There’s no disputing the significant shift customer success (CS) has had over the last few years; it’s become increasingly pivotal.
As companies navigate economic uncertainties and focus on maximizing revenue from existing customers, the responsibilities of these teams are expanding beyond traditional boundaries of value realization. We’re increasingly seeing customer success teams being responsible for account expansion – whether that’s upselling or cross-selling to existing customers, or renewals.
This new responsibility and recognition as a revenue driver made us wonder: If customer success teams are clearly bringing in revenue via account expansion, are they being compensated with a commission on the sale?
This article delves into the critical role customer success plays in driving revenue, explores the nuances of account expansion ownership, and examines the compensation structures for these revenue-generating efforts.
Drawing from the State of Customer Success Report 2024 and insights from renowned customer success leaders, this article focuses on:
- The significant role customer success plays in driving revenue.
- Who’s responsible for account expansion?
- Does company culture affect who’s responsible for upselling and cross-selling?
- Do Customer Success Managers get commission on upsells, cross-sells and renewals?
- The question of bonuses vs. commission.
The significant role customer success plays in driving revenue
“Businesses need customer success to step up and own revenue to survive,” says Emily Garza, Head of Customer Engagement at Unit21, during a keynote she presented at Customer Success Festival San Francisco 2023. Emily’s words ring true to the general atmosphere in business today.
In 2024, we're seeing a pronounced focus on revenue generation and customer retention metrics within SaaS companies, with customer success teams taking the brunt of the responsibility.
The emphasis on protecting and maximizing existing revenue streams could be attributed to the current macroeconomic climate of uncertainty and cost constraints.
However, it's crucial to maintain a balance between retention efforts and proactive expansion motions. As Rob Zambito, seasoned customer success leader, cautions:
"We’re all so under the gun to retain our customers that we're completely neglecting expansion [...] which is really dangerous for a lot of customer success teams that we're potentially losing sight of all of expansion."
Rob defines expansion as the “increase in revenue attributable to your existing customers.”
Rob’s point highlights the need to balance retention efforts with proactive expansion motions like upsells, cross-sells, and improved adoption. An excessive inward focus on protecting revenue risks neglecting the full customer lifetime value.
Who’s responsible for account expansion?
Now this is the question on customer success leader’s minds.
Unfortunately, there is no definitive answer as it’s highly dependent on factors such as business maturity, industry, and company culture.
Our 2024 State of Customer Success Report surveyed global customer success professionals of all seniority levels to ascertain what they’re responsible for and how they feel about their work.
In particular, we explored whether CS teams formally own full customer expansion responsibilities alongside retention.
- 49.1% of companies reported that customer success is responsible for all expansion: upselling, cross-selling, and renewals.
- 20.6% indicated that expansion is handled by a completely different function.
- The remaining companies utilize a hybrid model, with customer success partially responsible for specific aspects of expansion.
Nearly half of our respondents confirmed their team manages all expansion spanning upsells, cross-sells, and renewals centrally.
However, over 20% still treat expansion as completely separate from CS, likely residing in sales or account management roles. The remaining respondents utilize a hybrid model between CS and sales.
As economic pressures incentivize teams to maximize their existing book of business, this variation reveals an ongoing debate around how to optimally align retention and expansion incentives under one unified customer success charter.
Expansion as a KPI
Wanting to understand if customer success teams are being measured on the amount of revenue generated, we asked our survey respondents to reveal which KPIs their teams are measured on.
We discovered that after churn rate and retention rate, the two next most common KPIs for a customer success team are expansion MRR/ARR and upsell revenue.
Does company culture affect who’s responsible for upselling and cross-selling?
We wanted to understand how company culture influences the responsibility of expansion. Whether companies claim to have a community-first, customer-first, product-first, sales-first, or marketing-first approach – we wanted to know the impact this has on CSM expansion responsibilities, if any.
Interestingly, the company's cultural approach does seem to influence who is responsible for expansion activities:
- Customer success teams with no involvement in expansion are typically part of customer-first cultures.
- Teams responsible for renewals, upselling, or cross-selling are usually part of sales-first organizations.
- Customer success teams solely responsible for all aspects of expansion typically come from customer-first companies.
Jess Galenski, Director of Customer Success at Apryse:
“Customer success is closest to existing customers, so it only makes sense they are part of driving expansion within their customer base. While it should not be the sole focus it should be part of their focus as they have the access, the data and the relationships with customers to drive meaningful expansion that will give customers value in the long term.”
Mark Higginson, Chief Customer Officer at ScreenSteps:
“The increasing focus on revenue expansion activities like upselling, cross-selling, and renewals within customer success teams aligns with my experiences in 2024.
“CSMs can significantly influence and help identify potential expansion opportunities. While the effectiveness of this depends on the organization, product, and other factors, fostering a strong partnership with sales can create a dynamic duo that will significantly increase the effectiveness of CS or sales handling these alone. This will help to balance customer-centric goals with revenue targets, ultimately driving business growth, and strengthening and retaining our customer relationships.”
Haig Kingston, Head of Customer Success at OpenBlend
“I think that as long as it is controlled and not pushed, it’s the right direction. CS should have a warm sales opportunity but it shouldn’t be its primary focus. The focus should be retention and advocacy: incentivize growth alongside your sales partners.”
Do Customer Success Managers get commission on upsells, cross-sells and renewals?
Okay, here’s the big question. We wanted to understand if customer success professionals earn commissions based on revenue increases from their accounts, through things like upselling, cross-selling, or renewing contracts.
We’ve established that 49.1% of customer success professionals are responsible for all areas of account expansion like upselling, cross-selling, and renewals. However, this new information highlights that nearly two-thirds of them don't receive any commission as an incentive for these revenue-generating efforts.
This highlights a potential misalignment; 40.8% of the responses who don’t receive a commission for expansion were from customer success teams that fully own expansion responsibilities.
So while customer success teams are often relied upon for account expansion activities, the compensation structures may not be properly motivating or rewarding these critical responsibilities.
Bonuses vs. commission
According to its Principle Customer Success Manager, Ralph Meyer, the customer success team at Procore Technologies has two key metrics: renewal rates and expansion.
Ralph admits that around “75% of their KPIs and their performance is pretty much weighed on that renewal rate,” resulting in the business putting a lot of focus on it. In terms of compensation, there's no compensation per se. It's more so on the bonus and the performance rating."
Ana Herrero-Wallace, Principal Customer Success Manager at Workday confirms this practice of providing bonuses but a lack of commission. In her keynote presentation at Customer Success Festival Amsterdam 2023 that examined the relationship between sales and customer success, Ana noted:
“We're fighting for CSMs to get compensated with commissions, right? We get bonuses, but we don't necessarily get commissions only in certain things, but we need to maybe speak up a little bit more because I think it's only fair."
Final thoughts
Ultimately, nearly half (49.1%) of customer success teams are responsible for owning revenue for existing customers. However, it’s clear that CS isn’t being acknowledged for this shift in responsibilities.
To close on the words of Mark Higginson, Chief Customer Officer at ScreenSteps:
“Over the last year, customer success has seen significant changes, with CSMs taking on more responsibilities. Not only does this include traditional roles like retention and relationship management, but revenue-generating activities such as upselling, and cross-selling, too.
“Additionally, CSMs are increasingly required to prove their value by directly contributing to revenue growth, despite only 36.4% receiving commissions for these efforts. This shift highlights the growing importance of CSMs in driving business success, but also requires clarification in responsibilities so CSMs don’t become a dumping ground of random responsibilities.”
Are you surprised by these stats? 👀
If this research has had you raising your eyebrows or scratching your head, then give our full report a read.
Or perhaps you agree with these findings. Perhaps you've had your suspicions for a while that CSMs aren't being properly compensated for their work in driving revenue for existing customers.
Our full State of Customer Success 2024 report is the most comprehensive study on the current CS landscape, holding a magnifying glass up to how customer success is being carried out in companies and how its professionals genuinely feel about it.
