How to Scale Customer Support and Customer Success at Your Startup

Every SaaS organization needs Customer Support and Customer Success functions. But most don’t know how to scale their teams effectively during periods of fast growth, leaving them with a large cost burden and very little to show for it.

To dive into this topic we hosted a well attended webinar this week with Michael Redbord, who is the Vice President and General Manager of the Service Hub at HubSpot. Michael spent the last five years growing the Customer Support and Customer Success functions at HubSpot, and he shared his hard-earned lessons of how they started from a team of one to now a global team of over 250.

In the webinar we discussed what type of customer facing teams you need at every stage of your organization’s growth, how to set that team up for success, and how to keep your customer front and center through it all.

No worries, if you missed the webinar. You can view a recording of the webcast here on-demand.

The audience also engaged in a great Q&A session with Michael, that we wanted to re-share with you here.

Webinar Q&A Recap

Speaker: Michael Redbord, Vice President & General Manager, Service Hub, HubSpot

Q: How do you go about adding onboarding specialists and renewal type of functions into the mix with Customer Success as you grow?

A: This is touching on that – when and how do we specialize question. I think the person asking this question is probably coming from a place where they have a full stack CSM, where they’re doing everything. The question is then, when and how do we carve off components of the lifecycle and how do we do that without destroying the customer experience or the business.

So, my take on this is – you actually want to wait until the point where it’s an absolutely must do and your team is really screaming about it. This may seem a little bit adversarial from a leadership standpoint but, you want to be sure that you’re making the right call. The moment you carve off implementation – your CSMs no longer see that piece. Their day zero of a customer is now more like nine to six months into it (or whatever timeframe). You also break the relationship. You’re adding a touch point. So, the specialization approach has costs that are kind of hidden even if the benefits are very obvious.

Renewals for instance, I think that’s one in particular that you want to be careful about because CSMs really enjoy delivering Customer Success and the financial conversation is a harder one. But if your CSMs are owning both today, what does it do when you break that up and now there’s somebody else that handles the money? Does the customer view the CSM in the same way? Is that as important to the relationship? So, there’s a lot of hidden costs in specialization. I think you want to wait until the point at which you’re absolutely forced to do it before you make the call, because it’s very hard to walk that stuff back.

Q: For Customers Success what do you recommend is the best approach to divide and conquer your customer base to strategize on how to nurture, grow and expand?

A: This is a segmentation question, and this is going to be different for every business. This is a generalizable way to think about it though – for every customer there’s a certain amount of opportunity and there’s a certain amount of risk, and the goal is to balance those two in a way that allows you to segment your customers based off that philosophy.

First, you’ll want to figure out how do you measure risk in our business. Let’s say it’s the amount of software revenue we have from them today. You could make a bell curve of that and understand what’s a high-risk customer, it’s a $10,000 MRR (monthly recurring revenue) versus a low-risk customer, it’s a $1,000 MRR. Then put that on the scale, risk on one side of this equation and on the other side is opportunity.

There’re various ways of measuring opportunity. You can measure opportunity by the size of the company because perhaps you have products that you could sell to different people or you charge on a per user basis and you can measure on the size of their revenues. Or if you’re selling to e-commerce companies and you want to get more of their purchases into your system to get a bigger share of that wallet.

Measuring risk and opportunity is important and then you end up with some segments that start to become somewhat obvious. Low risk/low opportunity – you want to manage them at high ratios and low touch. Then high risk/high opportunity – okay you know how to deal with those. And there’s the high risk/low opportunity, and this maybe is something that you manage in a somewhat low touch, but you added certain programs to help handle them. Once you have those four quadrants, I think you can begin to get pretty tactical about how you are actually going to deliver success for each of those segments.

Q: How long should you continue having your team handle both Support and Success actively together before dividing the two teams in the early stages of your startup?

A: I think this one’s actually the place where I would recommend this is a division that’s going to happen pretty quickly and needs to happen. The trouble here is, if you have one person managing Support and Success – so the reactive and the proactive work, respectively. What happens is, they’ll float to the work that appears highest urgency. So, they’ll come into work every day and they will sit down at their computer and they look at their inbox and if they have a bunch of urgent customer requests, that they need to react to, they’re going to do those first. That means they’re going do those before the proactive work like – oh I should really put together this QBR, or oh I should really call that customer because their account is red or something like that.

So, I actually think the carving off the reactive and proactive functions is a somewhat healthy division to make and it’s one that in my experience happens pretty early on. Not because people are thinking in that way, like I just said but, because the systems are different – it’s a ticket queue versus a kind of a proactive lifecycle management. They require a different type of person and they use different systems, so we start to hire different people pretty early on for the Support for Success functions.

Q: What are your favorite metrics to track when it comes to Customer Success?

A: Oh, baby there’s lots of them. When it comes to Customer Success, I think again you want to tie yourself as closely as you can to the core of the business. So, we’re talking about revenue growth and revenue retention on a dollar basis.

But what I really like, that I think is very telling, is something we at HubSpot call, customer dollar retention. It’s basically your customer retention rate, which you can get through churn rate and a little bit of SaaS math. Then what you do is you weight it by dollars. So, what that means is that a $5,000 MRR customer is five thousand times more important than a one-dollar MRR customer.

This also forces you to kind of handle that segmentation question that we had earlier in a pretty wise way. I think when you look at customer dollar retention as opposed to just churn rate, it’s revealing of – okay, we have these big customers, but they retain terribly. And then it forces you to ask questions – are we signing up the right customers? Are we servicing them the right way, etc.?

It also enables you to look at your smaller customers and play a little bit more “easy come easy go” there and not obsess over every cancellation from you know, a $5 a month customer, the same way with a $500 a month customer. So, I’m a big fan of the customer dollar retention metric.

And I feel like I might need to duck and cover for what I’m about to say – but I’m actually a fan of NPS. I’m not a fan of the number. I’m a fan of the process. I think it’s a really important process to highlight the voice of the customer in the business.

Q: Since you have built out teams, what do you look for when you’re hiring a CSM?

A: Oh man, yeah so, I’ll tell you what I don’t look for – I don’t look for industry expertise. I think a lot of that’s teachable and unless you’re in a really technical field where you require an advanced degree or something you probably don’t need to look for that.

I’ve looked for a lot of different things over the years. I don’t know if I have an answer here on the perfect CSM profile. I think in a lot of ways that tradecraft is somewhat new. On the CS side, the core thing that I’ve always seen really matter is, empathy, and just like, willingness to talk to people.

It’s amazing how many people end up by accident in Customer Service and that then turns into Customer Success, if you’re good at their job. But at their core they don’t particularly like talking to people, that’s not their happy place. The CSM’s job is to spend a lot of time on the outside, “CSM-ing”. You only can look at reports for so long and build so many charts. So, the people that I’ve seen be most successful at CSM jobs, the thing they have in common is, they care about people. They’re empathetic and a lot of the rest of the stuff is pretty teachable.

Thanks again to Michael for the great presentation and stay turned for more ChurnZero webinars to come!

 

---

Customer Success Around the Web

• 6 Best Practices to Streamline User Onboarding – User onboarding is one of the most crucial — and frustrating — elements of any product launch. Read these six things to consider when setting up your user onboarding plan.
• 20 Examples of How Showing Gratitude Helped a Business – Showing gratitude year round (not just during the holiday season) has major benefits for any business.
• The Role of Customer Success Manager in SaaS  – Take a look into the day to day life of a CSM at LiveChat.