In the fast-paced world of tech-startups, the success of a company is no longer solely dependent on acquiring new customers. Instead, focusing on customer retention and measurable customer results has and will continue to be a key driver of sustainable growth.
A well-established Customer Success org is often overcomplicated by hundreds of opinions and voices on what CSMs should be doing and focusing on. However, there is one common and critical question that comes up regularly in my conversations: How many accounts should a Customer Success Manager (CSM) be responsible for?
The CSM Golden Ratio: Finding the Balance
Determining the appropriate ratio of customer accounts to each Customer Success Manager is crucial, but doesn't have to be overly complex. Striking the right balance ensures that CSMs can provide personalized outcomes reviews and drive the right strategy with each customer—without becoming overwhelmed.
Based on my experience working and consulting with some of the best tech-companies, here are some guidelines for the ideal ratios:
1. Digital / SMB Segment: 125-200 Accounts per CSM
For small and medium-sized businesses (SMBs), your CSM can effectively handle a larger number of accounts. With a streamlined approach and automated communications, CSMs in this segment can maintain regular alignment sessions and outcomes reviews for each customer on a maintained cadence.
2. Mid-market Segment: 80-125 Accounts per CSM
As businesses grow into the mid-market segment, the complexity and maturity of these businesses grow. This requires more frequent results reviews and customer alignment sessions—which requires more expertise-driven conversations with the CSM.
3. Large Segment: 40-80 Accounts per CSM
In the large segment, businesses deal with more significant challenges, and customers often have more complex demands. This doesn't mean that the approach to these accounts has to be complex. To provide consultative alignment and expertise-driven behavior changes, CSMs in this category should have a limited number of accounts.
4. Enterprise Segment: 10-40 Accounts per CSM
Enterprise customers are the most critical clients for a SaaS company. They demand top-notch consulting and expertise. Therefore, CSMs handling enterprise accounts should have a very limited number of clients, allowing for a highly strategic results reviews where the CSM should be the ultimate-subject matter expert in what their customers have to do to achieve success.
Data Insights: What Other Companies are Doing
To gain insight into current industry practices, Vitaly.io recently surveyed several B2B SaaS companies regarding their CSM-to-customer ratios. The results showed that 33% of companies reported a ratio of 1 CSM to 10-25 paying customers, making it the most common response. Other ratios reported were as follows:
(source: https://www.vitally.io/post/what-is-the-golden-ratio-of-customer-success-managers-to-customers)
29%: 1 CSM to 25-50 customers
23%: 1 CSM to less than 10 customers
14%: 1 CSM to 51-100 customers
1%: 1 CSM to 101-200 customers
It is evident from the data that having fewer customers per Customer Success Manager is more common, aligning with the suggested ratios.
Factors Beyond Numbers: The Importance of Segmentation
While the suggested ratios provide a solid starting point, it's crucial to understand that each SaaS company is unique, and there are various factors to consider when determining the optimal CSM-to-customer ratio. One essential factor is customer segmentation.
Rather than solely relying on numerical calculations, segmenting customers based on their use cases and specific outcomes you're helping them achieve, can help determine the appropriate level of Customer Success coverage for each group. High-touch customers may require a dedicated CSM, while low-touch customers could benefit from automated outcome-reviews and resources.
Optimizing Your Customer Success Model
Once you've determined the ideal CSM-to-customer ratio for your company, it's time to optimize your Customer Success model accordingly. Let's explore two different strategies: the 1-to-many and 1-to-1 approaches.
1. 1-to-Many Strategy
In the 1-to-many Customer Success model, a single CSM is responsible for managing multiple customers. To make this strategy successful:
Automate communications wherever possible to save one-on-one interactions for high-level engagements.
Segment customers based on their use case and expected outcomes, ensuring that the content and resources they receive are highly relevant.
Utilize various communication channels, including email, chatbots, community forums, and customer-accessible knowledge bases.
Make sure to use your expertise as much as possible. Remember, your customers aren't purchasing your software because they like the product. They want what your product can do for them! Help them make the right changes to maximize their results with your product.
2. 1-to-1 Strategy
In a 1-to-1 CS model, CSMs are assigned to a small number of high-value customers. To excel in this approach:
Provide CSMs with the necessary tools and support for effective communication and data analysis (Ideally Salesforce or Hubspot)
Position the CSM as a trusted advisor and partner to the customer, guiding them through their unique journey. Remember, your CSMs expertise will be one of the most valuable products your company offers!
Proactively hold outcome reviews with your customers (stop doing QBRs and checkins) where you're reviewing the measured results you helped them achieve, and aligning on future results.
Regularly use your expertise to help the customers make the correct changes that allows them to achieve the best results with your product. Think: what are your most successful customers doing? How can your other customers do the same?
Building a Proactive Engagement Model
Often, when we scale our customer success teams, we introduce more accounts, more processes, more systems, more hats to wear, etc. This tends to lead to what I call "analysis paralysis" where CSMs have so much they "could" be doing, but get lost in what to actually do at that very minute.
This is where I highly recommend you build out a proactive engagement system that allows you to scale your customer success reps (i.e. each rep can handle more accounts proactively).
I call these playbooks the Renewal Operating System - you can setup similar playbooks on your own. Here's a quick summary of what each playbook does:
Outcomes Master Plan:
Aligns with your customers on which outcomes matter most to them
strategy to help drive those specific outcomes
Deployed throughout sales and CS to help drive alignment cross departmentally
Prescriptive Customer Onboarding:
Specific playbook to get customers to the specific outcomes quickly
Empowers CSMs to be assertive and prescribe the right actions for each customer
Enables your revenue teams to sell the expertise of onboarding, improving deal velocity
Executive Outcomes Review:
This is the proactive method to continually align and measure customer outcomes
Focuses on renewals and key processes from day one to secure renewals
Done correctly, this increases your expansion opportunities by 2.5x
Whenever you're ready, there are 3 ways I can help you:
The Renewal Operating System:Â This is the ultimate set of playbooks for tech-founders and revenue leaders. This system aligns your teams to the outcomes you produce, improves customer retention, and doubles your expansion opportunities.
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