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'Customer success' VP role: To reduce SaaS churn

A new role at software-as-a-service companies suggests that keeping customers is perhaps more important than gaining new ones.

Consider the old adage that it is harder to attract new business than to retain current clients. This is especially true with companies specializing in software as a service, or SaaS, where it might make just as much sense to focus on retaining (and garnering new revenue from) current customers as it would be to focus on gaining new customers.

As a result, there's a new seat at the executive table that could rival the importance of the traditional "vice president of sales" role: enter the "VP of customer success."

Guy Nirpaz, CEO of Totango
Guy Nirpaz, CEO of Totango

Thinking Out Cloud blogger Geva Perry set up the context for new executive roles like this, saying, "the move to a service delivery model for software (SaaS) and other aspects of IT [platform or infrastructure as a service] is changing every aspect of the business, [including] engineering and operations, but even more interesting to me [is] the business side of the house, including marketing, sales, and customer success. This is especially true for B2B companies."

While "customer success" may create perceptions of customer support activities, the responsibilities of this emerging title seem to skew heavier toward strategies and activities that directly foster upsell and renewal revenues. To simplify, the VP of customer success is responsible for "farming-type revenues," compared to the "hunting-type revenues" sought by the VP of sales.

A quick search on LinkedIn and Google show "VP of customer success" roles at a number of SaaS companies, including Marketo, HubSpot, Lyris, Affectiva, Clarizen, WordStream, Zenprise, Affgoo, Jobvite, Zuberance, and SLI Systems, just to name a few.

I discussed the definition of this new role with Totango CEO Guy Nirpaz. He noted that for companies that have a zero-touch sales model, the VP of customer success' primary responsibility is to drive revenues and that there may not be a sales function involved.

In some cases, the executive responsible for customer success and revenue in a company with a low sales model is also called chief revenue officer. For companies who have a low-touch sales model, there likely is a separate "(inside) sales" function and a "customer success" function, whereby the latter is focused on avoiding churn and improving customer satisfaction.

Bruce Cleveland, general partner at InterWest Partners, wrote a good post over a year ago that summed up the real differentiator between sales and customer success, which is the reduction of customer churn. He notes five key metrics to gauge success in this role: onboarding rate, adoption rates, usage rates, renewal rates, and customer satisfaction scores.

So if customer retention (and all that it entails) is the name of the game in SaaS, apparently, the VP of customer success is the newest key figure within the organization responsible for the company's success.