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How to Increase CSM Productivity on a Limited Budget

Posted by Sandi Lin on April 28, 2016

Going into 2016, many customer success leaders are being asked to do more with less. The uncertainty around the public financial markets is causing many companies to take a hard look at their budgets, in an effort to improve unit economics and shore up margins and profitability.

At the recent Customer Success Summit in San Francisco, many attendees were facing the challenge of supporting a growing customer base with flat CSM headcount. Read on to learn how to increase CSM productivity when you have limited resources and budget.

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Key metrics for CSM productivity

As a customer success executive, you are likely tracking some or all of the following metrics:

  • Revenue managed
  • Number of accounts, customers, or end users managed
  • Revenue changes (expansion + renewals - contraction - churn)
  • Customer satisfaction (CSAT)
  • Net Promoter Score (NPS)
  • Onboarding cycle time
  • Product adoption and usage (e.g. monthly active users)

The lion's share of costs is typically due to headcount. The national average salary for customer success managers (CSMs) is $67k, according to Glassdoor, so fully loaded costs could be $100k or more per CSM.

Customer success teams often measure productivity in terms of output per CSM, for example, revenue managed per CSM (benchmarks vary, but $1-2M in annual contract value managed per CSM is a common goal). In addition, CSMs are held to a minimum CSAT/NPS bar in order to ensure a quality customer experience.

Challenges of growth

With a renewed industry focus on efficiency, customer success teams are facing the challenge of scaling to 2x and 3x their existing customer base while keeping headcount flat and CSAT scores high. In general, many operational teams aim to improve productivity by roughly 5 percent annually from ongoing productivity enhancements.

The reality is - customer success teams need to be considering wholesale process changes in order to achieve expected step-function productivity gains. Minor adjustments simply aren't enough to scale your team.

Assuming flat headcount, CSMs need to find ways to free up time to focus on the highest-value activities, which are typically building 1:1 customer relationships and managing renewals, upsells, and cross-sells. Any repeatable tasks that can be automated, should be.

At the end of the day, there are only three ways to free up CSM time:

  1. Don't do the activity
  2. Have someone else do the activity
  3. Replace the activity with a scalable alternative

We'll discuss strategies for implementing each of these points next.

#1. Don't do the activity

It's a good time to evaluate the level of support that your CSMs offer for different segments of customers. If customers are paying you $100K per year plus onboarding fees, you can afford higher-touch strategies compared to customers who pay you $100 per month and can churn at any time. For lower-touch customers, perhaps you can eliminate activities - for example, doing an annual business review with quarterly email check-ins instead of full quarterly business reviews.

It's important to segment your customer base and make sure that your CSM strategy makes sense with the corresponding unit economics. At Skilljar, we estimate customer success activities in hours for each customer segment, and balance that against total hours available in a year per CSM. 

This isn't to say that you should stop servicing your lower-touch customers. Yes, there are some activities that you can probably eliminate, or reset expectations with sales and customers early. But to maintain a high quality customer experience, it's likely you'll be moving activities to a more scalable alternative rather than eliminating them entirely. For example, perhaps some onboarding activities can be handled with in-app product messaging.

#2. Have someone else do the activity

There are two ways to improve productivity by shifting work - either by lowering costs or by leveraging economies of specialization.

To lower costs, consider hiring "junior" CSMs to handle simpler tasks and lower-touch accounts. Remote work is also an option to leverage lower cost geographies. Junior, remote, and even contract or outsourced positions could be hired as part of natural attrition and replenishment over time.

Economies of specialization is a more common and incremental approach. For example, creating dedicated professional services, implementation, education/training, and support teams. This enables specialists to be more productive in each of their areas of expertise, as well as enables each team to scale as needed. Similarly, having sales handle more of the account management and upsell/cross-sell functions can free up CSM time. The downside of this approach is having multiple points of contact for the customer. As a result, the CSM is usually the project lead and point person for all customer inquiries.

#3. Replace the activity with a scalable alternative

Finding ways to automate CSM activites is scalable and often leads to a better customer experience. For example, basic training frequently takes 25-50% of a CSM's time. Moving to an on-demand onboarding and training model has multiple benefits:

  • Customers can get started right away, 24/7 from anywhere in the world, without scheduling
  • There is a single source of content for product updates and changes
  • Customers can reonboard and retrain as needed
  • Data is collected about customer engagement and understanding
  • CSMs save time to focus on higher value activities
  • Internal resources can leverage the product training

Look for the biggest areas where your CSMs spend time, and brainstorm about ways that these can be automated. You'll likely see a multi-pronged strategy covering new onboarding approaches, new product changes, as well as CSM workflow improvements.

Conclusion

Scaling CSM productivity by 2-3x with flat headcount and improved CSAT scores is very possible. For a real-life example, read about how Procore achieved these results while cutting onboarding time by half in this case study. Determine your key metrics, analyze CSM activities, and identify ways you can reduce, transfer, or replace CSM activities with scalable alternatives.

To learn more, download our eBook, How to Scale Customer Onboarding!

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Topics: Training, Customer Success

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