How to implement a Customer Success strategy? Part 2
In this first introductory article, I already explained the reasons for implementing a CS strategy and why it is so important in a SaaS company. The goal of this new article is to provide pragmatic tips for any founder who is about to launch its CS team: How to organize the team? How to recruit CSM? How to measure his impact?
⌚ When should you start building your CS team? ⌚️
It becomes relevant when you reach € 2m run-rate OR when you have signed your first large customer… the one you cannot afford to lose!
As an example, Aircall started recruiting its first CSM when Uber signed as a customer. The company was not reaching more than € 50k MRR.
🚧 How should you organize your CS team? 🚧
CSM is a new role and everyone has a different definition, so first, be sure you know what will be the tasks of your CSM. You should especially define where the CSM comes into play:
* some companies like Freespee use the CSM already at the pre-sale stage (in order to define the prospect’s goals)
* other companies use the CSM from the product integration stage
* most of the time, CSM starts his job after the on-boarding process
* in some cases, the sales person keeps supporting his customers during his first 3 months, and then introduces the CSM to the customer.
Another important question to ask yourself before the hiring process is “do all customers require the same success strategy?”. In some organizations like AB Tasty, the CS team is divided into 2 types of CSM:
* CSM handling the top accounts. They manage limited portfolios: 50 customers each & € 1.5m ARR max. They should definitely meet face-to-face each top customer on a quarterly basis.
* CSM in charge of mid-market customers. Their portfolios are made of ~100 customers and are worth € 500k ARR. Their role is to build a community of users and a dedicated program to guide them digitally.
In some other organizations, CSM are split by sectors: some are in charge of banking customers, some other of telco clients, etc …
🙋How to recruit a good CSM? 🙌
How to find candidates?
As for all the other positions that recently emerged (Chief Happyness Officer, Product Manager, …), recruiting your CSM can be very complex. Why? A good CSM doesn’t even know what a CSM is !!! Cécile Sallé de Chou, Head of Customer Success at AB Tasty shares a good tip: “ when writing your job description, say you are looking for an Account Manager and specify what is a CSM in the core of your job post”.
How to select the right candidate?
Never forget that a CSM is a business-oriented person. This is probably what differentiates him from a consultant: while the CSM works for the budget-owner, the consultant considers that the customer is the user himself and is much more operation-driven.
A good CSM went to a business school, is good at relationship management and can also speak to tech/product people.
How to pay your CSM?
A junior CSM is paid around € 35k as a fixed salary, but should be able to double this with his variable pay. Variable should be linked to the following criteria:
* Portfolio Size of the CSM (number of managed customers)
* Gross Churn (a good objective should be 4–8% per year for large accounts and 10% max per year for small to mid market customers)
* Cross-Sell/ Upsell (€100–300k/y for a post A-round company can be a good target).
🎮 What tools should your CSM use? 🔑
A good CSM should use automation tools to be more productive in all his missions:
* Customer community creation: online training tools, webinar recording tools
* Customer behavior analysis and ranking: some tools are made for CSM to help them identify at-risk customers. Totango and SalesMachine are good examples of tools through which you can define triggers based on business rules. Axelle de Faÿ, Customer Success Director at Salesforce recommends GainSight and Amity, which can even be plugged to your Salesforce CRM
* Communication with customers: some tools can help the CSM interact with the customers directly through your product to redirect the customer behavior or to answer his questions. Intercom is probably the most famous one.
As a side note, your CSM team should also have access to your company’s road map. Showing to the customer what already happened in the last 6 months in terms of product innovation and what is expected to be launched in the next 3 months can help convert an upsell and avoid a churn.
🚨How do you measure the profitability of your CS team? 🚨
As a CEO, you need to measure the impact of all your variable costs. Same thing for your CS team. According to Romain Blanc, Senior CSM at Freespee, you should control the following metrics:
* Direct KPIs: gross & net churn, cross-sell & upsell, conversion rate between POCs & contracts.
* Indirect KPIs: success of your referral program, customer use, NPS, what CSM bring to the other departments (such as their impact on the roadmap).
Then, to control the profitability of your CS team you should monitor the following ratio: [(Renewed ARR + new ARR coming from successful POCs +upsell & cross-sell)/ Salary of your CS team].