How to Structure Customer Success to Maximize Growth

For the majority of CEOs and commercial leaders, customer success (CS) remains a top priority and a key driver of growth, product adoption, and customer satisfaction. Most organizations have shifted from debating whether to implement customer success to determining how to effectively integrate CS into commercial processes. Yet many commercial leaders struggle to determine where CS should sit within the organization or how to operationalize the function effectively. Whom should the VP of Customer Success report to? The VP of Sales or the CRO?

The short answer is, it depends. In most B2B organizations, the head of Customer Success reports to one of these three internal leaders:

1. CEO
2. VP of Sales or Chief Revenue Officer
3. VP of Customer Operations or Chief Customer Officer

Use the following pros and cons of each reporting structure to help determine where the Customer Success function best fits in your organization:

1. Reporting to the CEO

• The head of CS regularly has the attention of the CEO, enabling the CS function to drive initiatives and impact cross-functional change. This includes the ability to develop CS specific metrics and KPIs.
• This approach enables a 360-degree feedback loop from the CEO’s direct reports on all key parts of the business. Sales and marketing functions provide market demand and customer booking details, product and engineering functions provide details on the building of current and future products and the customer success function provides a view into customer experience and the 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 e.g., balancing customer experience with growth oriented processes to increase bookings.

• This approach can create artificial silos between Customer Success, Customer Support, Sales and Marketing. These silos can result in conflicting customer communications and a limited view of the full customer lifecycle and customer touchpoints.
• Misalignment of functional goals for Customer Success, Customer Support, Sales and Marketing can make it harder to execute cross-functional initiatives.
• The CEO has one more direct report when the CEO likely already has too many direct reports to manage effectively.

2. Reporting to the VP Sales/Chief Revenue Officer

• All revenue is owned by one person. New-business, cross-sell, up-sell and renewal revenue are all linked tightly together.
• CS is likely a higher priority for the sales leader than it would be for the CEO, leading to more attention on CS initiatives.
• This approach yields tighter alignment between sales and CS across the full customer journey, from pre-sales through 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 customer lifecycle.

• Sales leaders may prioritize account growth and bookings over customer experience, particularly during lean months or at the end of a fiscal period. 
• When CS and sales goals conflict, the sales leader must decide whether it is more important to close new business or focus on customer success and customer experience. 
• CEO are likely less engaged when the CS function does not report to them directly. 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.

3. Reporting to the VP of Customer Operations or 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 customer success and nothing else.

• Much like reporting to the CEO, reporting to a CCO/VP Customer Operations can also create artificial silos between customer success, sales, and marketing teams 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.

In addition to the pros and cons cited above, other factors to consider when determining how to govern your CS team include:

• New business - What percentage of your business comes from acquiring new customers versus maintaining existing ones? This will determine whether your focus is on growth or maintaining current revenue streams.
• Customer retention rates - Are they high or are you experiencing a significant churn rate? This will impact how much emphasis you should place on customer success.
• Usage model - Consider whether your business operates on a consumption or subscription model. This will influence the approach you should take towards customer success, as the needs and expectations of customers can vary depending on the model.