How to build a winning Customer Success organization for a B2B SaaS company

Maximizing Customer Value

With this article, I address executives and founders of young companies that face the challenge of building a Customer Success organization from scratch and the new kids on the blog interested in the process of building modern, customer-facing teams. I share my thoughts on creating a Success Strategy and provide insights on dos and don’ts when scaling Customer Success for a complex B2B SaaS product.

At Personio, Customer Success is not manifested in one specific role. It is rather an essential part of our company culture, according to which all customer-facing teams enable our customers to understand the product, give feedback, grow, and eventually make their people processes more successful. Customer Success at Personio follows the mission to Maximize Customer Value, which we interpret in two ways:

  1. We act as our customers’ advocates towards Personio: We understand user needs and translate them in a meaningful way for Product & Engineering. We handle complaints. We create workarounds for missing features and we indicate hidden potentials.
  2. We act as Personio’s ambassadors towards our customers: We communicate our product vision as well as which features we are building and why. At the same time, we increase recurring revenue through up- and cross-sells. We manage renewals and proactively prevent churn.

At first glance, it might feel that those two interpretations do not always align. However, as we are working towards customer lifetime value, our work always drives sustainable long-term growth which heavily correlates with our customer’s success. To be more precise: We only succeed as a company, if our customers do.

Determining a Customer Success Strategy

As there are never enough resources to serve all customer needs perfectly, it is crucial to create a strategy that allocates capacities to the initiatives with the greatest impact for your customers. In order to determine a Customer Success Strategy, you should consider factors like average revenue per account (ARPA), product complexity, product maturity, user characteristics and of course the role Customer Success should play in your company. Getting a clear picture of those dimensions, makes it easier to think about a good mix of communication channels and team structure.

ARPA matters, because it determines how much resources you can allocate per customer. Companies with thousands of small customers mainly distribute their resources on content creation, standardized communication (for example, event-triggered email campaigns) and automated processes (for example, in-app content). Companies with a few large customers focus on creating a personalized and high-touch service experience. We built different teams and a mix of communication channels that are able to serve Personio’s customer base which includes companies from both ends of the spectrum. Of course, an increasing number of channels goes hand in hand with greater effort to update and maintain them. For that reason, I recommend to focus on a few more personal channels to learn and make your first customers happy. If you do it right, they will thank you with referrals. With a maturing business, you should later expand the offering and especially invest in less personalized channels to work towards decoupling headcount from customer growth.

Product complexity and maturity affect team structure and headcount needs significantly. Both, product complexity and maturity, dictate the degree of personalization for product implementation as well as trickiness and volume of customer requests. By product complexity I particularly speak of the number of possible configuration options such as access rights to customize a software to individual needs. Product maturity is reflected by application performance and stability, scope of features, and frequency of system errors.

As more complex products are harder to learn and set up, this urges the creation of a personalized implementation to ensure long-term customer success. Furthermore, on average, requests will take longer to solve and be harder to automate — no chance for chatbots. With less product complexity, implementation can be solved by utilizing in-app guides, tutorial videos, and other standardized content.

Immature or young products often suffer from bugs and unsolved usage edge cases. As a result, you will receive a higher volume of customer requests and need to find more custom work arounds. In this case, it is crucial to provide professional support for customers and make product teams aware to solve issues quickly. High product complexity and low product maturity lead to significant hiring needs. Eventually, you should incorporate the headcount cost in your recurring pricing in order to keep the gross margin healthy.

Know your users! Having a good understanding of who is using your software is crucial for finding the balance between overwhelming and boring users with content and trainings. Ask yourself how autonomous, tech-savvy and process-driven your users are. Figure out how much time they want to and are able to spend on training. Discover which communication channels they prefer and how to phrase your messaging. With this information in mind, it will be easier to take decisions. For example, you could decide to invest resources either into personal one-off customer account reviews or into the creation of lasting on-demand content. Obviously, tech-savvy and autonomous users would prefer the latter. Non-tech-savvy and less autonomous users need high-touch contact, more detailed explanations and guidance.

As for the role of Customer Success in the company, we decided to make the credo “Customers First” not only one of our Operating Principles, but market Customer Success as one of our USPs. Striving towards offering best-in-class customer service even helps us boost inbound growth through customer referrals. In this sense, it was very important to me that our customer-facing activities were not only cost-driven, but revenue-generating. This puts the department in a position of not having to justify cost, but rather to emphasize the effect of loyal and satisfied customers with a high lifetime value.

Dos and Don’ts for starting Customer Success from scratch

For the second part of this post, I’d like to provide some learnings I made when scaling the Customer Success organization from 1 to 35 people. Of course, there is a ton of experiences specific to our business, but I would like to point out five more general points that probably apply for most other products and companies as well:

Start with getting product implementation straight. What you miss in the beginning will be hard to catch up later. The early success of customers compounds over their lifetime. Customers that don’t experience an early added value won’t be there for long. Sketch the steps that are needed to set up your product and then visualize and communicate them to your customers with clear responsibilities and milestones.

Focus on employee onboarding. Teams only scale, if new team members are able to take over responsibilities of existing ones. Don’t hold on to responsibilities for too long, but let new team members prove themselves. To accelerate trust building (and make you feel more comfortable), you should create an employee onboarding program. Ours is designed for three months and includes sessions on product expertise, tool knowledge, process understanding, communication skills, and most importantly, feedback sessions.

Avoid false economics. Good tools come at a cost, yet they provide a lot of value if utilized correctly. When you aim for growth, look for tools that similar, but larger companies are successfully using. Features for collaboration, advanced reporting, user management, role-based access control, APIs, and so on, might seem unnecessary for a small team. You will realize that as soon as your team grows, those features are essential to scale efficiently. I recommend to invest into more sophisticated tools and spare the hassle of migrating later. To name a few, we are using Zendesk for ticketing, Pendo for in-app guides, product and usage analytics, and Gainsight to manage customer implementation as well as retention and expansion programs.

Plan your headcount and tend to overhire. Since you are (hopefully) growing, consciously overhire to have sufficient capacities in case of unexpected events like employees leaving. The greater capacity also provides you with the power to automate processes and create content besides the increasingly externally driven daily routine. As hiring and employee onboarding take time, build a hiring forecast with key drivers for the headcount need of each role. Regularly update and compare the actual data with your plan. For example, the headcount of our Implementation team depends on the number of implementation projects that one Implementation Manager can complete per month. Knowing how many new customers we will add according to our business plan, we can easily forecast the hiring need.

Don’t compromise in recruiting. Don’t let short-term capacity problems cause you to make wrong hiring choices. We make sure that new team members not only have the right skills and motivation, but also contribute to our team’s culture. For each new position, define clear role expectations and sought character traits. Create an interview guideline and cases to help you understand whether applicants meet the criteria. Involve your team in the interview process to get as many perspectives as possible. Besides role-specific skills, we value a good portion of common sense, analytical thinking, data-drivenness, on-point communication as well as empathy and patience.

I hope that I was able to shed some light on the first steps of building a Customer Success organization. With Customer Success, there is a real chance for companies to transform the dusty image of customer-facing professions from the large anonymous call center into agile, pro-active and data-driven teams. Communicating this vision is a clear differentiator when it comes to employer branding and winning the best talent. Make use of this for your company and start transforming.

Customer Success at Personio (2019)