Dear SaaStr: We Are a Series A StartUp and Have 500 Enterprise Customers Now. What Should My Customer Success Team Look Like?
With 100+ enterprise customers at Series A, you’re already at a scale where Customer Success (CS) is critical to retaining and growing your revenue base.
Here’s how your CS team should look and what it should cost:
1. Team Structure
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Customer Success Managers (CSMs):
The general rule of thumb is 1 CSM for every $2M in ARR at scale, but for enterprise customers, you may want to go deeper—closer to 1 CSM per $1M in ARR if you’re growing fast or if your customers require high-touch engagement. This may not be sustainable but is the right way to invest as you are scaling.- If your ARR is, say, $10M, you’d likely need 5+ CSMs depending on the complexity of your accounts and the level of service required.
- Each CSM should ideally manage $1M-$2M in ARR or 10-20 bigger enterprise accounts, depending on deal size and customer needs.
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Specialists:
As you scale, split out specialized roles like onboarding specialists, renewals managers, and upsell/expansion experts. This ensures your CSMs can focus on relationship management and driving adoption, while specialists handle transactional tasks like contract negotiations. -
Manager:
Once you have 4-5 CSMs, hire a CS Manager with experience in scaling teams and implementing best practices. Promote from within when you can, but be careful if they haven’t proven to some extent they can lead at this level. You do need more process at this scale. Hustle alone can carry CS in the early days. -
Support Team:
Customer Success is not Customer Support, but you’ll need a strong support team to handle reactive issues. This team should work closely with CS to ensure seamless customer experiences.
2. Budget
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10% of ARR While Scaling, 5% Thereafter:
A good rule of thumb is to allocate about 10% of your ARR to Customer Success + Support once you’re past initial traction. So, if you’re at $10M ARR, you’d budget $1M annually for CS and support headcount.- This includes salaries, tools, and other resources.
- At scale, you might reduce this to 5% of ARR. You can see above that’s where Notion is at — today. But early on, investing heavily in CS pays off.
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CSM Compensation:
CSMs are typically paid a mix of base salary and variable comp tied to renewals and upsells. For enterprise-focused CSMs, expect to pay $100K-$150K per year, depending on your market and location.
3. Key Metrics to Track
- Gross Retention Rate (GRR): Aim for 90%+ for enterprise customers. Anything below 85% is a red flag in bigger accounts.
- Net Retention Rate (NRR): With upsells and expansions, you should target 120%+ NRR or so in enterprise (and roughly 110% in mid-market, and 100% in SMB). This is where CS drives growth. Whatever the target is, CS should drive it up.
- Logo Retention: Track how many customers you’re retaining year-over-year. For enterprise, this should be 90%+. Too many don’t track this as closely as NRR, etc.
4. Why Invest Early in CS?
- Revenue Impact: In SaaS, 50% of your revenue comes from existing customers, and up to 50% of your growth can come from upsells and expansions. CS directly or indirectly manages 75% of your revenue.
- Second-Order Revenue: Happy customers bring referrals, case studies, and expansions. This compounds your growth over time.
A great recent SaaStr deep dive with the CRO of Notion and VP of Customer Success of GitHub here:
