Why CSM needs to be a single digit hire, luxury & customer success, excuses to talk to your customers

Fighting Churn Newsletter

By all accounts the Customer Success industry is on the rise – everyone is talking about it, sharing ideas and theories, getting excited by the potential to impact critical business goals. Yet companies still wait too long to hire in customer success, even when they know they shouldn’t.

Generally companies wait on their first CSM hire for two reasons. First, it’s another headcount, which can seem too expensive when your MRR is still fairly small and you maybe only have a few months of runway before you’re out of cash. And second, it can be hard to find someone good, especially in the early days.

But in this excellent article from Jason Lemkin, founder of SaaStr, he explains why it should be a rule and a commitment that you MUST hire your first Customer Success manager as a “single digit hire”, i.e. before you get to 10 employees. And — this is the part that he admits is counter-intuitive — you must do this even though it will NOT impact churn for your first customers (because most of them you never really had).

  • So why make this hire when cash is tight? Because if you don’t hire a dedicated CSM as a single digit hire, your #1 single best source of referrals, case studies, upgrades, PR, more customers – those first, happy customers – won’t produce as much. Second Order Revenue works, even in the early days. Your first enterprise customer, more often than not, will actually get you your second. They tell their business friends, a colleague at a trade show, etc. In fact, because they “discovered” you, it will be in their interest to promote you. That’s how they get kudos, both internally and externally.
  • So why doesn’t your first customer success manager have to be perfect?  It’s a relatively plastic role in the early days. It’s not like sales, where your first 2 sales reps have to really nail it. It’s probably enough if your first customer success manager just (x) has experience making customer successful, (y) at roughly, vaguely your price point and (z) is proactive. This person can do the job decently for a while and later you bring in a manager with real experience growing a team. Your early CSMs can be utility players, not great at any one thing, but good at getting attention, resources, and figuring things out.

In the beginning (and probably always), a Pretty Good customer success manager that is driven and committed, is far, far better than no customer success manager at all. Far, far better. So stop waiting.

What does luxury have to do with Customer Success?

The luxury industry knows what Customer Success is only just beginning to grasp. Think of a concierge at a 5-Star resort. Not only do they know exactly what you need when you ask a question, they also seem to know exactly what you need before you ask, or, in some cases, without you saying anything at all. And when they provide guidance or suggestions, they frame them in such a way that you feel more confident once you possess this new information.

See any parallels with Customer Success??

The challenge is that it’s tempting to think that your customer is completely rational. That they will objectively understand the value of your solution and do whatever it takes to leverage that value to help them achieve their business goals, with little guidance required on your part. But if this were the case churn – both as an event and a concept – would cease to exist. Clearly this is not the case and it boils down to two very simple reasons: 1) We’re all dealing with incomplete information and 2) None of us is completely rational.

So how to do you combat these challenges and provide luxury customer success? This thoughtful read offers lessons customer success pros can learn from the luxury industry – specifically that delighting customers doesn’t happen by chance! – to ensure their customers get full value from their solution.

Excuses to engage your customer

A simple but true fact of customer success: you have to constantly engage your customers. But sometimes you need a good excuse to reach out, just to get the conversation started.

Ask and you shall receive: a great list of 15 excuses to re-engage your customers! Here are our three favorites:

  1. Your contact got a new promotion: Linkedin likely maintains a prominent portion of your daily social media time. If one of your contacts gets an upgraded title, be sure to congratulate their achievements in their past position and express your excitement for their future endeavors within the company. This will also ensure a smooth transition if you will work directly with a separate individual covering future communication.
  2. You saw an article and thought of them: Perhaps your morning Twitter feed led you to an interesting article which could help or entice one of your customers – pass it along! Letting your customers know that they are on your mind is both heartwarming and reaffirming. Send them articles of value that can offer.
  3. It is your contact’s birthday: A birthday message speaks volumes for the relationship you share with your customer. With a personal note of your admiration and appreciation for their work, you can go above and beyond to show your investment in their success both personally and professionally.

Word to the Wise

This week’s wisdom gets to the heart of why Sales cannot solve your churn problem. While Sales is certainly focused on revenue, Sales – or Services or Support for that matter – is not properly suited for handling growth in user adoption, reducing churn, and adding value to the customer’s journey. That’s why it’s vital to invest in Customer Success early.

There are several reasons that Sales is not the solution in the face of churn but it really comes down to this:

“Sales may compound the issue. It’s tempting to have your sales team re-engage with an at-risk client and re-sell them on sticking around another year. But what if the root cause stems from your sales team? What if the risk reason centers on your team misrepresenting your technology to potential clients? Additional promises of features that may never exist will only make matters worse. It’s a good idea to have a different team do the digging and solve the problem.”

As companies grow, they lose intimacy with their customers. Swarming customer issues or maintaining close executive relationships can only scale so far. When you start to double or triple your customer count, you are going to have a problem. Accelerating your rate of growth will accelerate your rate of churn if you don’t have the proper Customer Success foundation in place. A resource dedicated to the long-term success of your customers should be in place the moment you land your first customer.

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