Knowing where your stand before getting started

SaaS companies usually start building a customer success team when customer retention starts to make an impact on their revenues.

Some are far-sighted when it comes to customer success, others get started later than they should.

In addition, building a team dedicated to customer success is relevant in some cases and not necessary in others.

The anatomy of your customer base

To get started, it is paramount to understand what type of customers you have in your base - as it will have a huge impact on your decision to implement a customer success team or not.

The following table will help you understand if building a dedicated team is relevant for you.

Quantity of logo per big milestone

As you can imagine, for the same amount of revenues, managing 1 or 1,000 customers is not the  same thing and requires another scale of skills!

Actions to be handled on customer base

Each company has its own organization. Some put expansion and renewal management into the hands of the Sales teams, others in the hands of the Customer Success team.

In any case, here are the main actions to be performed on the customer base to insure a good retention:

• Onboarding

• Education

• Training

• Expansion

• Renewal

When to start and why?

Average salary of CSM:

US: $90k

Europe: 45k€

South America: R$36k

Depending on your ARPA, the mission of your CSM will differ greatly, but its impact won't.

Retention comes from success, which comes from good adoption, which comes from good education, which starts at onboarding.

This being said, small teams usually cover Onboarding, Training / Education, and Renewal.

Keep in mind that bigger teams split these functions with onboarding managers, professional services, success managers and account managers. Don’t overthink your process as it might be just be right for a few months!

So the main question is: when doest it become necessary to have someone dedicated to the customers onboarding and education - while keeping renewals in the hands of the sales team?

Well, as soon as its salary is justified by your churn rate.

Let’s say you are based in the US, with an average salary of $90k per year for a customer success manager. Spending $90K into this hiring will only be relevant when you believe to be at risk of loosing more than $90k of annual revenues from customer churn!

So, depending on your current churn rate, hiring a full time position might be of the utmost urgency, or may just as well be postponed until you reach higher annual revenues.

Loss of revenues

Until then, a part-time position or shared responsabilities between your product and sales team might just be enough.

Note: if you work on a yearly basis with your customers, your churn rate might be delayed by 1 year. This is why it is important to start scoring your customers today so that you can gain visibility on your upcoming churn.

Read the rest of this article here: Understanding your Customers

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