Scaling Customer Success: Technology vs. Headcount

John Kelly  |  September, 2017
Scaling Customer Success

Cash-flow and funding can limit headcount for many early-stage SaaS companies, and at the outset, Customer Success often falls on a team of one. This lone CSM is responsible for training, support, and an avalanche of other tasks to ensure that customers continuously renew their subscription. As the business grows, this team of one will need to figure out how to scale their role — and do so quickly. The solution frequently boils down to one of two choices: 1) invest in Customer Success software, or 2) hire an additional team member.

It isn’t difficult to imagine the impact of a new team member. Simply put, additional headcount has the potential to double the output of a single person team. An exceptional candidate may even push your results higher, although conversely, a miss-hire could also limit the team's potential.

See Hiring, Developing, and Retaining Your Customer Success Team to read about the skills and characteristics that define great CSMs, best places to recruit CSM talent, and how to develop and retain your Customer Success team.

On the other hand, Customer Success software provides an opportunity to scale through increased efficiency and effectiveness. For example, CSM software uses data to help identify which customers are silently struggling with your product, likely to leave, or even ready to expand. Data such as module and feature usage, number of open support tickets, active user trends, and number of interactions can all indicate levels of customer engagement and health. These indicators allow Customer Success Managers to provide the right help to the right clients at the right time, which inevitably leads to more positive outcomes and higher renewal rates.

  WITHOUT CS SOFTWARE WITH CS SOFTWARE
CUSTOMER ENGAGEMENTS 'Everyone is equal' or demanding customers absorb most time. Proactively focused on customers with the right help at the right time.
CHURN
RISKS
May go unnoticed. Alerted early for recovery action.
UPSELL OPPORTUNITIES Limited visibility. Alerted to upsell opportunities.
CSM BEST PRACTICES Varies across the team. Consistent workflows and playbooks.
CUSTOMER INFORMATION Spread across multiple systems. All in one platform.
BUSINESS INTELLIGENCE Requires multiple tools to build charts and identify trends. Point-and-click report generation for internal use and customer xBRs.
CUSTOMER HEALTH MONITORING Relies on individual metrics, often subjective, and limited to trailing indicators. Metrics roll up by segment, incorporates objective data, and evaluates leading indicators.

Once you've decided on the benefits of Customer Success technology, you'll still need to think about the implications of timing. When should you prioritize technology spend over additional headcount or training?

The answer will come down to a balancing act between available funding, your customer profiles, and the maturity of your processes including data sources and systems.

Customer Portfolio Profile

If your Customer Success engagements are high-touch and relationship-led, then a one person CSM team will reach a practical limit of accounts they can manage, and more accounts will necessitate additional CSMs. In this scenario, Customer Success software can still drive efficiency and add value (as shown above) but could be a lower priority in a small company with limited funds.

If your customer portfolio has a mix of high-touch and low-touch accounts, then a Customer Success platform will add a lot of value. Some of the initial benefits include actionable alerts about customer behavior, streamlined Customer Success processes, and automated email communications based on predetermined conditions (e.g. low feature usage during onboarding).

Process Maturity

Early-stage companies often look to technology as part of an initial Customer Success strategy, only to realize that they’re not ready to receive full value from CSM software because their processes are not aligned. Common examples include:

  • Customer Success team roles are diverse and include additional activities such as Technical Support, Account Management, Upsell, and Renewal. Some work is required to restructure the team and redefine roles and responsibilities.
  • Insufficient data sources available to measure customer behavior, such as product usage or support ticketing information.
  • No customer Segmentation is defined.
  • Incomplete or insufficient metrics to measure customer activity.

Process Efficiency

Even where processes may be in place they may not have evolved with the business, and may not be efficient as a result. Customer Success software can increase operational efficiency of several processes. Examples include:

  • Standardizing workflows to ensure consistent use of best practices across a team, especially a distributed team.
  • Automating customer communications — either routine or specific communications in response to specific pre configured customer behavior.
  • Analyzing data to identify actions instead of wasting time collecting data.
  • Generating customer reports — made easy from a customer Success platform with all the data integrated instead of using several independent tools and systems.

Skills Gap in Customer Success Team

Customer Success is a relatively new career, and CSM team members can have diverse backgrounds and experience levels. A correctly configured Customer Success platform can generate alerts about risks and opportunities, measure success and operationalize workflows, but it still needs skilled Customer Success personnel to carry out the right actions and manage situations. A Customer Success platform should evolve as your business and Customer Success team scales, e.g. fine tuning your segments, updating health scores, alerts, workflows, and playbooks. Onboarding should take care of the initial setup and configuration but someone will need to own the tool to ensure that your Customer Success business processes are reflected in the platform on an ongoing basis.

Funding and Budget

Practically speaking, investments in either headcount or technology will require funds or a certain level of MRR, and this may quickly rule out a hiring option. A one person CSM team will probably need a 2 user Customer Success platform, one CSM user and one admin or management user, and the investment of this will be approximately a tenth of the cost of a CSM. If you have budget for an additional CSM it would be worth considering the profile of your CSM hire and saving enough on employment costs to fund a starter level Customer Success Software platform. In this scenario, done right, a 2 person CSM team with Customer Success software puts an early-stage SaaS company in a great position to achieve the next level of growth.

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About the Author
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John Kelly is managing Director of CustomerLink, a Customer Success Technology and Services firm based in Europe that helps B2B SaaS companies improve their customer success operations. CustomerLink is the exclusive partner for Natero in EMEA.

You can learn more about CustomerLink at www.thecustomerlink.com or connect with John on LinkedIn.