Should SaaS Companies Charge Their Clients for CSM Service?

This article was written in collaboration with Ekaterina Korneeva. Ekaterina is an established professional with more than 4 years of experience in sales, account management, and client service. She is currently working in Wrike as a Customer Success Manager.

In today’s high-tech world, it’s all about the subscription-based model (SaaS).

With the current growth rate of the SaaS industry and with more companies switching from a traditional business model to subscription-based one, the role of a customer success manager could well become one of the most in-demand on the market in the coming decade. A couple of years ago, companies that could now be considered pioneers in this sphere were operating blindfolded, but they have since accumulated a significant amount of experience and knowledge of best practices.

The role of a customer success manager in its “classic” interpretation is to ensure a high level of customer retention and dramatically decrease the number of those who decide not to renew their subscription. To achieve these results, CSMs need to help the customers use the product in the most efficient way, so the value they receive outweighs their investment.

If the product is relatively simple, a CSM is may not be necessary. But for the complex products, CSM assistance is often essential. Guidance from a customer success manager produces significantly different results from those achieved when the customer has no further help. So the question arises: should the services of a customer success manager remain free (obviously they’re included in the price, but there’s no extra charge for the customer once the subscription is purchased) or paid? In this article, we will discuss the pros and cons of both approaches and even suggest a combined one.

Before we start discussing these pros and cons, we would like to highlight the fact that when you are considering either of these options, it is very important to brainstorm in context — not in a vacuum. We have prepared a list of questions that will hopefully help you formulate this context:

• What is your company’s current position and background? How long has it been in the market?
• What is a model of customer success you would like to use and implement?
• What kinds of activities are going to be run by the customer success team?
• What is the difference between a customer success manager and account manager in your team?

Pros and cons of the “free” approach

Pros

The obvious argument for the customers here is that they will not be charged any extra for the services of a customer success manager. We all know that there is no such thing as “free service” — the costs are simply included in the price of the product. But once the customer has already agreed to pay the offered price, any extra services provided — including the ability to have ongoing communication with a dedicated CSM — would be considered as a bonus.

Cons

So what are the cons of having a free CSM service, if there are any at all?

Sadly, the argument presented in the pros section is also relevant to the cons. It is well known that we often do not value the things that we don’t pay for. When a customer gets a dedicated CSM with no extra charge, it often leads to the wrong understanding of a CSM role. We’ve seen cases when customers do not even react to the CSM’s attempts to schedule calls to discuss the product’s usage or share the best practices and their expertise. This may seem irrational because the customers have already made the decision to pay for the product itself, and with the help from CSM they could get significantly more value from it. And yet, this sometimes happens.

The second issue here is that not every customer receives a dedicated customer success manager. Usually, SaaS companies set a certain threshold based on a certain MRR or ARR, growth potential and other criteria. So, in order to get a personal CSM, a customer needs to meet these criteria.

Finally, even the customers that do get a dedicated CSM only have a limited amount of that person’s time per month/quarter. It is often the case that a customer success manager has a relatively large book of businesses for which they are responsible. Even if we’re only talking about dozens of customers rather than hundreds, each customer can only expect a couple of calls per month, max. And sometimes, the pain points that need to be covered on the customer’s side require many more hours of CSM help.

Pros and cons of the paid approach

Now let’s talk about the paid approach. What are the pros and cons?

Pros

Firstly, if customers are willing to be billed hourly/monthly for the services of a customer success manager, they will not have any limits set up for the number of CSM hours they’re going to get (except the obvious limitations of the money they’re willing to pay). As we’ve already discussed, certain problems related to onboarding, adoption or setting up complex integrations often require the CSM to spend a lot of time with the customer’s team. In these situations, it is usually important that the hours are consecutive, so that the team does not need to waste the time in every meeting to recall what was discussed last month, or agree from which point they should continue.

The second argument here is that help from the CSM is, on many occasions, required immediately. From small questions to major use cases, urgent consultation is often needed. The client reaches out to the customer success manager to schedule a call and is told that the earliest day possible is at the end of the following week. This situation is less likely when the customer is paying for the CSM’s services. Their help would be delivered at the exact moment it is required.

We’ve already touched upon the third argument here in the cons section of the free approach: it is often the case that “free” service is not valued. There is a much higher probability that if there were an hourly rate for CSM consultation, the customer’s representatives attending a call or a meeting would try hard to make the most of it. And with this attitude, the probability of achieving better results would be significantly higher.

Cons

The obvious negative factor here is the need to pay for the service. And the more hours of the CSM’s time that the customer needs, the higher the bill would be.

Another negative factor here is that the service provided by the CSM could be misstated by a sales development representative or account manager, so the customer would consider the customer success manager as a technical support specialist. They would then be surprised in a bad way when they find out that they will be charged for the service in addition to the product itself.

Combined approach

Is there a third approach that combines the benefits of the ones described above? Indeed, there are cases when the CSM team gets overloaded with customer requests and finds it hard to address them all in time.

Here are some examples:

• A customer has a big and important process into which the product needs to be implemented. The whole thing will require a couple of days of the CSM’s work
• Integration needs to be built between the product and other systems that the customer’s organization is using
• A customer has several teams that have totally different product-related goals and each team has requested a detailed consultation on how to achieve them, and would also benefit from a hand-on-shoulder approach when working with the product

To address these and other situations, many companies choose to establish professional services (PS) and/or teams of solution architects. Customers pay for the services of these specialists and get their pain points covered exactly when they need them to be covered. The only limitation to the number of hours that the clients would get from the PS team is dependant on the amount of money they’re willing to invest.

Overall, this approach creates a win-win situation: clients still get a dedicated customer success manager with whom to discuss strategic questions during ongoing meetings for free, while their problems are quickly solved with the help of the PS team with the services for which they’re going to be charged.

In the end, whether or not you decide to charge for the customer success service, it’s all about the value generated for the customer. Key drivers here usually include increased revenue, decreased costs and decreased risks. Make sure you understand your customer’s values, as well as the importance of your product for the customer’s organization.