Hiring & Talent

When to make the first client success hire Is there a simple revenue mark you need to hit to justify your first client success manager? Not really. Most large SaaS companies add one client success manager for about every $2 million in annual recurring revenue, but you can’t wait until you reach $2 million to make a client success hire. As Jason Lemkin wrote, “hire your first CSM as early as you can afford to, as soon as you have even 1 large customer, or even a handful of medium-sized customers.” Lemkin believes once SaaS companies gain initial traction they can plan to spend anticipate about 10% of existing revenue base on the client success efforts. “At $2m in ARR, budget $200k in headcount for the CSM positions + support. At $4m, $400k, and so on,” Lemkin wrote. “You may be able to pare this back a bit later, but probably not too much.” Using that benchmark is an easy way to keep your company from putting too much pressure on your client success team and keeping you accountable to growing the team. It’s also a simple way to justify your hiring plan. As a SaaS company, so much of your success will not only rely on your ability to get clients to renew, but also upgrade and provide additional revenue to the deal. A good client success team could be responsible for handling as much as 75% of revenue. Don’t wait too long to make that first hire or risk losing quite a bit of that. What is a customer success manager? A client success manager centralizes communication efforts. In the early days, everyone from the head of IT or CEO might field questions, which sets up a potentially confusing system for solving client problems. Once a client success manager is in place, not only does it organize the customer service process but it also provides clients a regular contact. That adds a personal touch to the feedback loop and it will make your customers more comfortable using the product and reaching out when they have issues. Why hiring a customer success manager is important Especially in the early days—when you’re scrapping for revenue and closing last minute deals to hit quarterly goals—it’s easy for SaaS startups to overlook client success. Making a hire on the client success side doesn’t provide the immediate returns like a sales or marketing addition. It won’t improve your product like an engineering addition. But a strong client success strategy offers enormous value and is every bit as important as sales, marketing and product. It’s a long-term investment in growth and also an indicator your company will grow faster than your competitors and do it with less capital. Delight Your Customers One of the biggest benefits of making your first customer success hire is that they are someone that will be able to delight and expand your existing customer base. Having someone solely dedicated to delighting your customers will help ensure any potential problems, cancellations, or churn are picked up before it is a problem. Grow Your Business Efficiently In order to best grow your business it is vital that your existing customers stick around. No matter how fast your sales team is bringing on new customers if they are cancelling or churning shortly after. A customer success manager will be essential in growing your business as your customer acquisition continues to expand. Free Up Time of Other Team Members Generally in the early days of a business everyone kind of owns customer success but no one truly owns it. By having someone dedicated to owning customer success you’ll allow the rest of your team to focus on their day-to-day to grow the business in their respective areas. How much does a customer success manager make According to PayScale the average customer success manager makes around $68,000/year with the range being anywhere from $49,000 to $120,000. Generally speaking a customer success manager’s salary is largely their base pay with the occasional incentive or bonus plan. However, the location of the employee can also make an impact on their compensation. For example, a manager in New York City will make more than one in Denver. Do customer success managers get commission? According to data from PayScale and BuiltIn, customer success managers generally do receive a small form of commission. PayScale shows that the range floats from $2k to $31k whereas the average from BuiltIn floats around $10k. Generally, commission is not widely expected for the customer success role but including incentives and commissions can be a valuable tool to hire top talent. What responsibilities does a customer success manager have As the old adage goes, “it is cheaper to keep an existing customer than to find a new one.” Customer success managers are responsible for engaging, upselling, and building relationships with current customers to make sure they are getting the most out of your product or service. A few of their key responsibilities: Build Relationships Arguably the biggest responsibility of a customer success manager is to build and maintain relationships with existing customers. They should have a good understanding of the customer base and should not hesitate to reach out when needed. Educating the Customers A customer success manager has the ability to educate your customers and get them deeply engaged with the product. Upselling & Renewing Another key role of a customer success manager is the ability to upsell and call on existing customers to upgrade their plan. This is generally done at the end of a period (month, quarter, year, etc.) so strong task management and a follow up cadence is a good trait to mave. If they’ve properly educated a customer an upsell should be an easier accomplishment. Onboarding Depending on how the business is structured a customer success manager might own customer onboarding as well. This goes hand-in-hand with educating the customer but this is essential in getting them setup and ready to dive into the product or service. Understanding Customer Needs A customer success manager also has the opportunity to impact the product roadmap and help with decision making on where to invest the time of the team. As they are the voice of the customer they should advocate when they notice a trend or gap in the product or service. How many accounts should a customer success manager have? There are many varying takes on what a customer success manager’s workload should look like. Some argue it should be a set number of accounts while others say it should be counted by a revenue number. Managing Accounts Having a set number of accounts can be tough to translate across different businesses. For example, if the maintenance and contract value are higher they will likely have less time to manage accounts. As the team at ClientSuccess put it, “I prefer to keep the number of accounts in the 25-35 range, but many CSMs can manage up to 50 accounts and still build meaningful relationships, pick up the phone, respond to emails, and eliminate customer challenges in a reasonable amount of time. Any more than 50, though, and a CSM’s ability to proactively engage starts to diminish and the CSM will need to use additional technology and automation to improve his ability to manage the larger number of customers.” Managing Revenue On the flipside a more relatable metric might be managing revenue. While this certainly holds true for SaaS businesses it can also make sense for other businesses. When speaking to SaaS companies the contract and customer type impacts the $ of revenue a customer success manager can handle but generally speaking it is anywhere from $2-$5M. As Tomasz Tunguz puts it, “The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment.” Tomasz Tunguz charted the data by segment in his chart below as well: What skills should a customer success manager have? There is no one size fits all when it comes to a customer success manager but there are a few traits that you can keep an eye out for: Empathetic Generally speaking a customer success manager needs to be able to step into the shoes of the customers and understand how they are feeling. Not everything goes smoothly so they need to be able to help during down moments and show empathy to the customer base. Transparent Being able to have an open and transparent relationship with customers will only strengthen the trust and improve likelihood of an upsell or renewal in the future. If the core responsibility of a customer success manager is relationship building it all starts with building trust. Proactive Customer success managers need to be incredibly proactive. They need to sense problems before they happen and not be afraid to reach out before it becomes a real problem. Proactive outreach and communication will keep they ahead of the curve and will help strengthen their relationship. Customer success manager vs account manager As a SaaS company, every renewal is a referendum on client success. Each time clients get a bill they have to decide if your software is worth the money. So your client success manager cannot adopt the onboard and release approach, where an account manager typically spends 90 days getting a customer comfortable and then fade away. Instead, your client success manager needs to commit to a multi-year process that involves getting your customers acclimated to your company, developing a rapport and quickly tending to any issues they encounter. That’s what helps keep the renewals coming and increase your customer’s lifetime value. And your customers will be doing you a service as well. Through solving client’s problems and answering their questions, you’ll be acquiring essential product feedback that will help inform the next wave of iterative improvements. To learn more about hiring and building culture in the early days of a startup, check out our guide to startup company culture here.

The Call for Sales Development Reps Sales development reps (SDR) are an extraordinary tool to help you efficiently scale your startup sales staff. Reallocating some of the early work to SDRs can help experienced account executives focus on closing deals. But despite the value of specialization, a recent survey by Bridge Group revealed that just over half (51%) the companies asked segment inbound qualification and outbound prospecting into separate roles. What are they missing? The Bridge Group listed out four key advantages to specializations: A more focused, accountable sales force A well-aligned process to match prospect behavior Clearly defined career paths in your organization Role-specific innovations Of course, not every company will have enough employees to segment its sales staff. In the article, David Skok provided two provided criteria to know when you’re ready to hire a SDR: There is enough lead flow to make qualifying potential customer a full-time job for SDRs There is enough budget to hire two SDRs–hiring only one SDR might give you inaccurate view of how effective the role can be for your company Related Reading: Breaking Down the Nuances of Annual Contract Value (ACV) When adding SDRs, your return on investment may take an initial dip as the added staff may not be remarkably efficient out of the gate. But even if metrics slide, Conner Burt, Chief Operating Officer at Lesson.ly, said the long-term prospects for SDRs can often be bright for your business. “Your building a bench that you can use to promote SDRs to quota bearing sales people. That’s an intangible benefit.” Since 2010, there’s been a steady rise in the number of SDRs hired, which has resulted in a drop in the level of experience for the position. The average experience now is 1.3 years. The number of companies that hire SDRs with less than one year of sales experience has quadrupled since 2010. So ready to hire? While not all organizations are equal, Tomasz Tunguz does recommend having an average contract value (ACV) over $3,000 to justify building out your sales pipeline. Once you’re ready and looking for SDRs, Hubspot has a list of 19 questions for you to ask candidates. Here are some examples of the kind of questions they recommend: Pretend I’m a potential customer: how would you describe our product? Why do you want to sell this product? What would you ask potential leads to determine if they’re qualified? How would you research a potential customer? What resources would you use? What do you think will be the most common objections you’ll hear from potential clients? Lastly, while we’re on the subject of scaling your sales staff, be sure to check out this post from SalesHacker on the topic for further reading.

Raise capital, update investors and engage your team from a single platform. Try Visible free for 14 days. Quick Navigation What does OKR stand for? Where does the OKR framework come from? Benefits of Using OKRs for Startups Common OKR Challenges Common OKR Mistakes When should you start building OKRs? How to Track OKRs Try OKR Templates with Visible What does OKR stand for? In order to move forward at a startup, leaders need to be able to measure and improve upon all aspects of the business. Staying focused on near-term goals while working towards a larger company vision is a surefire way to keep everyone aligned. To help with this, more teams are turning to OKRs (objectives and key results). According to Christina Wodtke, “OKRs comprise an objective—a clearly defined goal—and 3–5 key results—specific measures used to track the achievement of that goal.” Each objective is supported by initiatives — the steps that will help a team achieve the key results. OKRs are made up of 2 major components: Objectives An objective is a clearly defined goal that you would like to achieve by the end of a period. An objective should tie to both the team’s overarching mission or goal as well as the individual’s personal goals. Key Results Key results are the actionable and quantifiable steps you can take to accomplish an objective. Each key result should be measurable and applicable to the objective. Related Resource: Startup Metrics You Need to Monitor Examples of OKRs for Startups As we’ve mentioned, OKRs are widely used so we have plenty of examples to pull on. The most famous one being Google. Google Google didn’t invent OKRs but they have become synonymous with the goal-setting framework. The team at Google runs OKRs like a well-oiled machine. Rick Klau, previously of Google, breaks down how they used OKRs below: “Though the video goes into more detail, here are a few keys to what makes OKRs work at Google: Objectives are ambitious and should feel somewhat uncomfortable Key Results are measurable; they should be easy to grade with a number (at Google we use a 0–1.0 scale to grade each key result at the end of a quarter) OKRs are public; everyone in the company should be able to see what everyone else is working on (and how they did in the past) The “sweet spot” for an OKR grade is .6 — .7; if someone consistently gets 1.0, their OKRs aren’t ambitious enough. Low grades shouldn’t be punished; see them as data to help refine the next quarter’s OKRs.” Swipely In 2013, Swipely was rapidly scaling and their CEO, Angus Davis, had a feeling their culture and alignment was beginning to suffer. Davis turned to OKRs to improve their productivity, culture, and alignment as they went from 30 to 80 employees. Since then, OKRs have become an integral part of communication and culture at Swipely. In an article with First Round Review, Angus Davis shares the example below “Paul, a member of Swipely’s engineering team Objective: Ship [X] feature to increase engagement. Description: Our [X] will allow merchants to access Swipely anywhere, increasing engagement, value, and differentiation which will reduce churn and differentiate our offering with an exciting new value proposition. Alignment: A company-wide objective is to “Become a ‘must-have’ tool merchants love to use,” which has a key result, “Ship [X] product to increase engagement and drive excitement in the sale.” The individual objective to ship [X] is aligned with this company-wide objective.: Key Results: Deliver alpha version to targeted devices for alpha testing feedback from 10 early customers by [date: mm/dd/yyyy]. Provide screenshots/screencast to support marketing launch of the app by [date: mm/dd/yyyy]. Release beta version by [date: mm/dd/yyyy]. Achieve engagement DAU / MAU metric of [X] with beta audience.”\ We love how the team at Swipely encourages individuals to write out their own objective alignment to those of the entire organization. Where does the OKR framework come from? OKRs are generally believed to be introduced by Peter Drucker, the father of modern management, in the 1950s. Since then they’ve been tweaked, renamed, and made popular by other business leaders. Andrew Grove is regarded as the “Father of OKRs” for introducing OKRs during his time at Intel. However, OKRs took the startup world by storm when introduced at Google. John Doerr of Kleiner Perkins (VC firm that invested in Google) took the idea to Larry Page and the Google team and the rest is history. As Larry Page put it, “OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.” Benefits of Using OKRs for Startups While you may be thinking to yourself, “OKRs are just another acronym,” they have a proven track record and can genuinely help move your business forward. Business Impact Larry Page credits OKRs for fueling growth at Google. As Peter Drucker put it, “If you can’t measure it, you can’t improve it.” By having a system in place, like OKRs, to measure and track your efforts, you will greatly improve your odds of improving all aspects of your business. Communication Impact When implemented correctly, OKRs can be more than a goal-setting framework for a startup. They have the ability to be a communication tool that can help both individuals and the company move forward. As put on “The Fundamentals” blog, “As a communication tool, OKRs bring two key things to an organization: Easily digestible direction such that every member in the organization understands how they contribute to the mission; aka focus Expectations amongst teams and their individual members; aka accountability” Increased Focus Objectives and key results can bring an increased focus to both individual and company-wide goals and missions. For example, if management and leaders have a clear set of OKRs for the organization and individuals across the company set their own OKRs (that tie to the high-level OKRs) everyone will be working towards the same big goal. Having each individual be able to articulate why their objectives will help towards the greater company mission is a great way to make sure that everyone is focused across the company. Common OKR Challenges Implementing a new goal tracking (and communication) framework is naturally a challenge for any startup. Luckily, OKRs have been implemented by large corporations and small startups so the challenges are predictable and well documented. Lack of Cooperation Naturally implementing a new goal-setting framework will come with some pushback as daily workflows change. The team at FirstRound Review offered a deep dive into how Swipely uses OKRs. Their CEO, Angus Davis, is a major proponent of using OKRs. As they put it, “Davis checks in on his immediate reports every week, and encourages his leadership to do the same. They believe people should be held publicly accountable for failing to regularly update their OKRs, and Davis even shapes his management meetings around them.” Having leadership that believes in OKRs is vital to success, which brings us to our next point… Wrong Leadership Having the leadership in place to set and monitor OKRs is vital. If management and leadership are passively tracking their objectives chances are the rest of the team will follow suit. Leadership can help cement the importance of OKRs by fitting them into daily workflow and conversation or using them as the talking points of team meetings. Misaligned Values At the end of the day, alignment is a major benefit of OKRs. Being able to document and articulate how individual OKRs are aligned with company OKRs is important to implementation and success. In part of having the right leadership in place, they need to be able to set the values and mission of the company so individuals can easily explain (and see) how their objectives are helping the company move forward as a whole. Common OKR Mistakes Building OKRs in a Silo One of the main benefits of OKRs is to eliminate silos in the workplace. In theory, everyone should be tied to the company’s values and missions. However, implementing OKRs incorrectly can still lead to workplace silos. If leaders and managers are only using their input and analysis to build OKRs, individuals will likely suffer and feel isolated. When building OKRs, make sure to incorporate input from everyone in the organization and allow them to set and tweak their own objectives. Key Results are Too Aggressive There is a fine line between making a key result too aggressive and a reasonable stretch goal. As Angus Davis, CEO of Swipely puts it, ““They have to be a stretch.” Most people wouldn’t consider 70% to be a good grade, but for OKRs that’s just about perfect, Davis says. You want your objectives to be ambitious enough to push you beyond your limits. When everyone does this, it forces the tough conversations about what’s truly needed to beat expectations.” However, you do want to make sure that 70% or more is achievable. If individuals are constantly hovering around 50% or less of their key results, it might be time to re-evaluate and set new key results. Inaccurate Tracking Tracking and measuring are vital for implementing OKRs. If you do not have a system in place to track, measure, and improve your existing OKRs, they will not work. On top of having a system in place, you also need to have a source of truth for where the actual data is coming from. For example, if a key result is measuring new leads, you’ll want to make sure it is coming from the correct source. We share best practices below for tracking your OKRs. When should you start building OKRs? Different companies operate their OKR setting and reporting differently. Generally, most companies use a quarterly basis but there are certainly examples of monthly or annual OKR cadences as well. Ultimately it depends on the needs of your business. If it is fast changing and you are rapidly tweaking and changing things, a monthly or quarterly cadence might work best. If things are solidified and you absolutely know what you need to focus on, a longer cadence might work best. How to Track OKRs Being able to measure and track your OKRs is vital to success. Without a system in place to track OKRs, you will never know how to improve. Track in the Open OKRs have the opportunity to be a communication system (on top of a goal-setting system). When tracked in the open, it will ensure that everyone in the organization is rallied around their common goals and objectives. It can be an easy way to demonstrate how everyone is impacting the business as a whole. As the team at Lumeer put it, “Share them with your employees and co-workers so that they can actively participate in achieving them. Make sure that everybody can see the current status and track the OKR.” Check out our Google Sheet & Update Template to share your OKR progress below: When tracking in the open, make sure to be mindful of the individuals. As OKRs are generally stretch goals, some individuals and teams may miss the mark as they should not be punished. Use this chance as an opportunity to improve goal setting in the future. Related Resource: The Startup Metrics Potential Investors Want to See Check-in Often As we mentioned earlier, the likelihood of successfully implementing OKRs is improved when leaders and managers actively engage with teams about their OKRs. If you miss a weekly goal it becomes difficult to achieve your monthly goal which makes it challenging to make up for your quarterly goal. We encourage leaders to check in with their direct reports on a weekly basis to review OKRs. Ideally, this will trickle down throughout the organization. Reevaluate As we mentioned earlier, OKRs are generally stretch goals. If you miss by a wide margin it is important to reevaluate at the end of the period and see (a) where you missed the mark and (b) how you can improve goal setting for the next period. Try OKR Templates with Visible We’ve built a free Google Sheet template to help track your objectives and key results below: Follow the instructions in the first tab of the sheet to start your OKR journey. From here, easily connect the sheet to Visible to automatically chart your key result progress. Check out an example of a Visible Update used to share OKRs here!