Just "keeping up with the joneses"?

There are a lot of articles that have been written with many experts believing that a Customer Success hire should be a single-digit hire for start-ups, i.e. employee number one to nine, but here in the UK I don’t believe we are at that stage yet, or at least not consistently. What we are seeing though is the growing appreciation for a Customer Success team but not yet as a priority over a sales or marketing function in start-ups. Why? I guess there is still a belief it is more important to win new business rather than keeping (and growing) what you already have. More worryingly though, as I speak to owners, founders, and CEOs is that they don’t always know why they are creating a Customer Success team, almost like they are just following the most recent industry trend. Keeping up with Joneses if you will (unsure if this translates! See: here for explanation). I will get back to this point later but let’s first look at when you should hire a Customer Success leader.

Before I start though….

Disclaimer: I am an experienced Customer Success leader looking for my next opportunity.

In my experience, if you are a SaaS start-up or scale-up and have made the decision you want (and more importantly need) a Customer Success team you will eventually come to the conclusion where you will need to hire your first Customer Success leader. This can happen one of three ways: firstly, you may choose to hire an experienced Customer Success leader as your first customer success hire and ask that person to spend some time “getting their hands dirty” until ready to expand the team. Secondly, you choose to hire a Customer Success Manager with the aim of that person growing into a leadership role in time as your business and the CSM team grows, investing time and effort into their development. Third and finally, you hire a number of Customer Success Managers before you decide to hire an experienced Customer Success leader to lead that team – and usually this number is between 3-6 CSMs but can also vary hugely – with the CSM team in the meantime reporting elsewhere, sales or operations usually.

I am sure each of these three options have their merits but for me I will take the words of American author, speaker, leadership expert and pastor John C Maxwell: “A leader is one who knows the way, goes the way and shows the way” and to that point I would always suggest your first customer success hire is one who “knows the way”, and for me that is a Customer Success professional with at least two years’ experience in a Customer Success role and ideally one with some form of Customer Success leadership experience. However, before you start your hiring process, ask yourself what you want that Customer Success leader to be responsible for. As I am sure you are now understanding, there are many different types and interpretations of what a Customer Success Manager is and what they are accountable for, and therefore this is mutually reflected in a Customer Success leader.

If you are a start-up or scale-up then I guess you want this person to potentially have built or grown, and scaled up a Customer Success organisation. What other companies have they worked at before? Have they worked at large SaaS companies or only start-ups, or do they have experience of both? What type of industries have they come from? What is the sales & customer success engagement model at those companies? How is success measured both for the team that person leads and for them individually? How have they performed against those measurements? What can that person demonstrate or evidence they have done, built, enhanced or learnt? Critically, you would also want to understand the culture of the companies this person has worked at. For small organisations like start-ups it is imperative that new hires “fit in”, they won’t “rock the boat”.

One component that may be restrictive or prohibitive in all of this: your budget. Currently in the UK whilst the role of a CSM is now established the role of a CSM leader is still in its infancy, mainly due to the number of CSMs reporting to leaders based in the US. The fallout to this is twofold; one is there is still confusion around what the Customer Success leader is accountable for (outside of the direct team management) and secondly, the salary for these roles are below market rate in comparison to the US or other leadership positions in the same organisation.  Whilst experienced Sales Directors in the SaaS space can easily command north of 6 figure basic salaries the equivalent Customer Success Director is starting at 75% of this, with many roles a lot less than this. Jason Lemkin wrote an excellent article a few years back now around the need to hire a Customer Success leader and the justification is that any initial sale of a reasonable size is worth more than 6x the initial ACV over its lifetime. And you know who is responsible for that happening: your Customer Success Management team.

As Jason says “So you are hiring someone now not just to manage your $750K in ARR today, but more than that, to make sure that $750K grows to $4.5 million (6x) over the next 36 months”.

So when you make that Customer Success leadership hire, remember that you are not just hiring someone to manage the customer portfolio of £750K today but someone you are giving responsibility to in ensuring that you maximise that CLTV (Customer Lifetime Value) and this in my eyes, has to be a Customer Success leader.

However, this is where I play devil’s advocate and refer to my early point regarding “Keeping up with Joneses”. What problem is your Customer Success team looking to solve? What problem is your Customer Success leading being hired looking to solve? If, for example, you expect to grow your team to 6 CSMs and beyond in the 12-24 months, and you need someone who can grow that team from experience with the right people and the right processes, to avoid some of the common pitfalls, then it would be the right thing to do.

But if you are planning on having a small team and have no plans for aggressive growth, and/or your CSM team will be “low touch” then you may choose to hold off for as long as possible with no direct Customer Success leader.

For me though, if you can afford it I would always look to bring on the most senior Customer Success person you can. They will learn the product and the customer-base by being “hands-on”, and they will fully understand the day-to-day job and the relevant needs for the required processes, tools, organisational structure and dynamics. They must be aware though that this is a hands-on job and they will have to get their hands dirty for this to work.
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Finally, the hiring of your Customer Success leader assumes great responsibility. It will fall to this person to drive a Customer Success culture through your company and this is one of the most challenging elements they will take on.