Why I Usually (Not Always) Prefer Customer Success to Report to the CEO

Ah, who should Customer Success report to?

It’s not super simple.

There are generally 3 options in the early and middle days:

  • CEO
  • VP of Sales (once you have one)
  • VP of Something Else. Finance sometimes. Product on occasion. Other “business” co-founder.

There are clear Pros and Cons to reporting to a VP of Sales. The Pros are:

  • Usually, a VP of Sales is your best manager. So usually, she can easily also manage Customer Success as well as all her reps.  You have too much to manage as it is.  And Sales and Customer Success are of course connected.
  • Better alignment with VPS owning an ARR/MRR goal vs. just bookings goal. Your VP of Sales may be better able to hit your ARR end-of-year goal if they are also in charge of churn and all upsell.  If you ask your VP of Sales to own the year-end ARR number, doesn’t it make sense to have them also own retention?  And if you let your VP of Sales off the hook for an ARR number, and only make her responsible for net new bookings (not ARR net of churn) … the VP of Sales naturally gets misaligned from the goal that really matters.  Where your ARR will end up on December 31.
  • Your VP of Sales may know better how to manage customer success than you do.  Even if your VP of Sales has never managed customer success before, she’ll have a better idea of how to do it and scale it than you do.  At least she’s likely worked closely with customer success before.

So things will seemingly go more smoothly if customer success reports to your VP of Sales.  And they often do at first.

But the Cons to having your head of customer success report to your VP of Sales are also large:

  • Distracting to VP of Sales that is a born closer. Often, very distracting.  Most VPs of Sales that are great are great closers. You want closers closing. And helping their team close.  Not spending 50% of their time on post-closing.  Sales is just the very beginning of a 5-10 year customer journey.  We’ve all learned to specialize more, not less.  Having your VP of Sales’ week full of Zooms and discussions on churn and retention will only take time away from closing and upselling.
  • Misalignment on Goals. A VPS wants to close more revenue. Not just retain revenue. But in Customer Success, renewing, even without any upsell, is usually Job #1. Keep the customers happy, and in the end, all is good. That’s what CS is all about. There is an inherent conflict here with Account Expansion, at least at the margin, and often with the biggest accounts. Customers that have little room to land-and-expand won’t get the same treatment from sales as an account that has a lot of room to grow. I don’t like this misalignment, personally. It always worries me.
  • The CEO sometimes, even often, isn’t as engaged with customers as they would be if CS doesn’t report to them. When the VP of CS reports to the CEO, the CEO talks to more customers, plain and simple.  I see this all the time.  And doing this retains more customers. Increases NPS. And has many positive effects. When CS reports to the VP of Sales or other functions, usually, I find the CEO just isn’t quite as close to the customers. The CEO often doesn’t even know a lot of the top customers personally. This has many negative effects over time.

So most of the time at least, I prefer the VP of CS to report to the CEO, if the CEO can manage the function. The CEO can balance the alignment, and bring the areas together.  And let your VP of Sales just be that.

You want closers closing.

(note: an updated SaaStr Classic post)

Published on February 17, 2021

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