A Roadmap to Customer Success for Early-Stage Startups
How should early-stage startups think about building a Customer Success team?
From this wide-ranging discussion, we drew out three key points for companies to consider when hiring their very first Customer Success team members:
- How and When to Build a Customer Success Team
In the early days, Customer Success will, by default, be a whole-team effort, with parts of the effort sitting with founders, your first salespeople, product managers, and others.
Eventually, however, B2B companies will need to hire dedicated Customer Success Managers (“CSMs”). In Nick’s experience, this typically happens when a company reaches 15–25 employees, and sometimes much sooner.
Although this begs the question — what is Customer Success? How is it different from Customer Service or other related disciplines? Nick’s answer is simple:
Customer Success is all of the effort that goes into proactively thinking about a customer’s product adoption, satisfaction, and outcomes after a sale is made.
There is a simple reason this is so important: it’s far easier to earn predictable, recurring revenue from existing customers than it is to find new customers. Your sales team will be pounding the pavement to bring in new customers, and it’s essential that your company makes sure existing customers are well-served.
With this first hire, you can begin to address what Nick would call “Customer Success debt”, or perhaps “Sales debt”, a term borrowed from software engineering. Technical debt is “the extra development work that arises when code that is easy to implement in the short run is used instead of applying the best overall solution” for the long run.
In the early days of your sales process, corners will inevitably be cut. Perhaps you won’t have trained all of the users at your customer. You may not have time to closely monitor product usage metrics. You won’t have time to check in periodically to listen to your customer, and you’ll miss invaluable product feedback, as well as the opportunity to understand and document innovative use cases that will resonate with future customers. These are things a dedicated CSM will take care of, helping your team and your product get better and ensuring that customers remain happy and loyal for years to come.
If you see this starting to happen, it’s probably a good time to consider hiring a dedicated CSM. One final note regarding account coverage — while every company is different, here are rough benchmarks to consider:
- At an Annual Contract Value (“ACV”) in the $15K-$75K range, expect about $1.3MM of ACV per CSM in the growth stage, and $1MM or less of ACV per CSM early on (particularly in the “figuring it out” phase)
- At an AVC of $75K+, expect about $3.33 MM / CSM in the growth stage and $1MM or less early on
2. What You Should Look for In Your First CSM
As you bring on your first CSM, a key question will be “what kind of person should I be looking for?”
The answer, of course, is entirely company-specific. But Nick has a concise framework to help you sharpen your thinking:
If you are selling a horizontal solution with a high average sales price (“ASP”), you will need a CSM who is adaptable to a broad range of customer types, who can quickly understand one customer’s industry-specific needs before moving on to a client with an entirely different set of needs. Think Domo or Salesforce, for example. While you can find these types of people anywhere, ex-consultants or MBAs may be good sources of talent.
Again, this is a framework for your first several CSMs, not necessarily a long-term roadmap. At scale, your CS organization will likely be broken into vertical-specific subteams.
A vertical solution with a high ASP is best served by someone with deep domain expertise. Consider Palantir or Schoology, for example. Customers — whether different government agencies, or different school districts — will tend to have similar needs, and will therefore be best served by someone who knows and understands those needs. Teaching these individuals the mechanics of CS and the specifics of your product will be trivial; becoming an expert on a specific industry is not. You’re most likely to find the right talent within your customer base — where, by the way, you are likely to find individuals interested in tech companies.
With a horizontal solution and low ASP, such as Dropbox or SurveyMonkey, Nick suggests looking for someone who has one key characteristic: hunger. CS is an amazing way for individuals to enter tech, in large part because the tools required to be great (more on this below) tend to be “softer”, natural skills. Someone who is hungry will quickly acquire the product knowledge and CS skills needed to thrive, and they will easily grow into a top performer while accumulating skills invaluable to their own long-term career.
Finally, with a vertical solution and low ASP, like GitHub or Okta, you may be best served by someone with a technical background. These individuals are equipped to develop a deep familiarity with the product and its use cases, and relay domain-specific feedback to product and engineering at a very technical level. Equally, these individuals will be well-equipped to implement scalable CS solutions in the early day.
3. How to Interview a CSM
Regardless of the CSM profile that’s appropriate, Nick believes there are a core set of attributes that make someone successful in the role. Those attributes, along with sample ways to tease them out in interviews, are as follows:
- Empathy is hands-down the number one qualification. You can ask something like “Tell me about the toughest customer you’ve ever interacted with”; this gives a CSM candidate the opportunity to demonstrate empathy. (As an aside, a major red flag here — complaining about a customer.)
- Persistence is the second most important quality. And in some ways, it’s the flipside of empathy. One way to interview for persistence is to ask, “How do you get a customer that went dark to call you back?”
- Communication is important for any position, but particularly so for CS. A great candidate should be able to communicate clearly and concisely at all levels of the organization, whether junior or executive-level customer contacts. One question to ask, for example, is “What are some tips on writing good emails?”
- Collaboration is essential to CS, given how many individuals and teams CSMs will inevitably draw on to help meet customers’ needs. You can try something like “Who were your go-to colleagues in your last job?”
- Understanding is the ability for a CSM to synthesize all of their learning over time, and develop a more strategic view of current and future customers’ needs. Here, you can ask, “Talk me through a client you’ve worked with; why did they buy? What were their goals? And how do you help them achieve those goals?”
In addition to these key attributes, Nick provided two very practical exercises for an interview. First, a “mock demo”: walk a CSM candidate through your product demo and then ask them to give you the demo back. The second is to conduct a mock Quarterly Business Review (“QBR”); you play the role of the customer and model real-world challenges (“this feature doesn’t work”, or “I saw your competitor is doing X, why aren’t you?”). Both are outstanding ways to see how quickly a candidate can learn and to see how they’d behave in real-world situations.
Now You’re on the Road to Customer Success
You’ll inevitably face new challenges as your customer base grows and your team scales. But, with the right foundations and a thoughtful approach to team-building, you will be starting your Customer Success journey on the right foot.
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