Video

How to Think About Scaling Your Customer Success Team (Video + Transcript)

courtney@saastrinc.com'

Courtney Rogin

Gainsight’s PULSE 2016 happened earlier this month, and Jason Lemkin hosted a four-part panel all about Customer Success from initial hire to scaling a team – and everything in between. We’ll be featuring videos and transcripts from each session, as well as top learnings from each.

How big should your customer success team be? After industry research, Jason found that most companies were budgeting around ~$2 million ARR per CSM. But does that still ring true? Find out in this panel discussion.

Featuring:
Kristina Shen, Vice President at Bessemer Venture Partners
April Oman, Head of Customer Success at BetterWorks
Adam Strong, Vice President, Customer Success at Apptimize.

Top Three Learnings:

  1. Is $2 million the right benchmark for a CSM? How to decide on the right portfolio size.
  2. How to define the line of customer segmentation in your business and all of its factors.
  3. When the customer success team no longer needs to be a product specialist.

Want to see more sessions like this? Join us at SaaStr Annual 2017 next February! Click here to purchase your tickets now!

00:04 Jason: I’m super excited about this next session. We’ve got a rock star group of panelists to talk about one of the things that I never really understood for a long time, which is, let’s see if this clicks. Just in brief, how big should you scale your Customer Success team? And when I was trying to figure this out, I had no idea when I was a CO, I hacked it and I looked at every public company document and I figured out that on average, and I talked to everyone I knew, on average when people were at scale they were budgeting about $2 million per CSM. And so at some point, I think all of us unless, especially these days when you can’t go public anymore burning epic amounts of money, at some point, how ever you define your budget you’ll end up with about $2 million per CSM.

00:55 Jason: But then it’s more nuanced. First of all obviously the more segmented your business, and this is a chart we used a long time ago, the more folks you’re gonna need per category, and that’s gonna drive that number down. And then more importantly, the best companies are scaling faster than ever and if we look at public company comps, those are fairly mature companies growing 30, 40% a year. If you’re growing 100% a year, 200% a year, my new version of the one per $2 million is one per $500K. And this is what we see when companies are well-funded and when they understand the power of second order revenue and they understand that customer success makes you money. If you don’t know how many folks to have, either yourself or to advocate for your boss, I’d say one per $500K if you’re growing in the triple digits per year.

01:40 Jason: And if nothing else, for COs and other folks here, if you don’t know where to invest, hire someone else in customer success. If that incremental person just pays for herself $1 for $1 it’s one of the best investments you’re gonna make. So, let me bring out Christina Shen from Bessemer, she’ll introduce our panelists, and we’ll dig into the science and the state of the art in terms of coverage and how many folks you need on your team and more. So let’s welcome her out and the team.

[applause]

02:10 Christina Shen: Thank you, Jason. Hi, everyone. I am, I guess we’ll figure out seats here. Hi, everyone, I’m Christina Shen.

02:16 Jason: You take the desk.

02:17 CS: Oh, I get the desk, wow.

02:18 Jason: Yeah, you get the desk. I’m sliding down.

02:20 CS: Wow, this is cool. Well, I’m very excited to be doing this panel here today and I’m excited to welcome our panelists as well. Maybe first April Oman can come out.

[applause]

02:35 CS: So April is a veteran in the customer success space and has over 10 years of experience in SaaS companies. She was most recently Customer Success Head at BetterWorks where she led Services, Customer Support Management, Ops, and Training team. Previously, she was a Senior Customer Success Leader at both Zuora and Cornerstone OnDemand, helping to scale both those SaaS businesses and prior to that she spent five years at Salesforce in various leadership roles. She loves biking and wine, although not at the same time and April is currently on sabbatical so we’re all very jealous of her well-deserved time off. Welcome, April.

[applause]

03:18 CS: Our second panelist, we have Adam Strong. Can we bring out Adam Strong?

[applause]

03:29 CS: Adam has been in SaaS for over 10 years as well and currently is a VP of Customer Success at Apptimize, a leading mobile experience solution, it empowers organizations through fast iteration of actual data. Prior to Apptimize, Adam was Head of Customer Experience at ClearSlide where he reduced churn and increased the win rate by 15%. Prior to that, Adam held executive roles at Yesmail for over nine years, heading customer experience, product dev, and technology services teams. If he was not working, he’s coaching his kids’ sports teams in town. Welcome.

[applause]

04:08 Jason: Thank you. It sounds like you guys both started when you were about eight.

[laughter]

04:13 AS: We just look young.

04:15 Jason: I understand.

04:15 CS: Good face cream. Jason, you wanna guess when I started?

04:19 Jason: Not.

04:21 CS: Awesome. Well, very excited to have this panel going. And so the main question is, $2 million for a customer success rep, is that the right benchmark? And so to set this question up, we thought we’ll walk through a quick agenda here, but here’s a couple of the topics that we frequently get. I get in venture capital through our portfolio companies and these leaders here frequently get in their respective organizations, but we’ll talk through a couple of these today and call out these questions.

04:55 CS: So the main questions is, how do you figure out what is the right portfolio size? So, we look at a number of factors when we’re looking at customer success organizations and even in the venture world, frequently ask how big is your organization? Are you selling more to enterprises? Are you selling more to SMBs? How big is your revenue base that you’re managing? Are you one million ARR, five million ARR, 20 million ARR? How do you think about budgets? How complicated is your product? ‘Cause many times if it’s a more… Call it a developer tool product, it might be more complicated to work through some of the requirements. While potentially if it’s a lightweight easy UGY may not require as much customer success help. Other questions that you wanna ask yourself is, can a CSM realistically manage that much as well? Of course, you wanna always push your employees as far as you can but you don’t wanna stretch them too thin. And in the end the question is, do you think that it’s reasonable for each CSM rep to handle that amount? So we’re gonna talk to a number of these points Adam or April or Jason, do you guys wanna comment in here as well? And from your personal experiences.

06:16 April Oman: I saw your number go down.

06:18 Jason: No, April, what’s the perfect number? What’s the answer? You’ve seen it all shapes and sizes right?

06:24 AO: I have.

06:25 Jason: Yeah, what have you learned?

06:27 AO: I like your $500K number better than $2 million.

06:29 Jason: Do you like that one better?

06:32 AO: Yeah. Well, being a leader I think the challenges is that, when you depending on the complexity of your product and the duration of implementation it really is a matter of what is the scope of customer success? If customer success is responsible for implementation as well as optimizing that customer, can you move to the next slide? Then I think your ability to have a portfolio of $2 million dollars is insane because you have to spend so much time getting that customer live on your respective solution. So I think the first place to start is to really understand what is the scope of customer success and what does it mean in your respective organization? $2 million dollar portfolio is a lot, when you go and talk to your CEO and to your CFO about what is the budget for customer success, they’re likely going to push back on whatever that number is. And so how do you get around that?

07:23 AO: I think it honestly goes back to thinking about what is the scope of customer success? So, here are just some things to think about in terms of the functions that customer success typically will perform inside of an organization. So you’ve got pre-sales, implementation, optimization, training, and support. Now if you’re asking your customer success team to handle implementation and optimization, that number has to go down. It cannot realistically be $2 million dollars, because they’re going to be firefighting trying to get customers live as well as trying to maintain and optimize those customers so they continue to adopt your solution. So when you think about how you can scale your customer success manager so that they can take on more, think about what you can do on the front end in terms of aligning to sales and the sales process which Adam’s gonna spend some time talking about.

08:13 AO: Think about establishing training and also a very strong support function so that your CSM really can be a pro-active advisor, deeply understand the customer’s business, so that they can add value in every single interaction that they have. And then the teams or the groups that really support the customer success managers, think about operations, think about customer programs around surveys and what you can do on the marketing side as well as some strategic services to get those some of those upsells.

08:44 Jason: One quick story I’d love to hear, when you were at Zuora you were working with Tien, the CEO, who is a Salesforce veteran, he’s been around a long time. He’s fairly quantitative and thinks a lot through these issues in my experience. Tell us a little bit about how you guys negotiated headcount, what was the experience there? He’s sort of been through it at Salesforce, but it’s also a new world by the same token. So what was it like, that interaction?

09:09 AO: Well, one of the things I have to say about about Zuora is that implementation was handled by a separate team.

09:16 Jason: So you didn’t have to worry about implementation?

09:18 AO: No, I did not have to worry about implementation. Training was a standalone function, although it was part of customer success we had a training organization that we could leverage for customers who needed training on new products, if you’re delivering features and function every single month, we also had a very, very strong support organization. So how you go and justify the numbers is you actually take a look at what is the forecast for projected growth. You take a look at what CSMs who are being most successful versus some of the CSMs who are really struggling. You have to have an understanding of how much of your business is enterprise versus SMB. For SMB you want to have more of a one-to-many strategy. You have to figure out how you want to tier your respective customers and then that’s kind of where you start. A lot of it has to do with the profile of the hiring of the CSMs that you hire.

10:07 AO: If you hire CSMs who have more technical acumen, sometimes they can handle more accounts than fewer accounts. But basically you wanna try and approach it from a numbers perspective but also to bring customer stories to the table so that Tien as an example, could have a really good understanding of which accounts were successful and why. What are the things that you did to make them successful versus the customers who were really challenging? And then why are they challenging? Is that solved through headcount or is it solved through data or is it solved through some other mechanism?

10:38 CS: Adam, maybe you can comment on your experiences at ClearSlide and Yesmail.

10:41 AS: I would add too… I think that was kind of our approach. When we were looking at to answer that question about is $2 million dollars the right answer? And we do… We felt like that’s a great place to start but then we started to ask ourselves what are some of the questions we would ask to then drill down to what an accurate amount would be for my organization. So customer segmentation was one of the things that we thought was very obviously very important. Where you are from a maturity of your business. You need to know what the scope of practice of customer success is even going to be. One of the things I’m gonna talk about which, I’ll give some highlights of some experiences of what we’ve gone through, when you do experience some of the pain of does customer success… Do they do the implementation? Do they do the training? Do they do the renewal? How involved in pre-sales are they? So you need to understand what your scope of practice is gonna be and how you even work with the rest of your organization. So once you have that I think you can get to what that scale is gonna look like and what that number is, whether it’s gonna be the $2 million for the CSM or higher or lower based on their customer segmentation.

12:02 AO: The one more thing that I would add, is that based on what… If your CSM is expected to handle the renewal and identify upsell and expansion opportunities, you’ll notice that we say revenue at the end of implementation optimization and also training. Training can actually be a revenue function, you wanna ensure that your CSM can be proactive enough with every single customer to identify those revenue opportunities which are gonna help you grow. So $2 million the right number or 4500K the right number? I think it’s gonna be different for many organizations but the one thing you do as a customer success leader, is you definitely wanna start tracking and understanding where churn is coming from and also forecasting and partner with your sales leader so that you know exactly how you’re gonna approach those renewal conversations as well as those upsell conversations. Because you have multiple opportunities in your interactions with customers to identify those. And if you have a $2 million portfolio, it could be easier or harder depending on the nature of the relationship and some of the other things that we’ve discussed.

13:04 AS: I would also add, I think you need to ask questions like, “Do I care about churn at this point?”

13:10 AO: Yeah.

13:10 AS: Right? “Is churn my number one focus?” We talk about it a lot in customer success, it’s certainly at some point in your company’s maturation or evolution, it’s very important when you talk about the valuation and retention of a customer, and leaky bucket and all that kind of concept. But, are you, in that first few years of a start up where… Are you thinking about more is it a growth game and how does CS then contribute to that? So you need to be aligned, as we say, with what the company’s strategic priorities are at that point.

13:47 Jason: Well that’s, so I only know ClearSlide by story, but a super dynamic company for a long time. A million things going on outbound-driven, rapidly changing. And that’s interesting, was churn not a key metric? And I could imagine how it isn’t, right?

14:03 AS: Yeah.

14:03 Jason: There’s a lot of reason it might not be as important. I believe in the early days, churn is more important as a relative than an absolute metric.

14:10 AS: That’s exactly right. So understanding where the relative churn is coming from in your customer segmentation is much more important than the overall, “Here is my SaaS metric of churn.” Because what that is doing is that’s informing the areas of your success practice, where you need to tweak the optimization. So, we would do some analysis on segmentation and understand how big that book is versus what we’re seeing as far as the loss to understand where we put our focus. And that I think is more important than trying to target 10% or something like that, annual churn.

14:48 CS: And then maybe, ’cause you’re both talking a lot about customer segmentation. Talk a little bit about how you guys define where that line is. Do you draw the line at by number of employees and the customer? By revenue they generate? By certain features or modules they use? How do you guys think about that?

15:07 AO: I think a lot of times when you’re very young in your company maturity model, you just look at it by ARR and that’s actually a mistake. You should look at segmentation ARR as one factor to think about and how you segment your customers. I would suggest that not only in addition to ARR, I would look at industry, I would look at growth, I would take a look at, where particular geographies that you actually want to grow in, and that you should think about for some customers whom if you have three tiers as an example, tier one, tier two, tier three. And your tier three are your one-to-many, and your tier one are your most absolute key accounts, is that you take the time to understand what the customer needs and to be thoughtful in terms of what tier you put them in. You might offer some customer where they’ve bought a pilot and their ARR might be low, but the growth potential is so dramatic that you might put them in a tier two or a tier one rather than a tier three. So, it’s not necessarily a hard and fast rule, I think that there is some art to it.

16:15 AS: I would 100% agree with that. I think it also needs to be very dynamic, you can start with whatever you might perceive as your segmentation as far as enterprise, SMB, that kind of concept and maybe it’s based on cost or something like that. But you might also then when you start to analyze, “Well, am I getting true adoption? Or am I having business challenges in this one particular segment?” You might actually have to adjust the way that you create these segments and service them. I think you need to continually look at that to be effective at how you segment your customers.

16:53 CS: Makes sense. Well maybe we’ll move on to the next topic as we talk about segmentation, also segmentation by stage of business as well. And maybe, Adam, you can kick this off or, April ,you can, what does a CSM look like at various ARR levels?

17:08 AO: So this is just a high level swag as I was thinking about what tangible content you could walk away from this session, and this is just my view of the world from Salesforce, Zuora, and also having spent some time at BetterWorks. So when I started to think about okay for one to five million versus five to 20, versus 20 to 50 million which are, generally when you hit five million you’re gonna hit that hockey stick and there’s gonna be some dramatic growth, the same when you hit 20 million. And I started to really think about what happens in customer success at these various revenue points for your respective business? So, generally what I have seen in the one to five is that everybody’s doing everything and really the challenge there is to start to figure out how are you going to be reactive versus how you’re going to be proactive. What are the customer moments of truth so that you know how to price and package?

18:00 AO: So you know how to implement as quickly as possible? You want to start to scale through some process and through some templates. But what you’ll see based on what we’ve just been talking about is the tiering and the segmentation is something that you need to do at every major growth pattern inside of your organization. So if you look from five to 20, this is where I would be starting to be thinking about establishing various teams, functions for training, operations, support. It’s a little bit hidden but there’s also implement Gainsight in the five to 20 million, which I which I put in there which seems to be…

18:33 CS: Shameless plug right there.

18:34 AO: Seems to be about right. But when you get to the 20 million plus, this is where it’s really about your… From what I’ve seen geography strategy, you want your CSMs in the field, do you want them as close to the customer as possible? You as an organization might be having a certain percentage of your business in a MIA and AsiaPac, and you need to start thinking about putting your CSMs there if that’s not something that you’ve already done to hit 20 million. That’s where support really needs to be global. So as you progress in terms of the growth of your own company you need to really think about what are your customers asking from you and start to evolve as a particular function, so that you can start to address all of the customer needs. And so don’t think that the way customer success looked like at a $5 million company is exactly how it’s gonna look at $20 million or $50 million.

19:26 CS: Adam, do you wanna…

19:26 AS: No, yeah, I would agree with that. And I think kind of a segue into what our next part of the conversation is about is, as you evolve, how do you interact with the rest of the organization? And so the other thing that we tried to… April and I tried to think about was what’s a useful tool or what’s the takeaway here for the group? Whether you’re at a point where you’re trying to build and scale your CS group or just trying to figure out what the heck to do. We try to think of some things early on and some early actions that you could take to really set yourself up and build a foundation for success as you go. If we move to the to the next slide here… The early areas of focus that we thought we have some… To stimulate some conversation and we’d love to hear some questions from the group on this is, you really need to understand where and how your customer moves through your organization, and everybody has to agree on that.

20:30 AS: So, how many people out there right now have either had a staff member or a team member or themselves said, “Okay, great. I’ve got this new account. I don’t know what they want, I don’t know why they bought, and I kinda know where they’re at, but I’m just gonna have to figure it out in the kick-off call?” Something like that. A lot of hands, a lot of heads are nodding to that. That is critical, this customer engagement model and having an agreed-upon approach to how customers move through the lifecycle, I think is very important. It doesn’t have to stay the same, but just getting agreement with the business and particularly the marketing and sales folks is critical.

21:12 AS: The other part is the lifecycle of the customer. I think everybody understands and also is very familiar with how you bring a customer from prospect all the way through, but looking at your your critical functions, like onboarding, is it important? Do you think it’s important? Do you feel like that contributes to the long-term engagement and lifetime value of that particular customer? Most would argue yes. Most would argue that that first 90 days is when you have the greatest ability to make an impression with that particular customer. That should inform and that should enable your renewal processes and everything else down the line to be able to drive that engagement in adoption.

21:57 CS: And Adam, maybe you could cite some examples there, from ClearSlide or Apptimize. What are those engagement triggers that you’ve noticed at both companies?

22:05 AS: Yeah. Again, I’m gonna try to give some, just some particular job aids or some tools that people can use as takeaways. I think critical to onboarding we found as a couple of really useful tools, certainly capturing what we used to call at ClearSlide and now we call it something different at Apptimize, but is essentially the positive business outcome. So why they purchased from you? That, just knowing that, and then being able to level set with that customer, when you engage with them, so that when you get to the point where you’re doing a review or you’re circling back with them or you’re talking with them at a later point, you can say, “Alright, how are we tracking to why you purchased?”

22:49 AS: That particular measurement is very hard and fast, it’s very metric-driven. And it’s also not… It’s not self-proclaimed. It’s not you saying, “Well, I feel like we’ve delivered a lot of value here to you so let’s talk about how we can charge you more next year.” It’s more, “You told us this at the beginning of the relationship.” Whether it’s you’re buying ClearSlide it was something like, “We feel like our presentations right now, our sales content is not being leveraged by the sales team, so we give ourselves a three on this kind of score.” Something like that. Then when you do go and visit them, you revisit that particular metric and you say, “How do you feel like you’ve done now that you have our solution? Do you feel like things have improved?” Just being able to do those types of things is what we feel is critical to onboarding and helping with that type of experience.

23:47 AS: The other two that I want to get before we leave off of this is optimizing your tool sets. April gave a plug for Gainsight. I think it’s not just the customer engagement platform, I think you need to be able to manage a customer from the opportunity management. This goes back to defining the scope of the group. Are you involved in pre-sales? Are you taking it all the way through to renewal? Are you supporting them? So, is there inbound coming in? You need to know… Define what your practice is gonna be and then you obviously have to enable the team to be successful. But setting that foundation early on is really critical. I would actually argue that, and I feel like there are some ClearSliders here that can probably corroborate with me, but the optimization of tool sets would have gone a very long way, and would have benefited us much earlier on in the game than where we ended up actually addressing it.

24:46 AS: So that’s why for me, that’s one of those things where I have a lesson learned from just throughout the career. And the big one, the other one, the fourth, this is not last but not least, it’s aligning your team goals and incentives. The overused term of coin-operated is not where I’m going here, but at the same time, if you wanna drive the right behavior, you have to align the goals of your individuals, of your team and that kinda thing. If you don’t do that you will have results going this way and expectations over here. And you’ll consistently have this gap and even thinking that, “Well, you know that’s not what drives my team, that’s not why they do it.” That’s bull. It’s incentives drive behavior, no matter who wants to argue that.

25:38 AO: And when you talk about incentives, you mean variable in some respect?

25:41 AS: Variable, all kinds of things. You might do an MBO program, where you’re trying to move the needle and improve the department’s performance or do things like where you have objectives set for them. But at the end of the day, if you don’t lay out the vision and then break those down to objectives to be accomplished by the team, it’ll be a very difficult challenge to get there.

26:03 Jason: Let me ask a related… I think this is a great list. Process, as you add process, process versus product. One of the things that I think confuses a lot of first time COs or maybe even fifth-time COs, is when does the customer success team not need to be a product specialist anymore? When does that happen, if ever? But I think it’s an interesting question. And at some point in bigger organizations customer success even gets abstracted away from product it becomes a pure process-driven role and I don’t know the answer to this question but what have you learned in rapidly-growing companies?

26:37 AO: I think they have to be products specialists for the most start because…

26:41 Jason: But everyone on your team didn’t understand all of Zuora, I mean this is a complicated process.

[laughter]

26:44 AS: I would I would agree with this. Here’s my particular point of view on that.

26:48 AO: Then I’ll answer that. I’m gonna answer that.

26:51 AS: It’s important to be a product specialist when you’re in the growth phase and it’s all about onboarding and new customers. Top line.

27:01 Jason: Yup.

27:02 AS: When that becomes the comfort zone, and so then what your default activities end up being are just training call after training call, you diminish the value of customer success.

27:16 AO: It’s true.

27:17 AS: That to me is kind of the… It’s one of those things where it’s very difficult to define but you know when you’re there. Like you know when you’ve reached when you’re in that zone. And so when you have call after call and they end up defaulting to training, then you’re losing the value of that CSM to actually drive engagement, and not just be that… Actually, I really don’t wanna minimize support, because obviously support’s a critical, critical function but we talk a little bit about how you evolve from support to success and I really feel like this is one of those differentiators.

27:51 AO: Yeah, support needs to be the how-to break fix system…

27:54 AS: Critical.

27:55 AO: Release type issues. To answer your question about products specialization, in particular at Zuora, which is commerce billing and finance. The CSMs needed to have a lot of depth of understanding of the product, but not all of them were experts. So you have to have a baseline understanding, especially if you’re a company that is doing monthly product releases. So how you stay ahead of what the product is, so that you can start to tie business challenges with what your respective solution is, is constantly delivering. So in some respects I introduced a new role, it was a Customer Success Architect, who was meant to be that super product specialist. And it was a shared resource.

28:35 AO: I had one on enterprise and one on SMB and so as CSMs would engage with the customer, in certain scenarios where it was getting out of their depth, they would leverage one of these two resources to come in and help facilitate a conversation around what the customer was trying to do relative to the product capabilities. That was two resources for a team of 25 CSMs, and that allowed us to provide the service that the customer actually needed. It also helped me as a leader, in that I didn’t have to go argue with product about, “Can I please borrow a product manager for this conversation, and then this conversation, and this conversation.” It also allowed services to focus on getting customers live, so I wasn’t having to borrow resources from services to have those conversations with customers. So with two resources for more than 800 customers and a team of 25 people we were able to solve that. So they didn’t have to be…

29:30 Jason: No actually, the one to 12 is not that different than a stressed sales engineer to sales ratio. One to 12 is a little aggress… But, plenty of organizations that operate lean have… You see that one to 10, one to 12 ratio.

29:43 AO: Yeah, so that’s how we handled it.

29:46 CS: Awesome. Adam wanna continue down your slides?

29:49 AS: Yeah… From a timing perspective. A couple of things that we wanted to share with with everybody and just to make it tangible, is when we get back to defining that customer engagement model and how a customer flows through your organization, and having a good alignment and general agreement on that to be successful. And I talked about some of the situational pain points, a customer comes in and you don’t know why they bought, what they do with them, and all you’re trying to do then is you’re in this support mode, organization that’s really focused on support. And so you’re on the growth and support continuum, you’ve got this fantastic sales process that’s multi-step and been through all the sales academies, and you know the customer lifecycle, you’ve got your implement retainer renew, and very boiler plate type thing. What happens is is you’re missing out on some critical contributions to the business when basically your success is being disabled. And so sales ends up in this prospect trial and implement phase, customer success, it ends up in just implementing and renewing, and that’s, “We’re gonna get you going and then I’m gonna talk to you in 10 months or whenever I get the… “

31:05 AO: 30 days before the renewal. [chuckle]

31:06 AS: Right. The CTA is gonna fire and tell me to send an email to you 30 days before the end of your year. That’s gonna take you so far, but what’s gonna convert you from support to success is when you layer in this concept of, if you move to the next slide. This concept where you’re talking about upselling and expansion. So recurring revenue, ClearSlide, Apptimize, Yesmail, all along the way there’s always been some capability or some offering in the platform that allowed for growth, that allowed for what we call organic-type growth. So you need a mechanism to convert and manage that and you also need a very defined mechanism throughout the CM where you’re reintroducing the sales organization to new opportunities. Customers want to be helpful, they want to get a promotion because of your platform. And so there’s no downside to asking for that upsell introduction, asking for, “Can we talk to so-and-so? What other division can we get into?” That has nothing to do with managing then the organic growth that happens during expansion, and if you’re not addressing both of those, you’re really missing out on some key opportunities. And you have to get alignment on the CEM otherwise it falters and sputters.

32:38 AO: So the argument would be that if you have a portfolio of $2 million, and that’s a lot for your respective company, your respective solution, your opportunity to really focus on those upsell and expansion opportunities probably are low, because you are firefighting with a bunch of different customers at different stages with maybe perhaps different customizations of your actual platform, which is one other reason why I liked your $500K number.

[chuckle]

33:02 AO: I don’t know if CFO would like that number. [chuckle]

33:06 CS: Well, curious then of using the $2 million or the $500K number at earlier stages, how much would you say of that should be upsell?

33:16 AS: So I put a target for growth on the CSM staff, the staff focused on success. And when we do get to that point when we wanna put targets on it, that is also where there’s a natural delineation between our support and success functions. The upsell is when you continually have the sales, or at least what we believe is when the sales executive continues to develop and cultivate. But yeah, we put a goal on our CSMs and I think they prefer it.

33:51 AO: I think when you take a look at customer success, your CSMs really are your path to growth, especially within your install base, and you should expect a certain percentage of revenue to come from your install base. Those are the easiest ones to sell to, they’re already customers. And so when you think about customer success, you might wanna think about separating your CSMs from your support. Support is typically cost, CSM should be part of growth and should be looked at the same just as sales and marketing are.

34:18 AS: Yeah.

34:19 CS: Great. So I know we’re running a little low on time. Maybe we’ll…

34:22 Jason: Let me ask a related question. Just curious. Do you mind if I…

34:24 CS: Go ahead.

34:25 Jason: For your customer success [34:27] ____, what’s the number one goal or KPI for the company? Like I like every functional area to have one quantitative goal. For me, it was it was net negative churn, segmented. Do you have one? What’s the uber KPI for the department?

34:44 AO: Net retention. Churn minus upsell. Net retention.

34:48 Jason: Net revenue retention?

34:49 AO: Yeah.

34:49 Jason: So stand up and… 118% is our goal for the year, guys, right?

34:53 AS: That’s where we’re at as well. I’ve been trying [chuckle] and trying and trying, and I really want to get to this point is I’m trying to get usage and adoption at the same strategic level as revenue. And with these types of platforms, and as customer success starts to evolve and grow, I do feel like, particularly in a SaaS model, obviously recurring revenue and things like that. Knowing who’s using and why is just as important as managing the dollars going in and out of your business, ’cause you’re really talking about long-term health of the company.

35:42 CS: Engagement is the predictor for future potential churn, so you always wanna keep your tabs on that as well.

35:47 AS: Yeah.

35:48 CS: Awesome. Awesome conversation throughout this panel. And so some of the key takeaways is is $2 million per CSM a good benchmark? The answer is really it depends. And here’s a number of considerations that we’ll throw out there, being the maturity of the company, complexity of that product, the scope of their role, the target customers that you’re selling to, and ultimately what your customers really need. I know we’re a little over time but are there any questions from the audience that you guys want to ask our panelists?

36:24 Jason: Oh, you’ll be way over.

36:26 AO: Yeah, we’re way over.

36:26 AS: We gotta rock…

36:27 CS: Way over. Alright, well thank you so much again and round of applause to the panel.

Published on August 2, 2016
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