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Updated August 22, 2022You’re reading an excerpt of Founding Sales: The Early-Stage Go-To-Market Handbook, a book by Pete Kazanjy. The most in-depth, tactical handbook ever written for early-stage B2B sales, it distills early sales first principles and teaches the skills required, from being a founder selling to being an early salesperson and a sales leader. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, commentary and future updates, and a high-quality PDF download.
As discussed in the previous chapter, as you start to have more responsibilities that occupy your time—but before you bring on staff to hand those off to—you’ll have to be mindful of splitting your calendar to achieve them.
Previously, you had to find time for prospecting, initial pitches, and down-funnel follow-up meetings; now, you’re adding implementation meetings, monitoring success KPIs, QBRs, and renewals! It’s a lot, so it’s vital that you be vigilant about blocking segments of time on your calendar, or those activities won’t get done.
The first step is to make sure that meetings for customer success activities—implementation calls, kickoffs, check-ins, and QBRs—get on the calendar as soon as deals are closed, so your future time is burdened appropriately. The second step is to start tracking these activities in your CRM. The same way you may have a Demo event activity or Follow Up meeting activity, you should track Implementation Meetings and QBRs such that, with a simple report, you can see, for example, all accounts that have a closed-won opportunity but have not yet had an implementation meeting.
After you have onboarded a dozen or so customers (depending on the size of your deals), you should start to think about how you could hire someone to take this responsibility off of your plate. Importantly, because of your experience onboarding, getting to success, and doing QBRs for that initial set of customers, you should have the beginnings of a customer success playbook. Codify it in documentation and process (again, to be tracked in the CRM), such that you can hire that first CS specialist, get him to success, and then start the process of stamping out more of him.
When you get to the point where you are adding a substantial number of customer success staff, you’ll want to be clear about who is responsible for what to get the most out of your investment.
importantThe compensation of customer success staff is heavily influenced by the responsibilities they bear. Firstly, as an aside, as of the mid–late 2010s, the compensation models of customer success staff have not yet seemed to wake up to the realities of the importance of customer success in a renewals-based world. If you refer to the revenue growth chart in the introduction of this chapter, and look at the scenarios with differing churn numbers, you can see the deep importance of customer success. That should be reflected in the level of talent you are willing to pay for and the compensation requirements that flow from that. Historically organizations have viewed support and customer success as a cost center to be minimized, rather than considering the opportunity cost of under investment in the function: higher churn rates, lower lifetime customer value, and reduced opportunities for upsell and positive word of mouth.
That said, one of the most important determinants of how you compensate your customer success staff is their commercial responsibility, or its absence. Will your customer success staff be responsible for renewals? Or will an account management staff or even the primary account executive staff be responsible for these? Generally, focusing account executives on new business is the right approach; focusing efforts and not splitting attention is typically the best way to assure that things are done right. AEs that are responsible for renewals often follow the same pattern, showing back up to an opportunity 60 days from renewal—270+ days from the last time they exchanged emails with the client. Approaching a client with the attitude of, “Okay, so catch me up!” is not a recipe for a functional success and renewal motion. The best organizations specialize this responsibility.
Who, then, should be responsible for renewals? There are typically two approaches. Customer Success staff can be responsible for renewals; you might even base part of their compensation, in a variable fashion, on renewals and upsells. The other approach is one wherein responsibilities are split, and Customer Success is responsible purely for customer success activities, like implementations, ongoing support, quarterly business reviews, and so on, but another commercial account manager is responsible for seeking out upsell opportunities and ultimately renewing the business. This latter approach offers the benefit of specialization and eliminates the concern (oft stated but dubious, in my opinion) that success staff can’t “close.”
My take on this is that early on, when there are fewer customers, that level of specialization creates unnecessary overhead. Creating specialization between account executives who are hunting new business and Success and Account Management staff who are farming existing business certainly makes sense—the behaviors and operational tempo of a new-business hunter are very, very different than those of an existing-business farmer. But at the very early stage, specialization between Customer Success staff and Account Management staff creates more complexity and overhead than benefit. Having a class of customer success person that’s responsible for the implementation, ongoing support, quarterly business reviewing, and eventual renewing of customers seems to be the best balance. You get both specialization and the benefit of a rep who’s deeply familiar with the 100, 200, 300 accounts that he is responsible for.
As your customer base grows into the hundreds or thousands, more substantial specialization of success and support roles may make sense. For example, you might split out inbound response support versus implementation versus ongoing success versus account management and renewals. The benefit of this is that you can get efficiencies of specialization and scale. You can provide a better level of service to folks who are chatting on your support chat widget or sending in tickets if people are staffed purely to deal with those; otherwise, they’ll be left waiting until a customer success manager gets off an implementation call and can turn her attention to tickets. Or you can have more senior, more skilled, and thus more expensive customer success staff focused purely on implementation, quarterly business reviews, and project management of success activities, while more junior (and less expensive) staff focus on first-line ticket response—not dissimilar from the specialization of SDRs and AEs in a pre-sales environment.
Regardless of how deep you get into customer success in your company’s earliest days, the most important thing is to think about it at all. The biggest error founders and other first-time revenue leaders make, aside from the inability to sell at all, is insufficiently investing in the success of customers once they have been sold.
If at very minimum you have a success mindset, and choose from the approaches above, you will already be far ahead of the game.
What the hell is scaling? People use the term all the time, but I find that about 80% of the time someone talking about scaling has no idea what they’re talking about!
importantIn B2B sales organizations, scaling is when you take something that has been proven to work at the unit level—one sales rep, one sales pod (an SDR, two AEs, and a CS rep)—and you start adding more of them, in order to parallelize your go-to-market. This is an important thing to realize—the way that most B2B organizations scale their revenue acquisition is not through magically selling more deals through your existing reps, but rather by adding more reps.
At a certain point, your sales reps only have so many hours in the week, and executing discovery calls, demos, follow up meetings, email, and closing calls with prospects takes time. So the way you scale revenue is by adding more people to do these actions.