Hiring your first CSM: When and Who to Look For?
In my time working with startups, a common and critical question I often encounter is, "When should I hire my first Customer Success person?" The timing of this hire is pivotal because ultimately impacts how effectively your company scales its customer success efforts. Missteps here can lead to operational challenges, such as the over-hiring scenario I've witnessed at companies that scaled their CSM teams too quickly. These companies end up trying to figure out how to streamline an oversized team to work more efficiently—a situation you want to avoid.
Identifying the Right Time to Hire a CSM
The ideal moment to bring on a Customer Success Manager is when your company is poised to start truly investing in customer outcomes, not merely managing an influx of support tickets. This is the point where a CSM can transition from a traditional support role to becoming a strategic partner for your accounts. This strategic partnership is essential as CSMs bridge the gap between your product's potential and the actual value realized by customers. They are pivotal in ensuring that the product's capabilities are fully leveraged to meet customer needs.
So all of that sounds good, right? But when exactly should a CSM be hired?
So when exactly?
To better determine the “when,” look for specific indicators that suggest your startup is ready to benefit from a CSM. Here are a few simple ones that come to my mind:
1. Customer Base Growth: When your customer base grows to a point where personalized follow-ups and strategic engagement can no longer be handled by the founding team or sales staff alone. For example, let’s say your startup initially managed 50-100 customers with direct interactions by the founding team. As your customer base grows to over 500 diverse customers, individual attention becomes challenging, leading to missed opportunities for deeper engagement and customer retention.
2. Revenue Milestones: Reaching a revenue threshold that allows for the investment in a role dedicated entirely to customer success without compromising on other critical operations. In this scenario, maybe your startup has reached a monthly recurring revenue (MRR) of $100,000, which provides enough financial cushion to allocate budgets specifically for roles that are strategic rather than operational, such as a dedicated CSM who can focus on maximizing customer value without affecting essential resources
3. Complex Customer Needs: Introduction of more complex products or services, or when entering new markets that require detailed customer education and support. For example, after launching a new, more complex product line or entering a market that requires specific compliance and detailed support, you notice an increase in the depth and frequency of customer questions that go beyond what your sales or support person is equipped to handle, necessitating specialized customer success intervention.
4. Feedback and Demand: Customer feedback indicates a need for deeper engagement or when customers begin asking for more comprehensive support services that go beyond basic troubleshooting. In this situation, customers are providing feedback indicating that while they find the product useful, they need more strategic guidance to fully leverage its potential. Or, key accounts are requesting regular review meetings to ensure they are achieving their strategic goals, suggesting a need for more dedicated support.
5.Strategic Shifts: Preparing for a shift towards a more customer-centric business model or when aiming to increase customer lifetime value through upselling and cross-selling that requires expert handling. For example, your startup decides to transition from a product-focused to a customer-centric approach, with a goal to increase average customer lifetime value. This involves not just selling products but ensuring that customers successfully integrate and expand product use in their operations, requiring a strategic partner rather than just a sales or support contact.
A quick tangent on CS Teams and Revenue…
I believe that Customer Success teams should be intricately linked to revenue generation. Lincoln Murphy talks about this a lot and tend to agree. This isn't about turning CS into a sales operation; rather, it's based on the understanding that genuine Customer Success efforts, combined with a robust product and strategic execution, should organically lead to increased revenue. Customers who achieve success with your product are likely to expand their usage because they see real value, not because they're being sold to. CSMs play a critical role in making this customer-driven growth a reality.
How to Approach Hiring your first CSM
From my experiences and discussions with other CS leaders, here are some effective hiring strategies:
1. Prioritize Relationship-Building Skills
A successful CSM should not only understand your product deeply but also excel in forming and maintaining relationships. This skill is critical because it involves engaging with various stakeholders across the customer’s organization, navigating different personalities, and fostering long-term partnerships. With this in mind, consider a candidate who has previously worked in a customer-facing role, perhaps as an account manager or in a community engagement position. During interviews, focus on their ability to handle complex scenarios, such as calming a dissatisfied customer or negotiating contract renewals. Ask for specific instances where they built or improved relationships that resulted in increased customer retention or upselling opportunities.
2. Set Clear, Achievable Goals
Defining what success looks like for your CSM will guide their day-to-day activities and help them prioritize tasks that align with your business objectives. These goals might include specific metrics like customer health scores, success plans (more on that in a bit), or direct revenue impacts through upselling and cross-selling.
For a newly hired CSM, set an initial goal of improving customer retention by 5% within the first six months. Break this down into actionable targets, such as conducting personalized onboarding sessions for new customers, establishing regular objective planning with key accounts, and developing a feedback loop to identify and address common customer pain points. Measure success through both quantitative metrics (like retention rates) and qualitative feedback from customers.
3. Develop Customized Success Plans
Creating customized success plans is a key skill for Customer Success Managers, as it involves aligning your product’s capabilities with each customer’s specific business goals. Effective success plans will enhance customer engagement, foster loyalty, and drive revenue growth by proactively addressing and anticipating needs.
To assess a potental CSM’s ability to develop and execute strategic success plans, use scenario-based questions during the interview. This method provides insight into the candidate’s analytical and strategic thinking capabilities in real-time. Present a scenario that reflects a common challenge or opportunity in your industry. For example, if your product is a SaaS tool for digital marketing, create a scenario where a customer needs to increase their user engagement but has limited resources. Ask the candidate to outline a success plan that leverages your product to achieve these goals.
Hiring your first Customer Success Manager can be challenging, but the framework outlined here should help set you on the right path. In a future post, I’ll discuss the optimal timing for expanding your CSM team and explore how leveraging AI-driven digital solutions can delay the need for immediate expansion.
