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.
  • Better alignment with VPS owning an ARR/MRR goal vs. just bookings goal. She’ll be better able to hit your ARR end-of-year goal if she’s also in charge of churn, and all upsell.  It’s always at least a little awkward to ask your VP of Sales to own the year-end ARR number, if she can’t also control churn.  They are inexorably linked.  And if you let your VP of Sales off the hook for an ARR number, and only make her responsible for gross bookings (not net of churn) … the VP of Sales naturally gets disaligned from the goal that really matters.  Where your ARR will end up on December 31.
  • She probably knows better how to do this 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 worked with customer success closely before.

So things will seemingly go more smoothly if customer success reports to your VP of Sales.

But the Cons are also large:

  • Distracting. Most VPS that are great are closers. You want closers closing. Not spending 50% of their time on post-closing.  Sales is just the very beginning of a 5-10 year customer journey.  Specialize more, not less.
  • Disalignment 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 disalignment, personally. It always worries me.
  • CEO isn’t as engaged. When the VP of CS reports to the CEO, the CEO visits 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 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 60% 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 I want closers closing.

Published on July 28, 2017

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