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underrated CSMs

8 months ago 5 mins read
Adam Schoenfeld
Adam Schoenfeld

IN FLIGHT & ASKS:

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I'll be joining Kyle Poyar (OpenView, Growth Unhinged), Sandy Mangat (Pocus), and Leah Tharin (Productea with Leah) to analyze the results.

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ARE CSMS UNDERVALUED IN SAAS?

I did something weird when starting Keyplay.

Our first hire was a founding CSM (customer success manager).

Next was founding engineer.

Then sales.

Then marketing.

I won't pretend this was a pure strategic move.

The decision was heavily influenced by our ability to recruit Lauren Hayes at that moment.

I'm also lucky to have a CTO co-founder who could build the MVP product solo.

When deciding to hire a CSM "too early," we envisioned 3 benefits:

1.

We'd *over-serve* our early customers.

If we were going to err in any direction, giving our early customers "extra" service and attention seemed like the best case.

2.

We'd be in a strong position when our first sales hire arrived.

Initial onboarding and CS motions would be tested in very small volumes rather than having to "catch up" to sales.

3.

We'd get another strong source of product direction.

From day 1, Lauren was in the weeds with customers and a heavy user of our product.

She found issues and brought insights that we would have otherwise missed.

This decision created tremendous leverage even beyond our high expectations.

**CSMs in The Early Stage**

Apparently our approach is not too common amongst early stage SaaS startups.

Lenny Rachitsky has been tracking the first 10 hires for an A-list of B2B startups.

Source: Lenny's Newsletter

In his sample, ~4% of the first 10 hires were in Customer Success.

Only Segment and Amplitude chose a CSM as their first hire.

There is a common mentality that you need early employees who can either BUILD or SELL.

In general, I agree with this concept.

But I think there are situations where an early CS hire can be a game changer and worth considering.

**CSMs and SaaS Growth**

The early stage is messy, ambiguous, and unpredictable.

There are a million different ways to build a team.

So how does investment in CSMs happen as companies grow?

Is the current return to rigor influencing this choice?

Let's look at sample of 7,400 VC-based SaaS with job posts in Q3 2023.

About 40% of companies in this sample had any open GTM roles in the last quarter.

Here's the breakdown by major GTM role category:

Across this sample there are ~50% more companies hiring Sales than CSMs.

The number of open roles is even more tilted toward sales.

There were an average of 5.0 sales roles open per company and 2.8 CSM roles per company.

If you layer those together, it's about 2.8 sales hires for every CSM hire.

The breakdown of leadership roles (Director+) follows a similar shape:

On the surface this isn't a surprise.

The BUILD and SELL roles always dominate startup hiring.

But considering the post-ZIRP era, I'm a little surprised by the relative difference.

I would have thought the sales and marketing hiring tightens up and we'd see a little more emphasis on retention-focused roles.

David Spitz at BenchSights had a related analysis recently.

He found that despite all the SaaS layoffs and cutbacks, Sales & Marketing expenses are still growing in public SaaS companies.

Only 15% of public SaaS companies actually cut S&M expenses.

S&M spend as a percentage of new ARR is now 233%, up from 150% eight quarters ago.

We'd like to watch this mix going forward.

**Who's Leaning into Customer Success in Q4?**

A quick filter on StillHiring.today shows over 350 community-sourced companies with customer success roles open right now.

More analysis is needed to find patterns by stage, category, and business model, but you can immediately see many well-recognized SaaS companies rise to the top.

Perhaps there is a correlation between CS and brand?

In general these are companies hiring across a wide range of roles.

CSM hiring appears to be a good indicator of general growth.

Job seekers may find this useful.

**Wrap up**

I'm curious to pull on this thread more.

No doubt the return to rigor will challenge many assumptions about how to build an effective GTM org.

While historically operators have emphasized BUILD and SELL roles, the potential benefits of prioritizing customer success can't be understated.

I've seen this first hand and we have plenty of cases studies for companies that hired customer success at the get-go.

Let's keep watching how this evolves.

*What other research would you like to see about GTM orgs?*

Reply or join the conversation on LinkedIn.

Best,

Adam

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