Day 74 in MIT Sloan Fellows Class 2023, Entrepreneurial Sales 6, Customer Success

Customer success matters because of sales growth

Most of your revenue comes after the initial sale. Initial sale only generates 5-30 % of revenue and the rest, 70-95% comes from renewals and upsells.

Create happy customers

Leads from happy customers

• Free acquisition
• Short sales cycle
• High conversion rate

Leads from unhappy new customer

• very costly
• long time conversion period
• low conversion rate

So, in a nutshell, it's easier and less expensive option.

Churn would be difficult to cover

For example, your churn is 30%.

In the first year, your revenue is $10M, and $3M was gone after one year.

It is easy to recoup from new users. However, in 6th year, your revenue increased on 100M, it would be very difficult to recover 30M revenue with new users.

How does CSM allocate their working time?

Basically they just allocate 20% of working time. If you want increase the time for renewal, you need to set different incentives.
How to form the CSM team?

The current best practice is to hire one CSM per $2M per ARR.

And you need to set three stages(Search for product-market fit, Search for GTM-market fit, and Scale). In each stage, you need to apply different strategy, resources, and focusing points. 

You can find more interesting insight from the link below.

Why You Should Hire for Your Stage

How to measure success?

In terms of incentives, CSMs typically have higher base and less risk in their plans.

There are other metrics.

you determine if a high churn rate is impacting your ability to make up your initial customer acquisition cost.