4 Considerations for Building and Scaling SaaS Customer Success Orgs

Primary Operating Partner and former CRO Cassie Young on keeping customers happy and making strong strategic decisions at every stage of your startup’s growth.

This month, Primary Venture Partners, OpenView, Lerer Hippeau, and Work-Bench hosted the third event of the four-part SaaS Growth Camp — a series of targeted workshops for early-stage founders. This session, led by Operating Partner and former CRO (and Customer Success expert and enthusiast) Cassie Young, covered both how to think about CS in the early days of scrappy startups’ first few deals as well as how to evolve customer success programs as companies mature and scale.

The TLDR? More customers = more complexity and specialization!

We broke down Cassie’s four key learnings for SaaS businesses scaling their CS orgs:

A tale as old as time: the generalist to specialist journey

Before delving into the CS hiring frameworks, Cassie offered a helpful way to think about the difference between the Account Manager and Customer Success Manager, which is the analogy of a bartender versus a personal trainer.

The bartender delivers on the customer’s request but is mostly reactive, and can usually only offer a “one size fits all” approach based on what is on tap. The personal trainer understands the customer’s bespoke goals and milestones, and works with them on a customized “training plan” to help them achieve their desired outcomes.

When it comes to the natural progression of CS hiring, Cassie says, “your first CS hire will invariably be a scrappy generalist, but you must ultimately evolve from the ‘jack of all trades.’” The first hire is someone who is excited to own the whole CS process, and ideally someone who is a strong project manager that loves building processes.

Eventually, a startup reaches a point where the scrappy generalist handling everything from the onboarding, technical support, and renewals will break, and will need to start to specialize by function. “At scale, it’s helpful to track exactly where and how much time is being spent on various work.” Are the CSMs spending time with the handoff from sales? Are they spending their time with lots of “how to” questions with the customers? Are they drowning in land-and-expand sales conversations? This will determine where the team needs specialization — and where resources should be spent across implementation, support, account management, and sales. Specialization also allows for economic efficiencies in certain places; for instance, support engineers typically cost less than CSMs, so it may make sense to hire a support agent if CSMs are overloaded on troubleshooting tickets. Cassie stresses the importance of tracking where time is being spent to ensure that resources are invested correctly. Another critical question that the early stage teams will start to ask themselves: Who owns the renewal?

Sample time-tracking application by customer ACV band:

In this example, the CS team is spending 35% of its hours on the <$100K ACV band that comprises <20% of the company’s total ARR — a ripe optimization opportunity!

Customer lifecycle best practices

It’s important that everyone within the organization adopts a mentality that every single employee is responsible for customer success and that it starts on the day of the first sales outreach. Once the deal is closed, the implementation starts chapter two of the lifecycle journey: a successful onboarding kickoff call to be followed by regular standups and status calls to ensure the implementation is running to plan. There should also be a formalized midway touchpoint during the implementation with all customer stakeholders to ensure that everyone is aligned and understands how the project is progressing.

Time to value (TTV) and product adoption are both critical for SaaS businesses, but it’s important to aim for key adoption inflection points instead of a “lift and shift” approach that’s purely focused on reducing onboarding time. For instance, if there is evidence that one part of the product suite drives high customer retention, TTV and onboarding roll-off should be focused on that milestone, not on simply getting the customer live. One obvious driver for ongoing product adoption and optimization is a business review cadence. Cassie advises these should be HIGHLY templatized, and must actually happen on a quarterly basis. Ongoing training and enablement is also critical, particularly as new features are released. She also stresses the importance of understanding the specific impact enablement can have: during her time at Sailthru, customers who attended in-person training were 23 percent more likely to renew.

She also discussed customer projects or value plans — these are ongoing artifacts that measure progress against QBR initiatives. Cassie recommends that the customer and CSM should agree and commit to two attainable, measurable initiatives rather than falling victim to “boiling the ocean” where there are 50 ideas for how to optimize the customer’s account but nothing winds up happening. To incentivize successful QBRs, Cassie recommends building that into the overall comp structure to incentivize all CSMs to prioritize them quarterly. She offered up an example for CSM comp plans: two-thirds net dollar retention, one-third measured business objective component based on QBR coverage.

Another initiative that brings strong alignment in conjunction with QBRs is a quarterly line-by-line (LxL), in which the CSM reviews a segment of customers line by line, often to the executive team, and highlights key risks and asks of the business. It’s a forcing mechanism to keep the whole business accountable and examine at-risk accounts. It ensures that the key decision makers are in the room to discuss customer requests and brainstorm tactics to save customers.

The ultimate efficiency unlock — scaling support

Most SaaS businesses reach a point where they have to rethink support and scale it effectively. The goal is to have fewer support tickets per each dollar of ARR. Helpful approaches here include understanding the most frequently asked topics as well as looking at the number of touches required to solve a ticket. Diagnosing where most of the inquiries are coming from as well as where the support agents are getting caught in extensive back-and-forth will tell a business a lot about what product features, customer training, and hires are needed.

Quite simply, monitor the trends in ticket volume (and number of touches required), and that should ultimately inform how you build and scale the team. Cassie shares an example that she ran into at her previous company when she measured ticket volume and noticed that payments and payment remittance were driving the most tickets. That informed a product change that eliminated those tickets. In another example, she shares a situation where there were an increasing number of tickets getting escalated to engineering, which slowed down resolution time; her team used this insight to hire an escalation engineer, which enabled a further 62 percent reduction in tickets escalated to engineering.

CS Metrics that matter the most as you grow and scale

“When it comes to metrics, net dollar retention rate, the composite of expansion, upsell/cross sell, churn, and contraction is the holy grail,” Cassie says, “but it can be a red herring when examined in isolation: A business with strong expansion and upsell mechanics could boast a 100 percent-plus net dollar retention rate while masking a 40 percent gross churn rate, a scenario that would cripple a company’s long term growth prospects.” A helpful graph to illustrate below:

NPS and CSAT are the obvious critical metrics for CS, and are not to be treated equally. NPS is a holistic satisfaction metric that evaluates the satisfaction with the business as a whole, whereas CSAT is most often used for one-off interactions on smaller engagements.

ARR coverage per CSM is a metric to pay attention to as well — how much does each CSM manage and across how many accounts? This could be a critical point to measure, especially when thinking about tiering out the teams to “strategic accounts’’ and where the most time is being spent with customers. It’s helpful to know if the CSM’s time is being spent on smaller accounts, and it could either be a flag that the customer is not a fit for the business or an indicator of a need for more tiers of service.

The CS org will inevitably evolve, and the metrics across CS’s time spent, tickets, and customer satisfaction should ultimately inform the growth and functions needed within the business to increase net dollar retention.

—Gina Yocom

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Primary Venture Partners

Primary Venture Partners

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A seed-stage venture capital firm responsible for backing NYC’s most promising founders. www.primary.vc.