Customer success for startups — how to get started

Customer success is a critical function within B2B software companies. It is typically staffed by customer success managers who are tasked with managing the experience of existing customers throughout their journey with the product, with the assistance of automation. Every B2B software startup eventually finds itself in need of a customer success function, but most struggle to spin one up without a few hurdles and misfires. This is because the focus of customer success is very broad, with diverse goals and roles required to succeed.

The best way to think about the customer success function is through the lens of the diverse goals this department is usually aligned to:

• Retention. A common purpose for customer success teams is to act both proactively and reactively to retain as many customers as possible. Proactive customer retention usually looks like checking in on customers who might be struggling to find opportunities to help, and this is usually data-driven (e.g., we know that customers who don’t do 𝑥 very often are likely to churn, so we prioritise checking in with them). Reactive customer retention involves responding to cancellation requests or getting involved in customer issues that are severe enough to lead to churn (including the following up of unpaid invoices). Success measures for customer retention include your retention/churn rates for both customers (i.e., logo churn) and revenue (i.e., MRR/ARR churn) as well as CSAT and NPS.
• Revenue expansion. ARR/MRR expansion is any additional revenue you make from existing customers who are increasing their usage of your product. This role feels a lot more like a sales role, and generally involves reaching out to customers proactively to encourage them to adopt more products or more features of your product. While this also helps with retention in the long-term (because customers who use more of your product are less likely to leave), the primary success measures are positive revenue expansion and limited revenue contraction, as well as other measures to represent utilisation (e.g., number of features actively used).
• Onboarding/Activation. For most products, customers are most likely to churn during the onboarding phase, which occupies the period of the user journey after sales but before a customer has fully adopted your software (this is because the customer is paying for the product, but not yet getting much value out of it, so during this phase of unrealised return-on-investment, they are most likely to give up on the product). This is why many companies dedicate customer success resources towards helping new customers to activate the software and get to a place where they are experiencing (and aware of) the value of the product. Mostly self-service products might only require a quick phone call (or might rely entirely on automated email or in-app communications), while products that require customisation and implementation often rely on internal or external professional services to get things working for the customer. Success measures here are diverse and often involves tracking how long it takes for a customer to get to value.
• Account management. Some customers require a single point of contact. This usually takes the form of an account manager (or dedicated customer success manager) who manages a portfolio of customers. This is common in enterprise SaaS, where individual customers might have a lot of support tickets, feature requests, and professional services projects in play at any given time, causing a need for cross-team coordination for each customer. Success measures for account management is similar to retention, mostly focused on retention/churn rates and NPS/CSAT.

If you’ve made it through the wall of text above, you’re probably thinking “that is a lot for one team to take on,” and you’re right. Customer success is a diverse function and the primary reason most startups initially fail to roll it out is that they don’t have a clear idea of what they actually need from their first customer success hires. When establishing your customer success team, it’s important to consider what problems you are trying to solve:

• If customer churn or customer satisfaction is the problem, you should focus on retention.
• If you’re trying to better monetise your existing customers, expansion is where you should focus.
• If you are struggling to get customers active and engaged after the sales process, then onboarding/activation is what matters most.
• If your high-value customers are unhappy, then account management might be part of the solution.

Most startups will kick off their first foray into customer success through just one or two hires. Unfortunately, most of the time, just two people can’t handle all of the responsibilities for customer success. This is why it’s important to be very specific about what problems you are initially trying to solve and to keep your first hires focused in these areas until the team grows and you can better spread your resources across the various responsibilities of customer success. Similarly, it is also important to know what type of employee(s) you need when establishing your team:

• Customer Success Managers who are focused on revenue expansion often need to be well-suited to a sales role.
• Activation Managers who are focused on onboarding new customers often need to be more technical.
• In some companies, Account Managers need to be very technical.

Like all teams, customer success is best resourced as a patchwork of people with diverse specialties and experience. The type of candidate I would hire for the typical revenue expansion role is different to the type of candidate I’d typically hire for technical account management. By focusing on just the most important customer success responsibilities when you are making your first hires, you have a much greater chance of success. As you expand the responsibilities of your success team, you can hire people with other specialities, and eventually cover all bases.