3 minute read / Jan 31, 2018 /
Reorganizing Your SaaS Startup’s Organizational Structure to Optimize the Customer Lifecycle
Recently, I wrote about customer/revenue operations, an idea that seems to be taking hold at many different SaaS companies. Instead of optimizing the performance of each individual step of the customer lifecycle, customer operations optimizes it over the entire journey. This is a fundamental change in the way a business manages its customers, and it’s now starting to be reflected in the organizational structure of SaaS startups
Two advances in thinking have led to the idea of customer operations. First, customer journeys are not linear. The classic funnel that we all picture in our minds isn’t the way that customers buy anymore. A customer may register for a SaaS product’s free trial, try it, contact customer support and decide not to buy at the expiration of the trial. But they return 90 days later and sign a contract for $90,000. Or a buyer might attend a few events hosted by a vendor, receive marketing emails over the course of 18 months, and then finally convert with an inbound call. Neither of these customer journeys is exactly the “prospect to qualified lead to contract” journey that has been canonicalized in Predictable Revenue.
Second, this nonlinearity means the responsibility for a customer bounces from internal team to internal team. Marketing might engage a customer initially, passing the lead to sales development. Customer success might get involved at the beginning of a process to answer some key questions. When the customer goes dark, the lead reverts to marketing. And when they finally come in to sign a contract in sales is involved.
Measuring the success of the marketing team’s ability to convert an initial customer to a sales qualified lead may not be the optimal way of building a business. Instead, it’s better to measure the end-to-end conversion rate from first touch to ultimate close.
Cross functional objectives like this can be achieved by building cross functional organizations and managing them well. But to simplify things, some SaaS companies are choosing to reorganize. They place sales development, account executives, and customer success/post sales support under the same leader, most of the time a CRO. The idea is that this leader will optimize the funnel from end to end, because the broader team will have a single objective of maximizing revenue.
With a singular leader, these teams will have the executive support to experiment more aggressively with end to end funnel optimization, trying techniques that reflect the nonlinearity of their customers’ journey. From initial outreach to engagement, from contract close to successful expansion, a SaaS startup is in the business of maximizing that customer lifetime value. Changing your startup’s organizational structure to reflect how your business manages its customers through their journey might be something to consider.