When to Hire Your Next CSM

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Since we’re in budgeting season right now I thought it would be a good time to write about how to plan out your 2019 hires. You’ll be much more likely to get headcount approved if you have solid logic and a great plan behind your request. Before you get started on this step-by-step guide, you’ll need 3 items:

Customer/CSM Ratio – First, you need to have a customer/CSM ratio for each of your customer segments. If you haven’t done this yet, here’s an article I wrote a few months ago that describes how you can arrive at the right ratio for your company, team and segment. There is no one-size-fits-all ratio, so you’ve got to do this work yourself.

Sales Plan – Next, you need to know how many customers to expect month by month over the next year. Generally, your sales leader will either have this planned out in terms of number of customers and dollars they represent (ideal) or just in terms of dollars per month (less ideal). If it’s the later, you can still arrive at the number of customers expected by dividing the total by the average deal size.

Churn Rate – Lastly, you need to know how many customers you’ll be losing. Use your average monthly churn rate to start with, and you can apply seasonality if your churn rate changes over the course of the year, or reduce the churn rate over the year if you have active churn reduction initiatives in place. Once you have these pieces in place you can start to build your budget. Here are the basic steps:

Step 1 – Set up your plan using a spreadsheet. Across the top, list each month in a column. Down the left side list Starting Customers, New Customers, Churned Customers, Total Customers and # CSMs. Also create a section for your Customer/CSM Ratio and Churn Rate. Here’s what it should look like to start:


Step 2 – Add your Customers/CSM Ratio and Churn Rate into the spaces you’ve created for them.

Step 3 – Add the number of customers you’ll be starting with in January. You’ll be making an educated guess, but you can fill in actual number once the end of the year is in sight.

Step 4 – Add in the number of new customers your sales leader is estimating your sales team will be closing each month. After steps 2-4, here’s what your spreadsheet should look like:


Step 5 – Use your Churn Rate to calculate the number of customers who you expect to churn in January (Starting Customers x Churn Rate). Then calculate the Total Customers you’ll be left with at the end of the month (Starting Customers + New Customers – Churned Customers).

Step 6 – Carry the January Total Customers number up to the February Starting Customers field. Then repeat step 5 for February. Keep going until you’ve filled out all of the months of the year. Once you’ve completed steps 5 and 6, your spreadsheet should look like this:


Step 7 – Calculate the number of CSMs you’ll need each month by dividing the Total Customers by the Customers/CSM Ratio. Once you’ve finished this calculation, your spreadsheet should look like this:


As you can see, according to the math you should add a CSM in March, May and July. Seems pretty simple, but I want to note a few things:

  • If you have segmented your customer base, you’ll have a different Customers/CSM Ratio and Churn Rate for each segment, and you’ll need to perform this calculation separately for each segment.

  • Sometimes, your sales segments and your CS segments are different. If that’s the case for your company, work with your sales leader to come up with a New Customers number that makes sense for your CS segments.

  • This plan shows when you need someone, but it takes time to hire and train a new CSM. If you need someone in March, for example, you should probably be recruiting now. Work with your HR department on a timeline.

  • This is based on averages, estimates and plans. As you go throughout the year you’ll replace the planned numbers with actual numbers. That might slow or accelerate your hiring needs, so review the actuals on a monthly basis and adjust accordingly.

  • If you don’t have money to hire as quickly as your plan says you should, you need to revisit your Customers/CSM ratio. Look for ways to increase this ratio by scaling back expectations or increasing automation.

Having a math-based plan for hiring CSMs will give you credibility with your finance team and increase the likelihood of your headcount being approved. Have fun playing with this calculation, and good luck with budget season!

The Success League is a customer success consulting firm that offers training and coaching for leaders. If you need help with challenges like planning a team structure, building a compensation model, or hiring the right CSMs, check out our coaching program at TheSuccessLeague.io

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Kristen Hayer - Kristen believes that customer success is the key to driving revenue, client retention and exceptional customer experiences. Her areas of expertise include developing success goals and metrics, designing the optimal customer journey, selecting technology, training teams, and building playbooks. Prior to founding The Success League, Kristen built and led several award-winning customer success teams. Over the past 20 years she has been a success, sales, and marketing executive, primarily working with growth-stage tech companies. Kristen has her BA from Seattle Pacific University and her MBA from the University of Washington.