Why the Golden Ratio Matters

A savvy SaaS company recognizes the value of Customer Success. CS prioritizes the quality of the customer experience over simply acquiring masses of new buyers and herding them into conversion funnels. It’s not by accident that businesses that invest in customer-centric strategies consistently show impressive net retention rates and 60% higher ROI than their competitors.

In short, making Customer Success a primary pillar of your business operations is a brilliant move.

As a company ventures into establishing an optimal CS strategy, it’s essential to note what other best-in-class businesses are doing. One important benchmark to follow is the ratio of paying customers to Customer Success Managers. If the number is too high, you could break this crucial member of your team. If it’s too low, you risk losing customers.

Finding the “golden mean” between customers assigned to individual CS managers will allow a business to attain optimal results that increase customer satisfaction while also capturing more profits. This article explores how to determine the sweet spot for customers assigned to Customer Success Managers and how to apply this ratio to your SaaS company’s existing Customer Success model.

How to Determine the Best CSM to Customer Ratio‍

To start, let’s look at some industry benchmarks. We recently surveyed B2B SaaS companies to gain insight into their current CSM to customer ratios. You will defer to multiple factors that are unique to your business when determining your own golden ratio; the benchmark data from our survey should be viewed as informative rather than a pure indicator of what your ratio should be.

Survey Question: What is your current ratio of CSM to total paying customers?

33% replied that 1 CMS to 10-25 paying customers was their current ratio. This also happened to be the most popular response. Other responses:

• 29% replied that their ratio was 1CSM to 25-50
• 23% replied that their ratio was 1CSM to less than 10
• 14% replied that their ratio was 1CSM to 51-100
• And only 1% had a ratio of 1CSM to 101-200 customers
  

From the data, it’s clearly more common to have fewer customers per Customer Success Manager. This makes a reasonable starting point.

Before we move to another data point that you can use to inform your ratio, it’s worth pausing to note something that you should avoid.

Avoid Using Revenue as a Primary Factor

A seasoned Customer Success Manager is already schooled in why you should avoid treating customers purely as numbers on an account balance sheet. However, if less customer-centric leaders from your company will have any input into crafting your golden ratio, please steer them away from using revenue as a primary factor. 

While appropriate for a variety of other strategy-forming activities, using revenue as the main factor can be a mistake because it doesn’t take into consideration any qualitative data like customer satisfaction, customer’s business goals, or other “soft” points that relate to their unique experiences.

Segment Your Customers by Type

A better method is to segment your customers by type and experience and determine what logical level of Customer Success coverage (high touch or low touch) each segment needs.

The best Strategy for Customer Success is to develop protocols from the customer’s viewpoint, not just your company’s. Using this approach, you will see which segments require a higher level of service and a dedicated Customer Success Manager.

Optimizing Your CSM Ratio for 1-to-Many and 1-to-1 Customer Success

Once you’ve determined your ideal ratio, you’ll want to optimize your Customer success model to match. Below we will cover two CS strategies and provide tips for helping your Customer Success Manager succeed with them.

1-To-Many Strategy

In a 1-to-many Customer Success model, one CSM is responsible for many customers. CS activities in this strategy should be designed to optimize a manager’s effectiveness at scale. Best practices include:

• Automate communications as much as possible and save one-on-one customer touches for high-level interactions.
  
• Ensure content pushed to customers is highly relevant by segmenting customers by type and experience.
  
• Use various types of media in 1-to-many communications. This almost always includes email but can also encompass chatbots, community forums, and customer-accessible knowledge bases.
  
• Personalize as much as possible. This can be as simple as using the customer’s name or sending communications at certain milestones. The goal is to make 1-to-many communications feel like 1-to-1 for your customers.

1-to-1 Strategy

In a 1-1 CS model, managers are assigned to a small handful of customers. 1-to-1 interactions are more involved, and therefore, this strategy is used selectively. Customers in this model commonly pay for expensive or complex products or services that require a lengthier customer journey. The following tips will help a CSM get the best outcome from this arrangement.

• Perhaps the most crucial tip for 1-to-1 Customer Success is to make sure that a manager has the support needed to provide high-touch care. This includes providing them with the right tools for communication and data analysis.
  
• Present the Customer Success Manager as a trusted advisor and partner to the customer. The CSM is there to provide guidance and to personally lead the buyer on a successful customer journey.
  
• Customer communications need to be proactive and timely. Use customer health scores and other analytical data to track customers’ success with products. If it looks like they may need help, the CSM should reach out unprompted to assist.
• Schedule regular check-ins with customers to ensure they are satisfied and meeting their personal business goals.

Customer Success Managers are the keystone of your SaaS company’s CS strategy. For them to be most effective, you should establish a golden ratio of how many customers they are assigned to. Once determined, make sure to provide them with the support they need to shine in their work.

Vitally works with Customer Success professionals in a range of industries. Request a free demo and see how we can work with you to enable your Customer Success team to deliver world-class customer experiences at scale.