What do CSMs do?
Proactively make sure customers get a return on their investment – their responsibility is to make sure that the customers are achieving value on the product and meeting their goals.
Be a liaison between the business and the customer – advocate for customers’ needs internally and communicate externally to the customers about things as they’re happening internally.
Why hire specialized CSMs?
Doing CS jointly with another role will result in conflict – e.g. having Customer Success do Support or Sales work. Support needs to solve reactive issues, so they tend to not be thinking proactively. Support isn’t thinking about making sure that the customer is getting a return on their investment and that they’re growing, evolving, and expanding with your organization. Sales generally has sales goals that they need to obtain. They are generally focused on meeting their goals as a significant part of their salary depends on closing those deals.
Even if churn is low, the barrier to exit in SaaS is low – subscription as a service model has lowered the barrier for entry for any product. As a result, it’s also lowered the barrier for exit. If your churn is low now, that’s great, but if you don’t have someone who’s laser focused on driving that value, making sure customers are meeting their goals ,and achieving ROI time and time again, your churn will start to creep up.
When does it make sense to hire CSMs?
Right out of the gate if you have a land and expand model – if you’re a company that is brand new, from the time you get your first customer (and even before then) you should be thinking about your customer strategy. You should be thinking about their journey and how you want them to take that journey, along with the stop points where risk could be inserted. The earlier you can get CS set up as a team and ingrained as a thought into your company, the better.
Segment out CSMs when relationships management gets purely reactive – in the beginning, you often have one group doing everything from technical support to onboarding to customer success. I start splitting CSMs’ responsibilities when I no longer see any proactive thought going into the management of the relationship.
How do you determine how many CSMs you need?
What do you need to meet your service level expectations – determine if you have a company that has a customer base that’s high touch, medium touch, low touch or tech touch. Figure out what service level you need to commit to, and what is going to be needed to achieve that outcome.
~$1.5-2M in ARR per CSM is a rough guide – I’ve seen much lower and much higher. It depends on the model for your customer base. If you have high touch, you have to manage less revenue. If you have tech touch, you manage more revenue and more customers.
What are the key parts of the CSMs job?
- Chasing down things internally to follow up with customers.
- Helping get bugs or features prioritized.
- Looking at data and trends in their overall portfolio health.
- Managing renewals and prioritizing upsell opportunities.
- Travelling (or Zooming) to meet with customers, learn about how they’re using the product.
- Training customers on how to get value or expand their use of the solution.
- Partnering with them to meet their goals.
- Driving forward joint projects.
What are the relevant “types” of CSMs?
There are many types of CSMs that support different business models. CSM as a title is not a one size fits all title. Think about your customer base. Are you B2B, B2C, B2B2C or some other model not mentioned. Depending on your business model, you’ll need very different skill sets from a CSM. A couple of types of CSMs are:
High touch – handles B2B enterprise companies. This is someone who is highly strategic. They might be a project manager who loves people and really understands the technical side of things and can think on the fly. They might manage fewer customers in their portfolio, but it’s generally higher stakes. I want them thinking strategically about their account base and having regular conversations with the heads of departments at their customers to discuss how our products help and how we need to evolve our product roadmap to accommodate for the problems they’re solving and will be solving for in the future. High touch CSMs know the ins-and-outs and are in tune with the industry. They become your strategic thought partner.
Low touch/tech touch – segmentation within segmentation. Low touch is all about prioritization and scaling efforts. Out of your portfolio, who are your enterprise customers within your low touch CSM model who need additional attention? Who needs to be in marketing drip campaigns? How do you nurture those relationships and move them along still, while giving them almost the same amount of attention as if they were high touch, but through an automated means.
What backgrounds should you look for in CSM candidates?
Assess gaps on the current team to decide if you need domain or CS experience – if you have a lot of customer success managers that have no domain expertise in the specific industry you’re serving (if you’re actually industry specific), look for folks to plug into that gap. Overall, I like to have a team that has a well-rounded skill set so they can learn from each other.
- Salespeople who don’t like to sell
- Extroverted project managers
- Support can do well, but they have a hill to climb because they need to get out of the reactive mindset mode
What qualities or skills should be on your hiring scorecard?
Judgement – curiosity, critical thinking, judgement. I have to be able to trust you with a large portfolio and a large portion of our company’s revenue. CSMs need to be able to balance being tactical and strategic.
Proactive mindset – CSMs shouldn’t get frustrated too easily, and they should be self-starters. Weird situations get thrown at CSMs and they need to be able to figure things out.
Desire to do the role – they need to genuinely care about the success of the customers and the success of an industry.
Analytical – CSMs should love data. In customer success, you wear many hats and one of them is aggregating data and looking at trends. You then use those trends to help you make decisions.
Strong communicator – someone who is great at presenting because you’re going to be presenting data and information all the time. People who have the ability to influence customers and have them move in the direction you’d like to see them go because you know the product is going to provide an infinite amount of value to them.
Influencer – CSMs have to be able to drive adoption within a product and a lot of that comes from influencing and helping drive change management.
What should you ask in the interview?
What were your metrics before?– I’m looking for responses where CSMs say they were measured on gross renewal rate, net retention, NPS, and their overall portfolio health. It’s important that they understand what these metrics mean and can demonstrate how they can impact and/or move progress forward on these metrics.
Knowing what you know about our product, what components would you put in our health score? – a good answer looks at things around sentiment, usage metrics (adoption), tenure, engagement (with the product and also with the CSM), time to first value, ROI, upsells (expansion). I’m not looking for a perfect answer, but if a candidate can demonstrate what components drive health, that shows me they are heading in the right direction.
Are there any tests or work samples that can help you identify great CSMs?
Give them a portfolio of customers with green/yellow/red health – I give candidates that are interviewing with me a portfolio, and in that portfolio, they have 25 customers in green, 75 in yellow, and 100 in red. I ask, “all things being equal, who are you going to call first?” Human nature tells them that they need to contact the red first because they’re going to churn. That’s what I’m looking for them not to do. I’m looking for the individual who says “well, I’m going to dig in on the green and learn what they’re doing that’s making them green.” I look for folks who think “what can I learn from my current portfolio (or others in the team) that’s going to help me strategically with the rest of my portfolio.”
Prioritization activity – I give the candidate a list of things that could potentially be on their desk, like a bug that came to their attention, 10 unread Zendesk tickets, an executive business review that you need to deliver in 7 days, etc. and ask them how they would organize their work. It’s less about how the CSMs say they’re going to prioritize their day and more about the conversation that they have with me. If they have an EBR and decide to prioritize that as last, but they can’t talk through that decision with me, that’s a red flag. I look for folks that dig in and ask for more details. I am looking for CSMs that have strong critical thinking skills and are self-starters. I need them to ask me questions during the interview process if I’m going to trust them with a high dollar amount in revenue.
Draw out a customer lifecycle on a white board (any product) – talk me through each of the stages, and then identify where you feel the most important part of the customer lifecycle is. I’m really looking for people who think about the strategic stop points in the life cycle and how they can influence it at every stop.
What are the common pitfalls?
Hiring people who have trouble with multi-tasking or prioritization – this could cause a lot of long-term issues because CSMs always have a lot going on.
Hiring someone who doesn’t understand land and expand or has fears of talking about revenue – or they don’t want to ask the difficult questions you sometimes need to ask. They need to ask the customer what needs to happen for the relationship to continue happening in a year from now. They can’t be shy about that.