How to Build a Plan to Staff Customer Success Managers

I frequently get asked, “how do I staff Customer Success?” or, “how do you get alignment for additional CS hires?” or some other type of question that shows there isn’t clear understanding of CSM outcomes, and a resource plan to drive these outcomes.

Things to Know Before Building the Plan

Before creating your plan it’s important to remember a few things:

• You need to get buy in from the CSMs themselves. They should feel challenged, but feel like it’s possible.
• Perfect is the enemy of good enough. Your first attempt is a rough estimate at best. If possible, track time so you can iterate and improve on the plan.
• Related to the above, an easy trap is to map based solely on ARR. Yes, revenue is an influence, but it’s about the customer’s experience. You can have a $20k customer with potential to become $6M, so you’ll want to give them a lot of attention. Conversely, you can have a $1M customer without upside that wants to be left alone except for important updates, so wants less attention. As such, prioritize by the customer’s desired experience first by understanding what you think the effort will be (in partnership with sales team), then the customer’s potential revenue, and finally their current revenue. As part of this, if you have a customer that is low ARR, with no growth potential, wanting a high-touch experience, you have a bad fit between expected experience and revenue, so you need to fix for that.
• Once done with your plan, map it against reality and ensure it’s going to pass executive review, especially with sales and finance. If a fully loaded CSM is $130k, and they’re only covering $500k of revenue, your plan won’t get approved as it’s way too expensive. You either need to update the experience, figure out how to automate/fix a lot of that effort, or have a larger conversation around the price point not matching the required cost to make a customer successful.
• Your CFO ultimately will approve your headcount. Make sure your finance partner and CFO deeply understand and agree with your plan so you don’t have the inevitable “new hire justification” conversation for every new hire.
• Your customer mappings for effort/tier can change! A customer can go from low effort/time to high effort/time for a myriad of reasons: a new leader/champion and a change in expanding usage of your solution are a couple of examples.
• Each customer in reality will be slightly above or below your estimates. They should balance out across CSMs to be roughly accurate.
• When thinking about staffing, it becomes really hard for a CSM to have relationships with more than 50 customers. If you have a plan that has a CSM with more than 50 customers, then understand they won’t have a quality relationship that can drive deep understanding of what the customer is trying to do. It will be superficial. This can be okay depending on the circumstance, it depends on your business and the customers’ desired experience!
• You will invariably hear, “Yeah, but how much revenue is a CSM covering?” or, “How much should they cover?” That’s not the right approach to building a model, but when the model is done I do find myself double checking against $2 million in ARR. If my coverage is below that, I need to understand and explain why (I’ve had CSMs acting as project managers that took me a while to extricate from). If it’s above that, great. You should always be looking for ways to scale CSMs further regardless! Just remember, you are designing for the customer experience first, and the revenue per CSM needs to work with it, or you need to re-think how the customer experience should look.
• CSMs can handle different types of accounts. I personally find it ideal to blend them instead of having a CSM with the “best” accounts. This spreads risk around should you lose a CSM and allows for better load balancing on the team.
• Thinking about PTO, and how to handle, can be tough. For the purposes of this plan, I’m assuming that a CSM will let customers know they are on PTO, so the work will not happen when they are gone. If an emergency happens while on PTO, the customer can contact the manager or another CSM (letting the customer know proactively). As such, it’s excluded (other than available hours) from the plan.

Building your CSM Staffing Plan

I typically start with a three tier system that I can bucket customers into: Good, Better, Best. I then list the tasks that a CSM would perform with estimated hours for a CSM to accomplish these tasks. The default tasks I evaluate are:

• Daily Interaction Management: Any daily firefighting/email response work.
• Tactical Review: Review outstanding issues, project updates, new updates.
• Data Analysis and Report Creation: Work spent analyzing customer’s key data, to provide insights and recommendations.
• Operations Review: Roll-up on where you stand month over month. Key metrics in regards to project updates, any critical/blocking issues that need to be escalated and discussed, adoption metrics.
• Proactive Customer Management: Following on LinkedIn or other communities, reading news articles, public filings, industry trends. Knowing what matters to the overall company and tie your business review into this information. This includes working on updating the Customer’s Success Plan.
• Business Review: Review with the champion and the executive sponsor to review key adoption metrics, key accomplishments, noteworthy status updates, get alignment on strategic initiatives and any changes, sharing updates on agreed upon key performance indicators.
• Renewals Management: Time you spend managing the renewals process
• Internal Account Reviews: I ask my CSMs to give a “portfolio” update on their accounts with a deep dive on a couple of their key accounts with partnership from other departmental leaders. This creates better success plan, and gives the rest of the leadership/executive key insights into what is truly happening with key customers (part of a Voice of the Customer initiative).

There is overlap in some of these tasks, so come up with definitions that you clearly understand and believe in. Additionally, this list is not exhaustive as there are likely other tasks that you need to consider for your CSMs.

How many hours should each task take? That is unique to your company, and the experience you want to provide your customers. I recommend getting in a room with one or two key CSMs to get consensus on the tasks and estimated hours.

Once done, your staffing plan should look like something like this:

Finally it’s key to be realistic about actual available hours to work, using the the following equation:

• Total hours in a year: 40*52=2080 hours
• Subtract PTO/Holidays (typically 10%): -208
• Subtract non-billable work such as training, and internal meetings (typically 10%): -208
• Actual available hours: 1664 (80% utilization).

From this, you can understand actual utilization per CSM per account:

Once you have this part complete, you can map your CSM to your accounts and their tiers to get a utilization chart like:

And now you have a predictable, scalable CSM Staffing plan!

Parting Thoughts

Now that your initial plan is complete, some parting thoughts:

• This is your starting point. I recommend reviewing the plan and improving it at least on an annual basis, if not quarterly.
• CSMs need to be driving revenue, but they also need to be reducing their cost. You should have efficiency improvements as part of your CS goals to improve the ARR per CSM every year.
• As part of understanding costs, this model clearly shows how expensive all those customer meetings are! The more you can move to asynchronous communication (self-help, training, etc.) without degrading the customer experience, the better!
• Understand where CSM costs roll up. I recommend putting it under sales instead of COGS, so that you are not part of the operating margin. Your primary purpose for the company is to drive revenue via renewals, upsells, and cross-sells, so if you are doing this, it makes more sense to be under sales.

• You can have more than 3 tiers, but I recommend trying to keep to a minimum.

I have attached a sample plan to help you get started!