Customer Success

Customer Success Is A Single Digit Hire

echojason@gmail.com'

Jason Lemkin

We’ve talked on SaaStr about leaning in on Customer Success as much as possible. We’ve walked through why Second Order Revenue (i.e., the revenue ultimately generated or supported by Customer Success) is the key to growing a SaaS business. We’ve talked about how all the Second Timers are hiring in customer success way early, ahead of sales, ahead of revenue.

And it’s been fun to see lots of startups and bigger companies internalize this.

Yet still … people wait.  They wait too long.  To hire in customer success.  Even when they know they shouldn’t.

They wait for two reasons:

  • first, it’s another headcount, which costs money, which can seem expensive when you have say just $5k-$10k a month in MRR and 6 months of runway left before you’re out of cash.
  • and second, it can be hard to find someone good, especially in the early days.

Ok, let me help.

First, let’s make a rule, a compact, and a commitment:  You Must Hire your First Customer Success Manager as a “Single Digit” Hire.  I.e., before you get to 10 employees.

And — this is the counterintuitive part — you must do this even though it will NOT impact churn.  Because your early customers, your first customers … they will not churn if they are for real.  Some will churn, yes, but that’s because those ones — you never really had them.  They thought you had Workday integration, but it doesn’t really work yet.  They thought you could have 1,000 concurrent users.  But you can’t.  Etc.

But those early customers that somehow found you, with no brand, no PR team, no Platinum Booth at Dreamforce.  They had an extreme need, so they found you, and … you won’t lose them.  You’ll find a way as founders to keep them happy, even it feels like you’ll almost lose them.  Because they found you because, for some reason, maybe just one small key feature … but for that at least, you’re either unique or better than the competition.  Not overall, but just in one little area.  You’ll find a way to keep that social contract, to keep those super early adopters engaged.

Screen Shot 2015-06-28 at 9.04.40 AMSo why make this hire when cash is tight?  Because if you don’t hire a dedicated CSM as a single digit hire, your #1 single best source of referrals, case studies, upgrades, PR, more customers … those first, happy customers … won’t produce as much.  Second order revenue works, even in the early days.  Your first enterprise customer, more often than not, will actually get you your second.  They tell their business friends, a colleague at a trade show, etc.  In fact, because they “discovered” you, it will be in their interest to promote you.  That’s how they get kudos, both internally and externally.

Yes, you can hack it as CEO.  You can be reactive, put out fires, visit with them when they happen to be in town.  But it’s not the same as someone whose job it is 24×7 to make those customer happy and be a success.  It’s not.

And second …

Second, your first customer success manager doesn’t have to be perfect.  It’s a relatively plastic role in the early days.  It’s not like sales, where your first 2 sales reps have to really nail it.  It’s probably enough if your first customer success manager just (x) has experience making customer successful, (y) at roughly, vaguely your price point and (z) is proactive.

You don’t have room for reactive folks at this stage.  There’s too much going on.  You need someone that is going to do what it takes to make Google, make Aetna, make whomever, happy and successful.  To deploy, to drive up usage, to train, whatever.

But … you can relax the spec a bit here.  Someone with a good head on their shoulders, with some on-point experience, that is proactive … can do the job decently.  At least for a while, until later you bring in a manager with real experience here managing a team.  Your early CSMs can be utility players … not great at any one thing, but good at getting attention, resources, and figuring things out.  You can hire a Classics major.  It’s OK.

Because in the beginning (and probably always), a Pretty Good customer success manager that is driven and committed, is far, far better than no customer success manager at all.  Far, far better.  Don’t wait until you can hire that magic one from Marketo, from Palantir, from wherever, with the spot-on LinkedIn.

So find a way to hire at least one, that meets the basic spec above, as a Single Digit Hire.  Even if you have to raise another $80k in your SAFE notes, or even cut your own crummy salary, or whatever.

Because getting just that one or two extra second order customers, those one or two extra upgrades, from happy existing customers, is the magic in SaaS.  It compounds.  And those early enterprise customers, down the road, will began 10-20-50 more happy enterprise customers.  If you take care of them.

Make it happen.

Published on July 1, 2015
  • Great post Jason, I couldn’t agree more that CS is a single digit hire! I would add that when thinking about the first CS hire to consider someone who has had experience in a structured CS organization. One of the most important things you can do at an early stage with regards to CS and Customers is to set expectations appropriately. If someone has not been in a position in front of customers before where they had to set and reset expectations, you don’t want them to learn how to do it at your expense. A CSM who has experience implementing or adhering to structured processes will be able to bring that expertise to the table and set expectations appropriately. The background/company they come from doesn’t matter much in my opinion but you can’t easily teach the experience of being on the front line with customers when things go wrong.

    There are a few things that a CSM/CS team should focus on doing consistently from the very beginning. They are not hard but do take discipline. Hiring someone with insight in these areas (on-boarding, setting expectations, feedback, quarterly reviews etc.) will help dramatically and steer the company around firefighting stage.

    I was fortunate to be hired as the VP of CS at a startup where I was the 8th employee. This was a big hire for them but they knew that the foundation of CS was critical to the long term viability of the business. Had they not hired CS at this early of a stage, the renewals and expansions that came 6-12 months after I started would have been in jeopardy or not happened. The Second Order Revenue happened exactly as you described above.

    Regards,
    Nils Vinje

  • Jason, your reasons for why people delay investing in Customer Success are spot on. Companies won’t think twice about having a Support web site which is reactive to customer issues but will balk at having CSMS who can prevent customer issues in the first place.

    Since Customer Success is a relatively new field, it is challenging to find exactly the profile you may want. We found great success in passionate Support folks moving into the CSM role. They understand the pain they can prevent in getting customer programs launched successfully.

  • Hi Jason,

    really great post here! I am now following your blog for quite a while especially on the topic of customer success and love it!

    I completely agree with the installation of a customer success team even in the early stages of a business but I am always wondering if there has a research been performed which approves the correlation between the customer success efforts and the overall success of a SaaS company as well as how much companies and especially startups spend in average for a dedicated customer success team. It would be great to get a statement from you!

    Best regards,
    Sebastian

  • Great post, and like many of your articles, I read them a few months after I wish I had. We are in the process of hiring our first dedicated CS now, probably a couple months later than we should have. 100% agreed, this is a single digit hire and to be honest, I think it should be in your first 7 if possible.

    Thanks Jason, your blog has become my bible…only I read it a whole lot more!

  • Very valuable insights here. In working with customers, I also find that many times companies are a bit hesitant about hiring a VP customer success as the first step for building a customer success team. Mainly because this is such a daunting task due to the budget required and the time it takes to find the ‘perfect’ candidate. Instead, I personally find that the first customer success hire is sometimes someone that’s promoted from within who’s proactive, smart and customer oriented. In order to help my customers find the first customer success hire, I’ve developed a job description template which also includes tips on how to hire your first CSM from within the organization, interview questions etc.
    If you’re looking for a template to help you get started on your first CSM hire, please contact me through my website at: http://www.csmpractice.com and I’d be happy to send it to you.

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