of innovation and efficiency within their business operations. Customers usually require a best practice with consulting expertise and guidance on how to implement the solution as most of the value and ROI from the solution is related to more complex business problems.

The Sales team would be responsible for building the relationships across, up and down the customer’s organization to support the sales cycle for the expansion opportunities. However, the CS team will develop the vision and usually has the product, industry and/or process expertise to develop the strategic roadmap plan that will generate the expansion opportunities. Therefore, the CS team will identify the expansion opportunities and share them with the sales team to manage the manage the sales cycles for each expansion. They also may include CSMs and Services in their sales process to present the best practice approach and scope the implementation project to recommend the right services program offering or develop the right custom services program, price and timeline that could be included in the contract.

The user community would be provided options for various approaches to achieving high value outcomes. These options can include an online self service onboarding approach that may be supported by a formal implementation program and plan, depending on the complexity of the software and processes it applies to. The expansion can be driven by sales to lay out the plan for how the customer can go deep (indispensable) or wide (engagement) across their company. If the customer has a more complex company , they could ask for an assist from CS. They can be solutions that allow for online guidance and support or require consulting best practices and recommendations as well as technical expertise to figure out how to utilize and operationalize the solution.

From the customer’s perspective; they usually still refer to their CSM as the person to define their strategic plan and handle issue escalation but refer to their Sales Executive for contract changes including expansions. They utilize a CSM and the services teams to support the execution of their implementation plan. This be more of a medium to heavy “Lift” services requirement. The technologies range from medium to high in their complexity to adopt and integrate into their business operations.

These solutions work well with a Sales Hunter and Farmer model. The CSMs can still ensure the customers have the benefit of having one person as their point of contact that understands how to get the most from the software to benefit their company, but will utilize the Sales contact for contract requirements and future needs.

Which model is your SaaS company operating in today?

If you have identified which model your SaaS company is operating in today from the above options and the company is struggling to achieve the planned targets and results (GR and NRR) from quarter to quarter and year to year, then I recommend evaluating what your customer’s requirements and needs are to guide them to a more mature state of operationalizing your solution. From the evaluation exercise, the Sales and CS teams can discuss which teams are best equipped to design and provide a best practice strategic roadmap plan for the various target markets. The teams can determine the lift required, how much strategic guidance and expert consulting may be required to achieve value or if the customers can develop their own plan internally with ease. It could spark further discussions on what roles are required within each organization based on the product ease of use, intuitiveness, In-product guidance and AI, and complexity of business problems the product addresses. The main question to answer is “What is required for a customer to operational the solution into some of their business critical operations and find a planned or organic expansion pathway?”.

The teams can then put a plan together on how to equip the Sales and/or the CS team to be able to conduct strategic design sessions with the customer’s key sponsors and stakeholders and get buy-in and commitment of their time, money and resources to execute a more comprehensive plan and ensure success will be achieved across the entire company.

As always, your thoughts and feedback are welcome. If you find this article interesting and inspiring, please share with your friends and colleagues. If you think your company could benefit from learning how to incorporate this analysis into your GTM strategy, please feel free to reach out to me and schedule a free consulting session at [email protected].