“We hit 115{c87e2df4b343d0515d304e127afe4653a549475791ab451641a18e09bd64e760} of our target across Totango + Catalyst in Q1 on our expansion number, and that was largely due to the CSMs and the focus they put in along with the work that we’re doing with our account executives. The partnership that we have is working.”
Customer renewals are the lifeblood of any subscription-based business, directly impacting your company’s revenue, growth, and long-term success. But let’s face it: managing renewals can be a time-consuming process – and if you’re relying solely on account executives (AEs) to handle all renewals, then you could be missing out on opportunities to generate new business growth.
At Totango + Catalyst, we made a strategic decision to challenge the script on revenue priorities, empowering customer success managers (CSMs)—those mostly intimately aware of customer needs and goals—to own core renewals, expansions, and upsells. The results? Increased renewal efficiency and targeted expansion, positive customer feedback, and a clearer focus for both AEs and CSMs on their goals. On a recent episode of The CSM Practice Podcast with Irit Eizips, I discussed why we made this shift and three strategies that made it successful, including:
- Using a RACI matrix to clarify roles and improve communication
- Building customer success qualified opportunities (CSQOs) into CSM compensation plans
- Leveraging variable compensation plans to motivate and incentivize CSMs
Here are a few highlights from our discussion and check out the full podcast to hear more of my tips for streamlining and maximizing your renewal process.
1. Master the RACI: Your roadmap to success
A RACI matrix, which stands for Responsible, Accountable, Consulted, and Informed, is a powerful tool for clarifying roles and responsibilities across teams. As we considered making this shift in ownership, it helped us answer important questions like:
- Who is involved in each stage of the renewal process?
- When can different team members step in?
- Where can each team do a hand-off?
- Who drives the renewal process versus who needs to be kept in the loop?
You can’t spend enough time prepping and addressing these questions and concerns—directly and with vulnerability. They’re critical for execution. However, it’s important to realize that leadership alignment, while crucial, isn’t enough by itself. Success requires buy-in from individual contributors – AEs and CSMs – who own and execute these roles daily. Three strategies to help make the new RACI matrix effective for your organization:
- Hold a comprehensive roll-out meeting: Have a live moment with representation from everyone involved in the RACI to walk through the entire matrix and explain each role with real-life examples.
- Leverage front-line insights: Create the space for individual contributors to provide feedback. Their daily interactions with customers offer unique insights that must be considered to refine and improve the matrix.
- Make time for open Q&A: Allocate ample time for questions, allowing people from each team to seek clarification and voice concerns. This open forum helps foster a sense of ownership and engagement.
“Get everybody on a single call, make sure that you go through and present the material on the RACI, have real-life examples that you can walk through with your team members, and then make sure that you have an opportunity for them to ask questions”
2. Transform customer success insights into revenue: The CSQO approach
Customer success qualified opportunities (CSQOs) are growth opportunities identified specifically by the customer success team. These are not just any leads – they’re opportunities rooted in deep customer knowledge and relationship value. More to the point, it’s when a CSM sees a tangible opportunity for growth, an identified budget, and a (projected) purchase timeline. CSQOs leverage the unique insights of your CS team who often know more about the customer than anyone else in the organization. By implementing CSQOs into your compensation plan, you empower your CS team to drive expansion, while maintaining their focus on customer success and retention. Benefits of implementing CSQOs in your compensation plan:
- Tunes CSMs to think ahead and listen for unique growth opportunities
- Prompts thoughtful, strategic, and consultative conversations with customers
- Helps customers anticipate and prepare for future needs
- Drives proactive solutions rather than reactive problem-solving
“The whole point of the CSQO and building that into a comp plan is to help celebrate the CSM’s knowledge and experience and what the CSM is doing for the customer.”
3. Incentivize pipeline generation: Empower CSMs and unlock growth potential
Pipeline is a leading indicator of future expansion. When designing compensation plans for CSMs, it’s important to include pipeline metrics alongside traditional retention and expansion goals. By compensating CSMs for pipeline generation, you’re recognizing their pivotal role in identifying growth opportunities and encouraging a more proactive approach to customer expansion. The goal isn’t to push unnecessary sales but to leverage CS insights to better serve customers and drive mutual growth. Best practices for designing variable compensation plans:
- Set clear targets: Establish specific, achievable targets for each quarter
- Reward attainment: Structure compensation around meeting and exceeding these targets
- Align with sales: Ensure your CSM compensation plan doesn’t conflict with sales incentives
- Leadership buy-in: Get executive support and clearly communicate the plan across all levels of the organization
“The CSM team is the closest to the customer, they know more about the customer than anybody, so they’re going to have the best insight into where the growth opportunities are for a given customer. Let’s comp them for that knowledge. ”
4. Transform renewals into growth opportunities
By empowering CSMs to take ownership of key renewals and actively seek growth opportunities, you’re not just streamlining processes, you’re fostering a proactive, customer-centric culture that contributes to long-term success of your customers and your business. Are you ready to unlock a new level of impact for your customer success team? Listen to my full interview on The CSM Practice Podcast and discover how Totango + Catalyst can help you accelerate customer business outcomes, prevent churn, and drive growth through customer expansion.