A note to all readers: This article is anything but a regurgitation of the renewal recommendations that already exist on the internet. We talked to two actual experts—Brooke Simmons, the VP of Customer Success at Rattle and Melanie English, a Senior Renewal Manager here at Catalyst—who’ve done this stuff for a living for years. Steal their ideas; they’re yours for the taking.
We’ve said it before, and we’ll say it again: The days of keeping the lights on just by acquiring new business are over. Customer-led growth (CLG) is the future for B2B revenue, which means retention and expansion are the new north stars.
To achieve these goals, sales and customer success (CS)—two historically siloed teams with separate purposes, processes, and leadership—must work together.
At Catalyst, we recommend starting with your renewal strategy. It’s an area where account executives (AEs) and customer success managers (CSMs) have overlapping responsibilities—and the greatest upside to building healthy partnerships.
When your CS and sales teams share ownership of renewals, everyone rallies around shared revenue goals and celebrates each other’s successes. This is how you can create a customer experience that makes clients choose you again and again. Plus, it gives your company the best chance to grow if the rest of the market contracts.
So CS and sales are both responsible for renewals. Now what?
Once you’ve decided to unify the teams, how does everything actually work? Here are five healthy, motivating tactics that virtually any unified renewal team should steal.
Tactic #1: Swallow your pride and embrace your new teammates
This is more of a mindset shift than a nitty-gritty tactic, but it needs to be said. So here goes nothing: Leaders, it’s time to swallow your pride and recognize the value your new post-sales or pre-sales counterparts bring to the table.
Part of the reason sales and customer success teams aren’t unified is, frankly, because of ego—particularly at the leadership level. For instance, CS leaders can become defensive of their accounts when an AE wants to jump back into the conversation after six months of zero customer interactions.
On the flip side, an AE may try to gatekeep a valuable executive relationship; instead of making an introduction and sharing a customer’s attention with a CS colleague, they keep their cards (read: relationships) close to the vest.
Unsurprisingly, this behavior doesn’t create collaborative, trusting partnerships—and your team is looking to you as a CS leader to set the tone. That means it’s time to check your pride at the door and model a generous, supportive posture toward your counterparts.
As the adage goes, “A rising tide lifts all ships.” Remind your CSMs that maximizing net new business is good for CS because new logos mean growth opportunities. Remind your AEs that maximizing net renewals benefits them, too, especially if they get compensated for growing accounts.
Traditional thought leadership says CS leaders need to fight for a seat at the table. But that’s a perspective that only furthers the “us vs. them” mindset. Revenue is everybody’s job.
And as a friendly reminder: Retention and churn are the metrics that the CEO and board of directors usually care about the most. It’s worth working together.
Tactic #2: Co-build client relationships from the get-go
Often with new deals, customer success teams feel like they’re in the dark. It’s not because salespeople are the worst, and it’s also not because CS teams are made up of weak, mouse-y people. It’s because siloes are what we know, and we’re raging against “it’s just how it’s always been” go-to-market motions that are no longer working well.
How great AEs lay the relational foundation for CSMs
During every deal cycle, give your AEs one place to answer these questions and document the heck out of them. Strong customer notes cover:
- What success looks like for the customer
- How the deal went down
- Who and what the AEs competed against
- What the customer wants to measure
- Why the customer is dropping competitor products
A seamless handoff does wonders internally for the sales and CS dynamics—and the customer experience, too.
It’s easy to assume that a CSM can just use their relational savviness to generate that relationship out of thin air. But this forces CS to ask the executive decision-maker the same questions all over again, which is annoying for the buyer and damaging to a company’s reputation and credibility from the start.
How great CSMs leverage AEs’ relational capital
Once an AE passes a customer to a CSM, they’re not out of the picture forever. The best AEs stay involved with their executive buyers, the ones who signed the deal. And CS needs to create a customer lifecycle to welcome AEs and guide them back in. Why? Because during the deal process, the AE built a valuable relationship network within the client’s company—one that CSMs can leverage to retain and grow the account.
Too often, though, the contract is signed, and the work gets delegated. The executive buyer moves on, the AE walks away, and that valuable network fades. It’s like fruit that rots on the vine. Months later, the CSM might ask the AE to join a renewal call, but by then, the effort is too little, too late.
Instead, imagine this: AEs fully pass the relationship over to CS to handle—but they don’t lose touch with their initial champion; they nurture that relationship every so often. This gives AEs the freedom to go chase new revenue while still giving CSMs helpful, not-out-of-the-blue back up when it’s time for expansion chats or renewal conversations.
With this model, AEs and CS teams work together to reiterate the partnership’s original value proposition and evaluate how the team is progressing toward it. If changes need to be made, the AE helps facilitate them.
Tactic #3: Clarify roles and processes—and make sure everyone’s on board
Depending on your company, CS and sales may be building a relationship from scratch. As with any other interdepartmental relationship, your teams will need new processes to reinforce your collaboration goals. (Note: This is also where a dedicated renewal manager can offer support.)
Your sales and CS members may not work in the same Google Docs or join the same meetings, but their combined actions make up a client’s experience. Making sure that experience is both value-driven and consistent is critical.
Let’s look at two partnership processes you can use to coordinate your teams:
Steal our strategy #1: Manage renewal risk together
Steal our strategy #2: Tag-team renewal forecasts
In B2B companies, sales forecasting is almost a science, but renewal forecasting is more of a guesstimate. Here’s what a data-driven renewal forecasting process could look like:
- After the original contract is signed, the AE introduces the CSM lead to the executive buyer; the CSM and AE establish a quarterly meeting cadence with this buyer.
- Every quarterly meeting, the CSM asks the buyer directly, “If renewal was happening today, would you renew?” The CSM notes the answer.
- Sales and CS leadership get a quantified view of gross retention—quarters ahead of time.
Here’s what happens when this tactic doesn’t happen:
- CSMs enter a forecast renewal based on guesses (e.g., “It feels like 80%”). As a result, renewal managers don’t know how to prioritize accounts.
- Higher-risk accounts get overlooked, while lower-risk accounts get all the attention. (This is a tempting, but inefficient approach to long-term retention.)
- Sales and customer success leaders get called into executive meetings to explain why accounts have churned. At this point, they have to defend their teams instead of highlighting successes.
Tactic #4: Create high-visibility renewal pipeline
The story of pipelines is similar to forecasting: In the sales world, the process is scientific, but in the retention space, there’s no common process. That means it falls on you to create a renewal pipeline that looks like your new deal pipeline. It’s on you to create a way to identify, nurture, and close Customer Success Qualified Leads (CSQLs).
For instance, each potential renewal should have an associated opportunity in your customer relationship management (CRM) platform, and you need to manage that renewal with the same rigor as new deals. At the very least, your fields must cover the type of opportunity, stages for the renewal’s progress, and forecast based on actual data, not estimates. (Remember Tactic #3?)
CS leaders can borrow strategies from the new sales process, like:
- Tracking stage management. Track every phase in the renewal process in your management software.
- Coaching. Train your reps to update their opportunity fields if it’s a new muscle for them. The data they input will become critical data points for leadership.
- Analyzing field updates. Look for potential issues and get curious about them (e.g., “These six opportunities are going to come in late. Why?” and “What needs to change next time?”)
- Running a renewal management meeting like a sales pipeline meeting. Walk through renewal ops and discuss the quarterly forecast in all the same places that net-new pipeline is discussed.
Here’s what happens when this tactic doesn’t happen:
- Your CSMs enter a renewal forecast based on guessing.
- Renewal opportunities are only opened and closed; they don’t represent the deal.
- Only the renewal date gets tracked, so leadership doesn’t have visibility into what’s happening with account retention.
Tactic #5: Incentivize and reward sales and post-sales for their partnership
Structuring incentives is a topic within itself, but to put it bluntly, you need great internal incentive plans that motivate both sales and customer success teams to renew.
Whether or not these incentives match isn’t important. What matters is that AEs and CSMs both have skin in the game for shared retention, individual client expansion, and/or company-wide retention.
How to incentivize AEs to renew
First, ask yourself and other leaders how you comp your AEs. Are they incentivized to promote future retention or to maximize initial revenue? Of course, an AE’s role is to bring in new business—but when you only compensate them for new business, you encourage them to oversell deals upfront.
Why is this a problem? When AEs only get paid for new sales, the client may end up with too many seats or products that don’t make sense for their employees today. Eventually, the customer has to right-size the contract—creating a down-sell for your company.
Healthier account management means right-sizing the deal up front and then compensating the AE for all the expansion that occurs in the next year or two. The incentive structure you choose depends on your specific product, contract, and industry, but some options include:
- Give AEs a percentage of expansion (e.g., 2%) for a set period.
- Create “negative incentives” for overselling (e.g., “If your net renewal decreases, you won’t receive a SPIFF.”)
How to incentivize CSMs to renew
Prioritizing renewals comes naturally to customer success folks, but stronger incentives can spur them on. Consider variable compensation for CSMs if your company only offers base salaries. CSMs should have the opportunity to get upside from growing accounts because they’ve helped foster success there.
Again, your ideal incentive structure depends on your company, but consider first what your CSMs find rewarding, and second what’s in their circle of influence. Some potential incentives include:
- Measure individual CSMs on net retention and gross retention; tracking gross helps you spot performance issues to address.
- Incorporate a leading indicator, a number that CSMs can influence directly, into the incentive structure. (e.g., “I’ll try to get 80% of my customers to use this new product this quarter.”)
- Set a CS team goal directly tied to the company’s strategic initiatives and compensate everyone for meeting it. (e.g., “This quarter, we’re paying out based on the adoption of [X] feature. If we hit our goal as a team, everyone gets $2,000.”)
As with AEs, you should think about the long-term impact of your incentives. For instance, compensating everyone on a feature adoption could lead to a rush to sell that feature at the expense of a client relationship—meaning you convince them to buy something they don’t need, and they eventually downsell or churn. Consider adding quality parameters, such as adoption without affecting health scores, to keep everyone incentivized on both the micro changes and the big picture.
Here’s what happens when this tactic doesn’t happen:
- The sales team has no incentive to help accounts grow; the company churns and burns—a bad look for everyone.
- Your CSMs aren’t compensated for growing accounts, and their motivation (understandably) lags.
- CS and sales team members have vastly different compensation, even though both work hard on the same accounts. Resentment naturally grows.
The choice is yours: Strengthen your renewal partnership—or suffer in the long-run
A strong partnership between sales and CS makes customer-led growth in B2B sales easier and more successful. Period.
By aligning on a renewal strategy, these historically siloed teams can pool their knowledge and skills to land and expand (or renew and accrue maybe?) more business. This partnership is critical in a down economy.
We’ll leave you with this: navigating renewals together can also be more fun. When your internal teams enjoy the revenue partnership—rather than battle over it—the client relationship benefits, too. They feel more at ease, in sync with you, and aligned with their goals. In other words? It’s a win-win-win.
Wondering what to read next? This Bottoms Up Forecast Template for Renewals is what our CRO, Mark, wrote and uses to forecast renewals at Catalyst. It’s a great next stop if you’re wanting to specifically bring Tactic #4 from this article to life.