🎙️ Hey there, SaaSpreneurs!🎙️

🎙️ Welcome back to another episode of SaaS Metrics School! Today, we're diving into a heated debate in the world of customer success. Should it be coded to COGS, OpEx, or both? 💼💰

I'll walk you through the different perspectives on this coding dilemma. If customer success is solely focused on product adoption and retention, I argue that it should be coded to COGS, above gross profit. However, if customer success also plays a crucial role in expanding existing customers and driving sales, then the case for coding it to operating expenses in the sales department becomes stronger. 📈💼

But what about those early-stage startups where customer success wears multiple hats? 🎩 In that case, coding it to both COGS and OpEx might be the way to go. But why does coding customer success matter? It turns out that miscoding can have a significant impact on key metrics like gross profit and customer acquisition cost (CAC). 💵

So, grab your calculators and join us as we untangle the coding conundrum of customer success. Don't miss this important episode of SaaS Metrics School! 🔍📊

You can also listen to the episode here.

📓Key Concepts to Learn💡

1. 📊 Customer Success in the COGS-OpEx Conundrum: First, you must define the function of your customer success team. What exact role do they play in your SaaS company? It's all about those customer success teams, champions of product adoption and retention, whose pivotal roles intertwine with the direct costs of delivering the product. 🛠️🤝🧑‍💻

2. 💼 Navigating the Sales Waters: If your customer success team extends its reach to expansion opportunities, delving into the realms of upsells and cross-sells, it might be more fitting to code them under the sales department within the operating expenses realm. This strategic maneuver allows for the introduction of quota and commission structures, recognizing the contributions of customer success professionals to the bottom line and revenue growth. 🚀💰📈

3. 🚀 The Dual Hat Dilemma: Early-stage startups, often the Swiss army knives of business, frequently task their customer success teams with multiple responsibilities. In such multifaceted scenarios, the art of coding customer success to both COGS and Opex emerges as a prudent approach. This dual classification accurately mirrors the team's multifaceted contributions, encapsulating their roles in product adoption, retention, and expansion, all seamlessly woven into the financial statements. 🎩🤹‍♂️📊

4. Why is the Coding of Customer Success a Decisive Matter? The consequences of accurately coding customer success are anything but trivial. The stakes are high, and misalignment can lead to substantial repercussions on the vital metrics that steer the SaaS ship. Customer Acquisition Cost (CAC), Gross Profit, and the overarching performance of your sales engine can all be subject to distortion. This underscores the paramount importance of meticulous customer success coding within your SaaS Profit and Loss statement. It's the bedrock of data integrity, ensuring precise metrics, and charting the course for informed, data-driven decision-making. 📈🧮🤓

We hope that this episode provided you with valuable insights into the coding of customer success in your organization. If you want to explore this topic further or catch up on other metric-related discussions, be sure to tune in to SaaS Metrics School. You can find the full episodes on our podcast platform or website.

If you found this episode helpful, make sure to tune in to future episodes of SaaS Metric School to broaden your knowledge of essential SaaS metrics and finance topics.

Got any burning questions or specific metrics you'd like us to cover?

Drop us a line, and we'll do our best to address them in upcoming episodes.

Until next time, keep hustling and measuring those metrics!

Best regards,

Ben Murray
Host of SaaS Metric School

📝 Episode Recap 🎧

In this episode of SaaS Metrics School, Ben Murray dives into the debate of whether customer success should be coded to COGS (Cost of Goods Sold), OpEx (Operating Expenses), or both.

He explores the different cases for each option, emphasizing the importance of correctly coding customer success in order to avoid misinterpretations of metrics like CAC (Customer Acquisition Cost) and gross profit.

Whether customer success focuses on product adoption and retention, expansion opportunities, or both, it is crucial to allocate it properly in the SaaS P&L. Tune in to this insightful episode to learn more about the impacts of customer success coding.