Why Customer Success Thrives in Operations
I’m not going to blow your mind telling you that Customer Success has emerged as a critical driver of growth and profitability. Furthermore, you’ve probably read your fair share of articles discussing who renewals should live with: Sales or CS?However, when it comes to positioning the Customer Success function within an organization, there's a lesser known debate coming out of the CS world as it matures: should CS be part of Revenue or Business Operations?
Customer Success is more than just a revenue-generating department; it's a strategic function that focuses on understanding and meeting customer needs, enhancing their satisfaction, and driving value realization. When Customer Success is at the behest of a Head of Sales or a CRO who has never been a CSM on the front-lines, it can lead to a myopic focus on short-term revenue goals that satisfy the commission demands of sales people, rather than the long-term success and satisfaction of customers. When Customer Success is part of Operations, it enables a more comprehensive approach to customer lifecycle management.
With Customer Success under Operations, its central role in executing on the company's overall strategy is placed at the forefront. Companies can emphasize the importance of customer-centric processes, and foster a culture of continuous improvement to deliver exceptional experiences. CS requires collaboration across multiple departments to deliver value to customers effectively. Placing it within Operations facilitates closer alignment with other key functions, such as product development, service delivery, and support, without reporting into a leader with a net new revenue target as their north star. This integration enables customer insights to flow seamlessly between teams, leading to a more holistic understanding of customer requirements. With closer collaboration, companies can proactively address customer pain points, make informed decisions, and enhance the overall customer experience.
While revenue-focused metrics are essential for any business, Customer Success requires a distinct set of metrics to measure and evaluate its impact. Placing customer success under Operations allows for the development of relevant performance indicators that align with the function's objectives. Metrics such as customer satisfaction, retention rates, upsell and cross-sell opportunities, and customer lifetime value can be better tracked and analyzed when Customer Success is integrated with operations. This alignment ensures that Customer Success efforts are measured, optimized, and continuously improved upon, without being muddied by the incentive of new revenue (even as upsells are considered new revenue).
As a company grows, Customer Success becomes increasingly vital for sustaining and expanding its customer base. By housing customer success within Operations, organizations can leverage operational expertise to scale Customer Success initiatives efficiently. Operations teams are adept at process optimization, resource allocation, and driving efficiencies. These capabilities can be applied to Customer Success strategies to enhance the team's effectiveness, streamline operations, and ultimately improve customer satisfaction.
Placing customer success under the operations umbrella offers several advantages for organizations seeking to prioritize customer-centricity and long-term success. By aligning Customer Success with Operations, companies can create a unified approach to customer lifecycle management, foster cross-functional collaboration, develop relevant metrics, and drive scalability and efficiency. Ultimately, this organizational structure reinforces the strategic importance of Customer Success and positions it as a critical driver of sustainable growth and operational excellence.
*Note - I chose not to explore CS led by a CCO in this article, but would love to know your take on how it might be the ultimate solution within an organization. Feel free to comment or reach out!
