Your Customer Success Team should not be responsible for a revenue target. Build an Install-Base sales team instead.
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Early in my leadership career, a mentor told me “salespeople don’t do sales and other things well”. I have found that to be true of salespeople and all other roles at a company.

The issue is focus. When we are responsible for too many things, we don’t do any one thing well.

It’s for this reason that your Customer Success team should focus on helping customers get the most out of the product and services. That’s enough. Nothing more.

The Customer Success team is your army of trusted advisors. You hire candidates with a knack for managing relationships, onboarding new users, putting out fires, troubleshooting issues, proactively delivering amazing experiences for customers. The best customer success managers are like air traffic controllers for company resources, ensuring all of the customers are getting the right level of value.

If that job doesn’t sound hard enough, imagine also being responsible for asking customers to buy your new product that was released last quarter. Imagine getting through a grueling onboarding process with a customer only to find that the salesperson undersold their planned usage and now you have to ask them for twice as much as they were expecting to pay. Yikes.

This is an all-too-common occurrence in early stage SaaS companies. It’s not a fair ask of any individual to be a trusted advisor to the customer, always advocating for the customers, while they are struggling to also hit a sales quota so they can pay rent.

A person’s focus can only have one master. Companies that give the Customer Success team an upsell quota run into two problems:

1. CS focuses on the customer, slower sales growth
2. CS focuses on the sales, customer relationships suffer and churn increases

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There’s a better way to build your team and you don’t have to wait until you are a huge company to do it. Once you hit $1MM in ARR, or about 100 customers, the team needs to level up. At this stage, you are likely still in a founder-led selling motion so the founder is involved in closing most deals.

Maybe you have some SDRs (hire in pairs), an Account Executive, some Customer Success managers. The early team is a hodgepodge of good, smart, motivated people in loosely defined roles just trying to get new customers in the door and making those customers really happy.

That’s good, it’s the right thing to focus on as you approach your first $1MM in ARR. But around that time you will notice the cracks starting to appear in the team structure.

Your ride-and-die early employees are stretched thin across prospecting, closing, onboarding, supporting, marketing, and everything else that goes into running a company. Everyone is working long hours and you can read the room: it’s time to establish some structure for your go-to-market team. Your first GTM Pod:

1 Sales Development Rep

1 Account Executive (New Logo)

1 Account Executive (Install-Base)

1 Customer Success Manager

This structure is perfectly designed to drive pipeline, close pipeline, support the install base, and sell into the install base. You can read more about the economics of this structure in my recent post. What makes this structure hyper-productive is the introduction of a new type of sales role: The Install-Base Account Executive.

Install-Base AEs are a different breed than your uber-competitive “hunter” style salesperson. They are more attuned to a customer's needs. They have a knack for value engineering and helping the customer visualize the future of the partnership. Most importantly, they are not afraid to “ask for the money” when it is clear that the customer is ready to buy.

This type of AE role focuses on keeping customers’ spend in line with their usage of the products or services, ultimately helping the customer get the most value from the product or services. The install-base sales motion drives revenue in three ways:

1. The customer has consumed the allotted usage in their subscription. These could be seats, or downloads, or contacts, or whatever your value metric is for your product. Every customer should have some usage limit associated with their price. When the customer is pacing toward 100% or more of their subscription limit, the Install-Base AE helps the customer right-size their subscription to match the needs of the business.
2. The customer needs to add products or features that are not included in their subscription. This requires that your product uses a good-better-best pricing model, or that you have multiple products to sell. The Install-Base AE evangelizes the features or products to the customer so that they can see the value, then gets the customer to upgrade for access to those features or products.
3. The customer is coming up on a renewal. Price goes up at renewal, every year. It’s important to set this expectation in the sales process. You should raise prices each year because you are investing in the product and team. You are releasing new features or products. You are making the product and services more reliable and valuable each year, not to mention inflation. The Install-Base AE will get you at least a 10% increase in ARR across your renewal base each year just by doing the work.

It takes some time to land the plane on this sales motion. Getting the right sales reps in place. Figuring out the handoff and rules of engagement takes time. So get started early, work out the kinks, and you will be rewarded with better net retention numbers and faster revenue growth.

Why should I start at $1MM ARR?‍

$1MM is not a magic number. Each company is different. $2MM or $5MM may be more appropriate for your business. The point is that your team will eventually need to grow out of the founder-selling stage into a more structured GTM motion. This is the moment to build the Install-Base sales team. Most companies wait too long, and it’s very painful to make this switch at $10MM or later.

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If Customer Success doesn’t own a revenue target, how will their performance be measured, and how should they be compensated?‍

Customer Success is measured and compensated on net revenue retention of their customer portfolio. The CS team will become the best source of leads for upsell and expansion opportunities. So long as the Install-Base reps and the CSMs are working together to support the customer, the CS team will feel in control of their outcomes.

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I already have Customer Success handling renewals and expansion, how can I transition to the team that I need?‍

There’s no silver bullet. It will be painful. The Customer Success team isn’t going to want to give up this responsibility. They will claim that the customer relationships will suffer. They will claim that their income will suffer. It’s all about incentives. If you can show the CS team that they will make the same or more money by shifting to the new structure (and a new compensation structure), they will settle into their new roles within a couple of quarters.

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You will have to overcome some challenges as you build the Install-Base sales team…

Rules-of-Engagement (ROE) gets messy. New Logo AEs will want credit for upsell deals that close shortly after the initial close. Customer Success reps will want credit and compensation for sourcing expansion deals. The only way to overcome ROE squabbles is to have a very clear set of rules and a commitment to transparency when issues come up. It’s best to have a zero-tolerance policy for foul-play. People looking to steal accounts or taking deals away from colleagues is a straight path to termination. It’s a core values violation for almost every culture out there.

Training and onboarding new reps is tough in the early days. Having 4 specialized roles (SDR, new logo AE, install-base AR, and CS) at an early stage company is a lot to plan for. Try to simplify the roles and bring those early employees into developing curriculum for future hires. They will be more bought in on their jobs and some of them jump out as leadership quality.

Speaking of leadership, it takes a special type of revenue leader to manage so many different roles at the same time. This is temporary because you will be able to establish teams of similar roles once you add headcount, but the first chapter of building this team is a real challenge. The founder will be involved, so will any Head of Sales or senior revenue leader.

Career pathing for young reps can be challenging. You are going to find reps who want to move into different roles. You have reps who have “topped out” at their current role and you’ll need to create new roles for promotion. This may seem trivial to think about career pathing with such a small team, but the sooner you work on it the stronger your team culture will be as you scale.

Customer confusion is a real risk. The customer could potentially come across 4 or more different direct contacts in the course of their first year as a customer. This could be viewed as a bad thing, but it’s really an investment in the customer relationship. You eventually get to the point where the team plays like an orchestra and everyone knows their queue. Stay confident through the bumpy beginning, the team works together and the customers are happier for it.

Despite all of these challenges, I still recommend building the install-base sales motion as soon as possible. The longer you wait, the more difficult it will be. Start with one rep. Pull a customer usage report and have that rep call happy customers to see if they want to right-size their subscription. You have revenue hiding in your install-base and you can start realizing that revenue today.