Now you achieved the PMF.
The number of clients increases, CSM’s resource gets tight, and a new CSM is hired…(repeat)
This is a common process and you may be growing like this.
However, it may be a mistake to assume that this process suits your business, or that this process is the best for you.
This is especially true now because the era of ‘growth at all costs’ is over and efficiency has become way more important.
In this article, we explain three things to consider before hiring another CSM.
ARR per CSM is a measurement of customer success scalability, calculated by dividing the company-wide ARR by the number of CSMs.
For example, if the company-wide ARR is $4M and there are 5 CSMs, the ARR per CSM is $0.8M.
From a CS scalability perspective, the higher the ARR per CSM, the better, but the appropriate level of ARR per CSM is broadly determined by the company phase, business model, etc.
As this article shows, the following milestones can be used as a general guideline.
ARR$1M per CSM is the first milestone for high-touch customer success (≒enterprise customers) and ARR$2M per CSM for low/tech-touch (≒SMBs) oriented customer success.
If you have 5 CSMs with an ARR$4M and you hire a 6th CSM because the all 5 CSMs are super busy, the ARR per CSM will be $0.66M.
This is not a very good ARR per CSM from a financial perspective and risks are being questioned about the scalability of the business.
While you should not be overly concerned while your company is small, you should always keep track of your company’s ARR per CSM, and if it is lower than it should be, you may not want to take it easy and say, “Let’s hire another CSM!”
As you are aware, the market is in Downturn. The era of Growth at all costs is over.
You have to focus on improving efficiency, and you have to seriously consider whether your company can withstand the cost of hiring someone in the first place.
If you hire a CSM with an annual salary of $100K, you will spend about $150K per year including other costs.
On a monthly basis, that is $12K in expenses. The ramp-up period would be around 3 months, so you would be spending at least $36K for a period of time that would not produce the outcome.
If there are any sign-up bonuses or recruiting agent fees that might add up, you will need to pay them too.
Also, let’s not forget that the ramp-up will also require existing CSMs to spend time training new hires.
In a volatile financial market, securing the runway is of utmost importance.
Can you say that this investment is a reasonable one that will certainly pay off, and you should do it immediately?
If so, you should hire a good CSM now. (Especially in today’s hiring market, it is not too difficult to hire good CSMs as it was.)
Can you accept the Cost increase in this Downturn?
As you are aware, the market is in Downturn. The era of Growth at all costs is over.
You have to focus on improving efficiency, and you have to seriously consider whether your company can withstand the cost of hiring someone in the first place.
If you hire a CSM with an annual salary of $100K, you will spend about $150K per year including other costs.
On a monthly basis, that is $12K in expenses. The ramp-up period would be around 3 months, so you would be investing at least $36K for a period of time that would not produce the outcome.
If there are any sign-up bonuses or recruiting agent fees that might add up, you will need to pay them too.
Also, let’s not forget that the ramp-up will also require existing CSMs to spend time training new hires.
In a volatile financial market, securing the runway is of utmost importance.
Can you say that this investment is a reasonable one that will certainly pay off, and you should do it immediately?
If so, you should hire a good CSM now. (Especially in today’s hiring market, it is not too difficult to hire good CSMs as it was.)
However, if you are not completely sure, you should probably hold off on hiring now.
This includes setting up a knowledge base, building a forum, and creating a place where customers can self-learn, but those are not effective unless the data is consolidated and you’re able to provide personally optimized communication to each customer across the features.
To make tech-touch customer success more powerful than high-touch, you should provide one place where your customers can enjoy all the customer success communication and where all the customer success communication is optimized based on the customer persona/activities.
With customer portals, customers no longer have to get lost using ten different communication channels. From product feedback to Q&A to self-learning, customers can find what they need quickly and easily without having to search through multiple channels.
Customer portals provide an opportunity to get to know your customers on a deeper level.
By understanding their communication needs and preferences, you can optimize the user experience for each customer. Companies can create custom groups and give customers access to content tailored to their needs.
We support hundreds of customers and help SaaS companies seamlessly scale their customer success. We offer no-code, customer-status-based community experience control, a communication workflow, and a 24/7 monitored secure platform — an exceptional value for our customers.
Curious about whether a community portal can work for you?
You can sign up for free right here.
