The traditional way of generating revenue from the universe of all the people that might be able to buy your product is hard, risky, and expensive. Platforms like Outreach & Salesloft accelerate the process of finding those people, moving them into a sales process, and converting them to revenue.

However, as companies get bigger, their reliance on customers becomes more valuable versus their reliance on prospects and generating revenue from customers should be easier and less expensive.

As a result of this obvious phenomenon, most companies still celebrate making the number of prospect accounts a salesperson manages smaller and the number of customer accounts a CS person larger.

Stolen from Tom Tunguz of Redpoint, the strategy of deliberately underselling is the new way, which makes the Customer Success function increasingly more important and more like traditional Sales today. Customer Success has always been more “product savant” than sales, but it’s morphing.

The below is what’s been done in most software companies over the past 30 years given that Sales has been comped on new business and the size of that new business while GTM models followed a more traditional sales-led motion where product was gated by a sales process. This usually leads to a combination of president’s club, high commission checks, but under deployment and churn.

If you look at some of the top 10 product led companies courtesy of the Notorious PLG newsletter by EV, half of them leverage a freemium model and deliberately undersell the first deal with a focus on usage and NRR. This is the new way as more software companies that scale to IPO deploy a product led motion.

When you combine an amazing product and a usage based model, where the AE is more like CS or the CS is more like sales, you typically get usage following value leading to high revenue rollover and happier, larger customers over time.

Gainsight is the OG in Customer Success software and it will be exciting to watch the newcomers like Catalyst, Vitally, ChurnZero and others ride the wave where the role of Sales & CS evolves in tandem with product led gtm motions.

“A key part of the formula: crafting the right account executive compensation structure to reward this strategy.

Deliberately undersizing contracts trades short-term bookings numbers for better unit economics, healthier customer relationships, and more expansion. AEs are more effective too. Who doesn’t prefer to sell to happy customers?” - TT, Redpoint