The SaaS Founder’s Playbook for Customer Success
As your startup grows, what your customers expect from you will change and the volume of their requests will change. You’ll shift from the reactive mode of supporting requests as they happen to the proactive mode of fixing issues before they ever become a problem.
I’ve spent the last seven years building the customer success function at HubSpot. I grew with the team, and played a big role in many of our successes…and failures. Along the way, I’ve talked to hundreds of founders, sales and marketing leaders, customer success VPs, and front-line reps about how to build a customer-first organization. Here’s how I’d recommend shifting your thinking about customer success as you grow.
Founding Stage
(0 to 5 employees)
At this stage, customer support isn’t your primary focus. It’s likely not even a problem on your radar, nor should it be. Your #1 focus at this stage is product-market fit.
Customers are integral in this process because they provide feedback, and every member of your team should be answering support requests, meeting with customers, and thinking about how to build a product that suits the needs of the market.
What to do
- Set up a simple workflow to manage customer requests. This won’t be more than a support@ email address and dedicated support times for each member of the team.
- Meet regularly to review common customer issues and build fixes into your product roadmap.
- Involve your entire team in helping to solve customer problems.
- Stay focused on using customer support as a learning tool to make your product better, and listen carefully–especially to your most vocal, demanding customers.
What not to do
- Don’t optimize for efficiency. Your goal is success. Don’t obsess over metrics like inquiry volume or time to close tickets.
- Don’t let your engineers hack together workarounds that will need to be maintained down the road; provide real engineering solutions to the types of problems new software has.
Early Stage
(5–20 employees)
It’s time to hire your first customer-focused employee! This won’t be a “Chief Customer Officer” or a “Customer Success Manager.” They may not even be full-time. This will be someone who is dedicated 100% to helping customers and removing support load from the rest of the team.
Keep in mind that early-stage customer people are different from late-stage customer people.
In later stages you’ll want people who think about how to scale through process, training, and systems. Right now you just need someone who cares deeply about helping your customers.
This work is hard and often unglamorous. Play your “founder card” for this person, it will empower them to advocate to engineering to fix recurring bugs and usability issues, push back on sales if (when) they keep selling bad fit customers, and argue with marketing about how to represent the product.
What to do
- Get your communication channels under control. Your customer feedback is coming in through a variety of channels: phone calls to founders, emails to engineers, even the occasional text message. Designate a first official channel (probably a shared inbox and/or live chat) to get in touch with you.
- Add a touch of process, carefully. Set up post-interaction NPS so you can tell if someone is still upset even after an issue is “solved,” start tracking the volume and quality of requests coming in along with metrics relating to revenue (i.e., gross churn rate, dollar-weighted churn rate, upgrade rate), and create some basic email templates to answer the most common questions.
- Start thinking about customer self-service. Write the blog posts that help customers help themselves such as “How to do X-common-goal in our app,” or “How to set up x feature”. Bonus: these articles will make your sales people very happy.
What not to do
Don’t get distracted by shiny things. Your priority is growth, and that’s driven by selling, not by customer success or renewal… yet. There are three very common shiny objects that derail customer success efforts in the early stage:
- Process improvements to issue routing, issue classification, and automated responses seem reasonable. Don’t do it. Your business model is still in flux, and flexibility is more valuable than efficiency and cost savings.
- Sophisticated models around churn prediction start looking very tempting. Before you hire a data scientist or implement expensive machine learning software, have a face-to-face conversation with 15 customers.
- Vocal customers are frustrating and often expensive to support. While it’s not a cardinal sin to lose a customer, be cautious about ignoring your complainers. If you can make them successful they will turn into your most vocal advocates.
Mid Stage
(20–100 employees)
Your customer base is growing, and demand for customer support is growing along with it. Your one customer-focused employee has become two (how’d that happen, anyway?), and you’re starting to see the path to having a whole gaggle of customer people very, very soon. You’re asking yourself, “Is this what scale looks like? Or am I screwing up this customer thing?”
What you need to do at this stage is act more deliberately than you have been been so far. It’s time to lay a foundation that you’ll keep for quite some time and do so purposefully.
The patterns that you develop at this key stage will grow with you and will spell the difference between running or stumbling as you hit the growth stage.
What to do
- Be intentional about what you measure. For support, add metrics like issue categorization and response/resolution time to your reporting. Start quantifying customer success by tracking lifecycle stages like new customers, successful setup, seeing value, etc.
- Start a knowledge base. Around the 1000 customers mark you’ll know the most common issues customers run into. It’s time to dedicate a full-time person to building your knowledge base and providing customer education support.
- Pick your channels deliberately. You’re outgrowing your shared inbox and starting to think about adding additional channels like phone, forum, and chat. Remember, it’s always easier to add a channel than it is to remove one (customers will recoil at the latter), so be thoughtful about adding new channels to the mix.
- Think carefully about specialization. As you near a team of 6+ you’ll start thinking about specializing. If you do specialize now, it should be around lifecycle stage (e.g., implementation, support). Avoid specializing by customer type (SaaS vs. Ecommerce vs. Automotive) or specific types of problems–your go-to-market is still changing, continue optimizing for flexibility.
What not to do
- Don’t get distracted by cost reduction. Strategies like outsourcing, hiring lower-cost people, or exotic employment offer tempting cost savings to the finance-minded folks. Your team isn’t big enough to really reap the rewards of these efficiencies. Stay focused on revenue growth, not gross margin.
- Don’t use your customer team as a buffer between company and customer. This is so tempting! Watch out for customer teams becoming physically segregated in the office or unplugging from Slack and email–these are the canaries in your coal mine warning you that the customer has stopped being everyone’s job.
- Absolutely no DIY software fixes. Your support and engineering team are tired of the same issues showing up again and again. The quickest solve for your stickiest problems is an admin panel that isn’t good enough for customers, but will empower support to solve a broader range of customer issues. This hack solution fails to solve for the customer and creates an under-maintained thorn in engineering’s flesh. You’ll arrive at the growth stage with sales and marketing pressing the gas while customer success and product struggle to keep up as they untangle years of bad code in the admin panel.
Growth Stage
(100–250 employees)
Your company has (mostly) solved product/market fit. You’re scaling, fast. It’s working… congratulations!
As you enter the growth stage, your efforts will shift to making the economics of your business work. The key question you’re answering company-wide is: Can we acquire customers and get at least 3:1 return in our unit economics? Your team and investors will be paying close attention to customer lifetime value, and the customer success side of this equation is retention.
Up until now, your customer team has been focused on the reactive work of customer support, and you need to keep doing that. But you’ll also start building a customer success team responsible for the proactive work of customer retention.
The expanded focus on the customer requires a different type of leader who can manage both the existing team, and build your customer success function. This is a critical hire– you want a proper VP of Customer Success or Chief Customer Officer who is strong operationally, deeply empathetic, technical enough to liaise with engineering, and can grow customer success into a growth lever for the business. If you haven’t been cultivating this person internally, don’t compromise or wing it. Turn to your investors, board, or even headhunters to help make this hire.
What to do
- Give your new customer leader a revenue number. This is a hotly debated topic and ultimately one that’s business-specific. The two most common are net revenue and churn. The important thing is that your customer team has a way to tie their value back to the business in a way that CFOs and investors care about.
- Establish models, not just metrics. You have the data volume needed to tap into the predictive power of models. Get an analytical mind on board to answer questions like: When should we hire our next support person? Is it more valuable to get a customer set up or to collect on a contract? What are some easy plays we could execute that would help us boost revenue?
- Invest in permanent systems. Early on, systems are less important than vendors would have you believe. But by now, you’ve learned about your market, product, and how to best serve your ideal customer. Now is the time to pick tooling that matches your service channels, style, and workflows.
What not to do
Don’t ignore your customer team culture. Customer teams, especially support teams, deal with unhappy customers and a never-ending stream of customer needs, often bearing the brunt of the failures in your product and go-to-market teams. This is hard work that inevitably impacts team well-being. There are three things you cannot afford to overlook at this stage:
- Don’t ignore cynicism and especially watch for this in more tenured people. When (not if) you start to see evidence of cynicism, don’t delay, it spreads. Toxic daily commentary is never worth it, even it comes from someone with valuable institutional knowledge.
- Don’t tolerate isolation. Err on the side of over-inclusivity by inviting customer teams to engineering events, sales rallies, and shutting down customer support for company events. Customer people tend to be “always on” and have a strong sense of duty, this is a recipe for isolationism.
- Don’t put process over people. Customer success people are naturally process thinkers, and while process isn’t the enemy, too much will make people feel like cogs in an, unchangeable machine. Your customer team always needs to be empowered to solve for the customer.
Scale-up
(250+)
HubSpot’s CEO, Brian Halligan, defines a scale-up as “Pouring resources in fast and getting a big return on them without the wheels coming off the bus.” You’ve identified your growth levers, now you’re going to see if that math scales.
Scaling up comes with CFO and board pressure to gain efficiency, and the natural tendency of a business will be to squeeze customer teams. Remember, making customers successful is a growth driver in your business. You want to keep costs down, but not at the expense of underinvesting in your customers.
What to do
Your actions at this stage should deliver either predictability or cost savings. There are three areas where you need to sharpen predictability:
- Team growth: Refine your model to accurately forecast the volume of work over time based on customer demand, hiring needs to keep up with that demand, and key assumptions based on how the team operates (i.e., ticket output/person). You should be able to accurately forecast needs across your customer segments.
- Management scale: As your team grows from a few to a few dozen, you’ll need to scale management. For specialized customer success teams shoot for an individual contributor to manager ratio of 8:1, for less specialized teams 15:1 or even 20:1 is appropriate. Team leads can help you further scale managers by taking on the bulk of mentoring, coaching, and quality assurance.
- Individual performance: Small support teams tend to be self-regulating, but as you grow, you’ll need to implement individual performance tracking by measuring ticket volume, close times, upsells, etc. at the rep level. There’s friction in this shift, but if you put it off you’ll end up with huge variation in performance across the team, and scaling predictably becomes tough.
Now let’s talk about cost savings. Until now, you’ve implemented automated process with caution. Now is the time to let loose. Start sending automated alerts to customer success managers when customer behavior indicates churn potential or upsell opportunity, automate your implementation workflow, maybe even build a chatbot to start helping you answer some FAQs. Consider hiring a “customer operations” person to focus on automation full-time.
What not to do
I’ve just spent paragraphs talking about operations, analytics, and efficiency. At this stage, you too will spend lots of time talking about operations. And this comes with a critical word of warning: Do not lose your obsessive customer-focus.
- Don’t fall prey to analysis paralysis. You’re tracking metrics like customer health, renewal rate, support interactions, and more. But your customer team needs a north star, not a conglomeration of dozens of metrics. Simplify metrics goals, and be careful about inundating them with so much analysis that they lose focus.
- Don’t lose sight of the sharp edges in your customer experience. Your team has put temporary fixes in place that ask customers to send an email to this address, upload this .csv file, or click this random button. Now it’s time to take process weight off customers and put permanent engineering fixes in place. You’ll also want to audit your support channels — add live chat, phone support, be super easy to work with.
- Don’t ignore the voice of the customer. Get customers interacting with non-customer-facing people; maintain (and circulate) internal lists like “The top 5 customer pain points from last month”; ensure your leadership team is talking to at least one customer a month.
Another big word of caution here: If you’re still in reactive support mode and don’t have any customer functions doing proactive work, you’re behind where you should be.
Some companies can get to the growth stage on customer support alone, but scaling up is dependent on your ability to predictably keep and grow customers. You’ll need a dedicated customer success team to make this happen. Don’t delay.
Putting this playbook to work
Most SaaS companies get serious about customer success after encountering a near-company-killing churn crisis. Churn spikes, panic sets in, analysis is done to uncover the problem, success people are hired. It’s rough.
If you can take the pointers offered in this post and implement even half of them, you’ll be a leader in customer success throughout all stages of the growth cycle of your business. The tips and strategies I’ve recommended are not particularly complex or clever–on the contrary, they’re at best just advanced common sense. But I hope that by adding them into your operations today and preparing you with foresight tomorrow you’ll be just a little more prepared for what’s coming your way.
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A version of this post was originally published on HBR.
