Use the CURE framework to figure out who owns contract renewal
By: Primary Venture Partners
Tags: Startup Lessons, Customer Success, Customer Retention, SaaS

The best customer success playbooks combine customer-facing programs with internal processes to drive an organizational rallying cry around customer satisfaction and retention. In truly customer-obsessed companies, everyone shares accountability for churn — but when everyone is on the hook for the retention number, who really owns the renewal?

Commercial ownership for the installed base of customers is frequently a “hot potato” in SaaS: when the proverbial music stops, who is holding the renewal number? Most strategies fit into one of the following ownership models or some variation thereof:

Customer success managers own renewals in addition to their day-to-day relationship management responsibilities

own renewals in addition to their day-to-day relationship management responsibilities Sales representatives own renewals and account growth (or at least for a subset of “strategic” logos or named accounts) in addition to their new business targets

own renewals and account growth (or at least for a subset of “strategic” logos or named accounts) in addition to their new business targets Dedicated account managers — who do not manage day-to-day customer relationships — own renewal and expansion targets

— who do not manage day-to-day customer relationships — own renewal and expansion targets Renewal managers manage the operational process and paperwork for more transactional renewals, and one of the aforementioned resources is accountable for expansion and growth (if relevant)

…so which role and ownership structure works best? First, let’s address the elephant in the room: great CSMs are most often not great salespeople. This is okay! The fundamental difference between the classical “account manager” and the modern-day “customer success manager” is that the former is focused on the commercial management of the account (retaining and growing customers) whereas the latter is focused on driving customer outcomes that ultimately yield renewal or growth (commercial upside). This is a subtle but very important nuance, as these approaches result in two very different customer experiences.

Save for early-stage businesses, new business should own new business only, and CSMs should never own renewals outright. CSMs are key stakeholders in the renewal process and should absolutely be incentivized to ensure their clients renew and grow, but the primary focus should be ensuring the customer achieves their desired outcomes and extracts maximum value from the product. So if the CSM isn’t owning the renewal, who is? While there is no one-size-fits-all approach for existing business commercial ownership, the CURE framework outlines key considerations for where renewals should live as well as what skills matter most:

CURE FEEDBACK

Contract size — Contract size can be a helpful proxy for renewals management. Lower ACVs often yield more straightforward contracts (e.g. consistent pricing tiers for all customers), which means renewals can be more transactional. Many renewals can be managed through auto-renewal language (side note: all contract drafts should include auto-renewal language [and perhaps even an uplift clause], even if those terms are more likely to be struck in enterprise deals). Operational renewal managers — who index higher for process than customer-facing commercial skills — are typically best-suited to manage these smaller deals. Mid-market and enterprise contracts have significantly more nuance (in terms of both terms and customer stakeholders), so a customer-facing resource with stronger deal structuring and negotiation skills is a better fit.

— Contract size can be a helpful proxy for renewals management. Lower ACVs often yield more straightforward contracts (e.g. consistent pricing tiers for all customers), which means renewals can be more transactional. Many renewals can be managed through auto-renewal language (side note: all contract drafts should include auto-renewal language [and perhaps even an uplift clause], even if those terms are more likely to be struck in enterprise deals). Operational renewal managers — who index higher for process than customer-facing commercial skills — are typically best-suited to manage these smaller deals. Mid-market and enterprise contracts have significantly more nuance (in terms of both terms and customer stakeholders), so a customer-facing resource with stronger deal structuring and negotiation skills is a better fit. Upsells and cross-sells — Do you have additional SKUs to offer your customer? If you do not have cross-sell products to offer and pricing is largely usage-based, the renewal is more likely to be transactional and can be managed by the renewals manager profile. If pricing is a bit more complex or bespoke, the dedicated account manager model is the better fit.

— Do you have additional SKUs to offer your customer? If you do not have cross-sell products to offer and pricing is largely usage-based, the renewal is more likely to be transactional and can be managed by the renewals manager profile. If pricing is a bit more complex or bespoke, the dedicated account manager model is the better fit. Resources — Your approach to renewals will invariably vary based on the stage of your company and the resources available to you. For early-stage companies, it is perfectly acceptable for the new business team to assist with renewals, especially when your sellers have strong relationships with your customers. As companies grow and scale, however, renewals often prove to be a distraction to the new business team, which could ultimately compromise your quota/OTE coverage and other sales efficiency ratios. Some early-stage companies will task their customer success managers with renewals; this approach works in the days of the generalist “Renaissance CSM,” but should be sunset as the broader CS org evolves to specialization. Asking CSMs to negotiate account commercials can and will jeopardize their strategic partnership with clients, so a CSM ownership model should only exist when teams are still very lean.

— Your approach to renewals will invariably vary based on the stage of your company and the resources available to you. For early-stage companies, it is perfectly acceptable for the new business team to assist with renewals, especially when your sellers have strong relationships with your customers. As companies grow and scale, however, renewals often prove to be a distraction to the new business team, which could ultimately compromise your quota/OTE coverage and other sales efficiency ratios. Some early-stage companies will task their customer success managers with renewals; this approach works in the days of the generalist “Renaissance CSM,” but should be sunset as the broader CS org evolves to specialization. Asking CSMs to negotiate account commercials can and will jeopardize their strategic partnership with clients, so a CSM ownership model should only exist when teams are still very lean. Enterprise — Enterprise deals are typically time-intensive and involve a number of stakeholders; moreover, they are often ripe with white space or “land and expand” opportunities (e.g. start with one business unit and leverage strong results to sell into others). Dedicated account managers are usually the best fit for these scenarios on account of the contractual and organizational nuances. However, if there is a material churn risk or a new evaluation team in the mix (either for your existing share or for an expansion opportunity), there is merit in bringing the sales team back into the conversation, as that will often imply a full sales cycle with a competitive element, etc.

The four dimensions of the CURE framework imply that there are a number of different organizational permutations to think about as you plan for ownership. Consider this decision tree as you weigh your options for determining which role processes the renewal:

Note: organizations will sometimes bifurcate the paperwork-oriented renewals manager role with a dedicated account manager focused on account growth, which could potentially be disorienting to the customer. The “full-stack” account manager — someone who manages all facets of the contract — allows for a more coordinated, customer-friendly approach: PM for implementation, CSM for strategy, Support for troubleshooting, and one Account Manager for all contractual matters. That said, if your customer base spans a number of different market segments, you might consider employing the renewal manager model for smaller customers and the account manager model for contracts over a certain dollar threshold.

The decision tree confirms the dedicated account manager as the modal approach for SaaS renewal ownership — but where should that account manager sit in the organization? While historically this role often reported into the sales team, it is increasingly aligned to the customer organization. When I was the CRO at Sailthru — overseeing both sales and customer success — I very deliberately moved our dedicated account managers into the customer success organization. The account managers reported into regional CSM team leaders, which strengthened our coordination internally (and with customers!) via regular line-by-line account reviews in team huddles, aligned compensation incentives (renewals manager compensation plans favored net retention versus expansion bookings targets), and ultimately drove a nearly 25% improvement in gross churn and a 10% improvement in net retention inside of the first year.

Equally as important to organizational design is ensuring that compensation incentives are aligned to drive the best outcomes for customers and your own retention and expansion numbers. Stay tuned for our next blog post with considerations for how to structure highly effective CS and renewal compensation plans.

— Cassie Young, Primary Operating Partner

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