How and When to Scale Your Customer Success Team

Dave Blake

Founder & CEO

I’ve been a part of three different B2B software companies at very different growth stages. As an executive at Omniture and at Adobe (after beging acquired), we had a large customer success team with several layers of management taking care of hundreds of customers around the world. On the opposite side of the spectrum, I’m now CEO of ClientSuccess, where we’re scaling our business and an earlier stage customer success team to meet the market demands of the customer success industry.

With my years of experience from startup to enterprise, I’m frequently asked how to scale a customer success team and when.

To answer that question, I typically start by discussing three important factors.

  • Annual Contract Value (ACV) Target Per CSM
  • Product Complexity (Simple to Complex)
  • Volume of Customers Per CSM

Below is a visual representation of these factors on a grid that will help guide your strategic thought process when it comes scaling your customer success team.

Three Important Factors to Scale Your Customer Success Team

customer-success-blog-clientsuccess-scale-csms

The first factor (and as illustrated above) is annual contract value per customer success manager (CSM). As a general industry rule of thumb, each CSM should be able to manage about $2 million in ACV (some may base it off ARR).

For some enterprise level CSMs, that range may be greater as they manage a fewer number of accounts that carry a bigger strategic dollar amount. At Omniture and Adobe, managing the enterprise and strategic accounts required significant more time investment into relationship building (relationship ROI), product training, value realization, goal alignment and achievement, travel, onsite visits, and making sure that we went high and wide with key contacts in the organization.

On the other side of the spectrum, CSMs managing smaller revenue (ACV) targets can usually handle more customers. In many cases, when you look at the books of business of mid-market CSMs managing 40 customers vs. strategic CSMs managing 10 customers, their overall ACV managed aligns remarkably well at that $2M ACV range.  Of course, this number really depends on the your business. Knowing your target ACV per CSM will be important as you grow your SaaS business. You will want to model against that number and make sure your CEO and CFO should know that number. It will be your trigger to hire a new CSMs to meet the new customer demand and scale accordingly.

Now, as mentioned above, the $2M ACV is a general rule but there are other factors that should be considered, including product complexity and shear CSM capacity.

Product Complexity (Simple to Complex)

Product complexity is another factor to consider when scaling your customer success team. As a rule of thumb, the more complex (think an Enterprise B2B platform), the lower volume of accounts per CSM. Complexity of your product will mean they’ll spend more effort ensuring the product is deployed, configured, and adopted across the your customer’s organization. On the other hand, if the product is simple and intuitive to implement and user, then a CSM can handle a larger number of customers.

For example, take the contrast between an enterprise SaaS solution like Salesforce.com and Trello. Both are technology companies, but the two platforms are completely different in their complexity. Salesforce.com has multiple “Clouds”, can scale across any size organization, and has more features and integrations available than most would ever need. Salesforce.com’s CSMs work extremely close with their customers to ensure they understand the software and apply it correctly to their businesses to get the most impact. On the opposite end, Trello’s technology is very easy to grasp and users can simply walk through a simple instructional wizard and have a good product understanding. In less than about 10 minutes, they’ll be managing Trello cards and increasing productivity.

The easier the product is to set up, learn, and use, the more customer accounts the CSM can manage.

Volume of Customers Per CSM

The third factor is simply volume of customers each CSM can manage in a proactive way. This number may vary depending on the stage of your SaaS business and the experience of the CSM, but I believe that severe degradation in proactive customer success starts around 50 accounts. Ideally, I prefer to keep the number of accounts in the 25-35 range, but many CSMs can manage up to 50 accounts and still build meaningful relationships, pick up the phone, respond to emails, and eliminate customer challenges in a reasonable amount of time. Any more than 50, though, and a CSM’s ability to proactively engagement starts to diminish and the CSM will need to use additional technology and automation to improve his ability to manage the larger amount of customers. Building software (technology) that makes this easy to do is my (our) passion at ClientSuccess.

Bringing the Three Factors Together (ARR, Complexity, and Volume)

Bringing ARR, complexity, and volume together will help you identify triggers to hire more CSMs. A best practice is to have each of the three factors defined clearly in your organization. While most companies may fit squarely into the factors above and others do not so you may need to refine your model based on the unique factors in your business Natural signs that your model needs refinement include shallow customer relationships, overworked CSMs, lack of insights and knowing the true pulse of your customer base and, of course, an increase of customer churn.

The Importance of Knowing When to Scale

Now you have the three factors defined, knowing when to scale your CSM team and planning ahead will be more clear and strategic. For example, you’ll see that you’re trending towards 75 customer accounts for a single CSM by the end of the next quarter, then it’s time to start interviewing and budgeting for a new hire right away – or have a few solid candidates in the pipeline at all times. Knowing these factors will help you position budget, headcount, and structure so you can be proactive in your plans instead of reactive.

As you get buy in to the three factors, you will quickly be able to scale your team without losing momentum. Plus your CEO and CFO will enjoy your strategic approach to scaling customer success.

Check out our resources below for more customer success best practices and insights for how your organization can build strong customer relationships:

eBooks:

5 Ways to Surprise & Delight Your Customers

3 Steps to Putting Customers First

Blog Posts:

4 Personalities of Great CSMs

6 Listening Techniques of Great Customer Success Leaders

3 Simple Strategies to Build Strong Customer Relationship ROI

Learn more about how ClientSuccess can help your company develop a strong customer success methodology and strategy with easy-to-use customer success software by requesting a 30-minute demo.

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