Three Stages of Customer Success Evolution

A start-up SaaS company continues to evolve over time as it grows. As such, it’s important to recognize the stage of maturation that your company is in and, based on that, know what’s needed from Customer Success in each stage of your company’s evolution.

Know these Customer Success focus areas so that you’re ready to fuel your company’s continued growth by transitioning and scaling the Customer Success team to best support the next stage of evolution at the right time.

Stage 1 – Secure Reference-Ready Customers

ARR: Infancy – $2MM

As your start-up company strives to acquire its initial set of customers and, from that cohort, secure a select set of customer references, it’s smart to establish a Customer Success function – often, a single Customer Success Manager – to shepherd these visionary and early adopter customers to success with your solution.

The Stage 1 CSM is a curious chronicler of customer feedback who proactively engages with customers in order to relentlessly capture, understand, interpret and consolidate insights on the use of and benefits received from solutions that, at this stage, are very much still evolving.

The Stage 1 CSM is comfortable – even enjoys – operating in an environment that changes rapidly. For them, ambiguity is OK.

The Stage 1 CSM often adopts a one-off approach to managing their initial book of customers. Building out processes is less important than engaging with customers. That said…

…The Stage 1 CSM establishes a core set of initial CS processes and workflows to bring some basic efficiencies while also being flexible enough to morph in response to a rapidly changing business.

All too common mistakes for your Customer Success organization to avoid during Stage 1:

  • Avoid customer feedback and convince yourself that, when it comes to customers, ‘no news is good news’
  • Capture customer feedback while not setting (or poorly setting) expectations about how that information will be used and the process used to determine whether or not it will be acted up

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Stage 2 – Scale to Support Rapid Customer Growth

ARR: $2MM – $10MM

With an initial set of customers – some reference-ready – in hand and product-market fit beginning to come into focus, your start-up company next refines and ramps its Sales and Marketing processes. As a result, new customers arrive at an accelerated pace, and the Stage 1 approach to Customer Success is quickly obsoleted.

In Stage 2, the Customer Success organization requires a framework – including new (and more) processes and workflows – that scales the group in order to maximize the value received by customers…which leads to more predictable renewals and clearer paths to identifying cross-sell and upsell opportunities (the ‘expand’ of a land and expand strategy).

The Stage 2 Customer Success framework allows your company to maximize revenue with your customers while it also provides the Customer Success organization the processes to allow all team members to thrive in their roles. Common framework benefits include faster employee onboarding, an ability for each CSM to manage a larger book of business, a prescriptive onboarding process that serves as a bedrock for a strong customer journey, and a CS team that is consultative in how it works with and maximizes value on behalf of its customers.

All too common mistakes for your Customer Success organization to avoid during Stage 2:

  • Customer Success roles are ill-defined; a CSM continues to operate as a jack-of-all-trades, resulting in a lack of accountability.
  • The company fails to clearly define what success looks like, leading to less predictable customer renewals and missed revenue expansion opportunities.
  • Customers are not able to articulate the value they receive from the solution or understand the solution’s ROI.
  • Customer Success hiring is prioritized at the expense of the development and adoption of a Customer Success framework.

Stage 3 – Mature and Fine-Tune to Achieve Predictability and Cost-Effectiveness

ARR: $10MM+

In Stage 3, a company is in growth mode, and Customer Success is a high-functioning revenue partner to the Sales organization.

This is the stage at which it’s important to have a Customer Success leader in place, as that leader focuses on honing the organizational structure (including looking for more opportunities to leverage role specialization) and improving workflows/processes.

All too common mistakes for your Customer Success organization to avoid during Stage 3:

  • The Customer Success leader is slow or reluctant to evolve the customer journey that’s already in place.
  • Customer Success roles and responsibilities are too broadly defined.

A company that evolves its Customer Success organization through these three stages at the right time puts itself in the best position to successfully scale its business from early stage to growth stage.