Why does a SaaS company need a CSM?

Who is a Customer Success Manager or CSM? Why does a SaaS company need them?

Who is a Customer Success Manager (CSM)? Why was the role of a CSM created in the first place?

For any SaaS business, its growth  and success relies heavily on the recurring business of the current customer base. Traditionally we have relied on a great product and a highly responsive support team. But despite the best product and a great support team, SaaS businesses continued to get last minute surprises of customer churn, downgrades or license contractions.

Despite best efforts, surprises came in pretty late in the cycle when the moment of turning around the affected customers was long gone. This led to missing revenue targets and lower than planned growth.

Customer success teams were originally set up with a single goal of retaining customers.  

There was a need to do more.

Customer success teams were originally set up with a single goal of retaining customers.  The customer success manager role started on a simple promise of transforming customer engagement from a traditional ‘reactive’ to a ‘proactive’ mindset.

Over time the Customer Success Manager role has expanded, to things such as proactively onboarding customers.

Today a Customer Success Manager’s core responsibilities include:

  1. To make sure that the customer is getting the “Desired Outcome” by using the product.
  2. To ensure customers have a great experience with the product and at every touch point. with the company.
  3. Calculating periodic account health of (at least) key accounts.
  4. Converting customer relationship and value into real advocacy. It could come in the form of an internal NPS survey, external reviews, a case study or the good old referral.
  5. To interact with customers and figuring out what features do they require. These features can then be added in the product roadmap. This way the focus will always be on making a product which the customers actually want.

The goal is to drive recurring revenue and growth, by renewals, upsells, upgrades and expansions. Customer success is responsible for increasing the profit for the company.

As cliched as it may sound, in today’s world, the customer is the king. Every problem should be tackled keeping the customer in mind.

Customer Success Manager is a person who is handed over the customer relationship after the customer signs up. Traditionally we have seen account managers and relationship managers play these roles as well. But the skills, tasks and objectives differed.  The main difference is that for a customer success manager the only focus is to make your customers successful which will eventually lead to financial growth of the company.

So how does a CSM foresee an upcoming problem?

SaaS companies wanted CSMs to not only identify those issues early, but early enough to be fixed before the customer churned out.

One of the major problems of CSM is identifying which customers are having problems and are likely to churn out. It is difficult to guess who might be having problems. This is where the Customer Success Platforms come into play. A Customer Success Software continuously monitors every SaaS account for its product usage, product stickiness and calculates an Account Health Score. It’s this score that works as a single best parameter for CSMs to identify any problems with the account. Once the problem is identified, the work of a CSM becomes much easier. S/he can then focus on making sure that the problem is solved as soon as possible.

Customer loyalty is the most powerful sales and marketing tool- Bill Price

A CSM should be both responsible and accountable. S/he should be giving decision making powers because success or failure is also dependent on their effectiveness.

Normally a company is sales focussed. But for a SaaS company, majority of the revenue comes from renewals and upgrades. Hence, customer success in a SaaS company should be as important as sales, if not more. Otherwise it will be like filling a leaky bucket. Customer churn will be high, leading to wastage of time and several other resources. Thus, an effective Customer Success Manager is a must for any SaaS company which wants to be successful.

Puneet leads CustomerSuccessBox. He is deeply passionate about the three product joys - the joy of producing, the joy of selling, and the joy of ownership. His inspirations come from family, friends, mentors, people he works with and from free thinkers like Eric Ries (The Lean Startup), Tim Brown (Change by Design: Design thinking) and many more.