Dear SaaStr: How Much of My ARR Can I Spend on Customer Success?’
You can target spending 5-10% of your ARR on Customer Success and Support combined, depending on your stage and growth priorities.
Here’s how to think about it:
1. Early Stage (Pre-Scale, <$10M ARR):
You’ll likely need to spend closer to **10% of ARR** on Customer Success and Support. Early on, you’re investing heavily in ensuring customers are successful, driving adoption, and reducing churn. This is the stage where happy customers are your best marketing and retention tool, so over-investing here makes sense.
2. Growth Stage (Scaling, $10M-$50M ARR):
As you scale, you can aim for **5-7% of ARR**. By this stage, you should have more efficient processes, better tooling, and a clearer understanding of what drives customer success. Gainsight’s benchmarking data shows that at scale, companies average about 5.3% of ARR for fully-loaded Customer Success costs.
3. Mature Stage (>$50M ARR):
At scale, you can push toward the lower end of the range, around 5% of ARR. Mature SaaS companies like Notion and GitHub have optimized their Customer Success investments to as low as 3.9% of ARR, but this requires laser-focused efficiency and strong automation.
Key Considerations:
- Customer Segmentation: Higher-touch models (e.g., enterprise customers) will require more investment. SMBs, on the other hand, can often be supported with lower-touch, tech-driven solutions.
- Growth Mode vs. Efficiency Mode: If you’re in aggressive growth mode, spending closer to 10% is justified. If you’re optimizing for profitability, aim for 5-7%.
- Churn and NRR Impact: If churn is high or NRR is below 100%, you may need to invest more in Customer Success to stabilize and grow your revenue base.
Ultimately, the right percentage depends on your growth stage, customer base, and strategic priorities. Are you currently closer to the 5% or 10% range? Let’s dig into whether you’re over- or under-investing.
