Aligning CS and Sales Goals for the New Fiscal Year
By Russell Bourne
In last week’s blog, Alli Tiscornia wrote with much holiday cheer about why it’s essential for CS to participate in a Sales Kickoff. This week, I’m going to dive into how to operationalize your strategy for CS and Sales teamwork, and set goals for both groups that amplify each other rather than create conflict. If you develop goal plans before your SKO, you can roll out the plans during the SKO. Or, if the SKO includes a forum to talk through co-work, the goals will be well-accepted when rolled out later.
Let’s start by acknowledging there are countless ways GTM teams are structured and staffed. That being said, most GTM teams at companies of growth stage or later make 2 pivotal choices:
Does CS involve Sales at any point in the expansion sales process?
Are the various GTM departments organized in a pod, or do they have a diversity of segmentation models?
For the purposes of this article I’m defining CS as the classic CSM role involving value realization, relationship management, and sometimes selling - but not including onboarding, tech support, and so on.
Expansion Sales
In situations where CS is fully responsible for expansion sales, a CS leader has plenty of freedom, but no lack of options to consider. There are 3 levels of commercial practice, post initial sale: renewal, upsell (more quantity of a product the customer already has), and cross-sell (existing customer buying a product or module new to them). “Expansion sales” encapsulates upsell and cross-sell.
Any SMART goal starts with gathering historical data to help set achievable goals. An often-cited benchmark says a healthy book of business has 90% annual GRR, and 110% annual NRR - in other words, there’s 10% churn and 20% growth. Let’s use that as our example. It’s tempting to use NRR as a quota, but with NRR, strong expansion can hide weak retention, and vice versa.
My most successful teams had two quotas running simultaneously, one each for GRR and expansion sales. Compensation drives behavior, and having a 2-quota system ensures a) proper prioritization of renewals and sales, and b) a lack of incentive to create budget for expansion sales by eroding the base.
If CS is fully responsible for expansion sales, it’s tempting for your sales team to disengage, but that’s not a silo that has to exist; there are fruitful trades to be had. As one example, if a salesperson closes a new customer at less than their full potential, they can “lead pass” a logical part of the white space to the CSM and get a bonus later upon successful expansion. On the flip side, a CSM could and should have a goal around passing back case studies or other advocacy.
Conversely, CS may hand expansion opportunities off to Sales at any stage. In some scenarios, it’s essentially a lead-pass, ranging all the way to other scenarios where a salesperson enters customer-facing calls as the close is near. No matter where you choose to make the handoff, what’s important is to have a consistent process across all CS-Sales pairings within any segment. This ensures both roles enjoy a repeatable role in the customer journey, and it also makes goals easier to create and track. For example, a CSM may have a goal of creating a certain number of qualified opportunities, or of advancing a certain number of opportunities to 50% stage before handing them off. And the Salesperson may have a corresponding quota specific to winning those deals; their new net customer quota can be separate, and weighted logically to reflect Sales expectations of new versus expansion sales.
The Team Structure
We at The Success League have observed over many engagements that the appropriate segmentation for existing customers is very rarely the same as for new net sales. That said, team structure is often decided by a senior GTM leader and you may find yourself in a pod, for better or worse. The beauty of a pod is the roles that lay in it - usually a BDR, an AE, a sales engineer, a PS engineer, a CSM, and sometimes a Partner Manager - function as a tight unit and often self-identify as part of their pod team more than their departmental team. It’s a silo-busting symphony… if they’re aligned to the right goals.
If they’re not, get ready for finger-pointing and inappropriate pipeline reviews.
How do you ensure the pod is united around their goals? By remembering again that compensation drives behavior, while also remembering it’s only appropriate to give someone a goal if they’re more or less in control of the result. In practice, this means defining what success looks like overall for the pod - for example, a pod should close some amount of a) net new business, b) retention rate, c) expansion business, d) onboarding time, and so on. Each individual in the pod is accountable for their role’s part as their primary variable comp - quotas for the revenue generators - and then an activity bonus for activities they are expected to fulfill to help others in the pod.
If you’re not using a pod structure, you can apply the same ideas as above, but the goal creation has to be more nuanced considering the CSM and salesperson won’t share a 1:1 territory. Again though, consistency is your friend. A CSM should be able to repeat the same motions with the same expectations with each one of the salespeople they work with, and vice versa.
CS and Sales Delivering Together
So far I’ve focused on quota-type goals, but there are equally important goals around customer experience and employee experience, not measured financially (though there are certainly downstream financial consequences). A new fiscal year is a great time to revisit all times in your customer journeys where CS and Sales deliver touchpoints together, or need to be aware of what the other is doing. The table stakes for this are: check egos at the door, and always consider the journey from the customer’s point of view.
If you designed a journey with a single great handoff call, make sure all parties expect to attend - and not to subject the customer to a duplicate, siloed version. If you designed a journey with a solid renewal outreach cadence, make sure the CSM follows it and the salesperson knows not to double it. Yes, you could create goal plans around journey-related activity, but I generally shy away from goals that are inputs rather than results. If you can successfully remove ego and get everyone pulling the same way on the rope, a formal goal shouldn’t be necessary anyway. Remember, one department isn’t “the team” - the whole company is.
Your Level of Authority on Goals
Let’s be honest: if you’re reading this as a Manager, Director, or maybe even a VP, you may be thinking it looks great, but your organizational goals are given to you from the executive level and you don’t have the ability to write goals the way you want. Fair enough; you can still do the best with the hand you’re dealt. Collaborate with your cross-functional peers; be transparent about what you think your teams’ missions are at a strategic level, and about how that translates into your formal goal plans. Ask each other how you’ll be able to help each other hit your goals and use the answers to create consistency and harmony between the teams. The executive team who gave you the goals won’t mind if you hammer out a good playbook together.
The Success League is a customer success training and consulting firm. We offer both CSM and CS Leadership certification training, as well as an on-demand series, CSM Selling, that helps you build the skills you need to tackle renewals and drive growth revenue. For our full suite of offerings, visit TheSuccessLeague.io.
Russell Bourne - Russell is a Customer Success Leader, Coach, Writer, and Consultant. In a Customer Success career spanning well over a decade, his human-first approaches to leadership and program management have consistently delivered overachievement on expansion sales and revenue goals, alongside much friendship and laughter. Russell serves on the Board of Gain Grow Retain as co-lead for Content Creation. He is passionate about equipping individual contributors and business leaders alike to lean on their Success practices to grow their careers and help their companies thrive. He holds a BA from UCLA, and in his free time plays guitar semi-professionally.
