magic ratio: how many csms per customer

HOW MANY CSMS PER CUSTOMERTHE MAGIC RATIO:

Science tells us we can have

150 friends

According to British anthropologist Robin Dunbar, the ceiling on human

capacity for stable social relationships hovers between 100 for the more introverted and 250 for the more outgoing, though 150 is the most

commonly quoted. (It’s called Dunbar’s number).

If you just thought about how many Facebook friends you have, note that

Dunbar’s number applies only to people you’d consider inviting to a dinner party.

So probably not that guy you’re pretty sure you knew in high school.

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With this in mind, here’s a quick mental exercise: decide how many family members you’d

put in that group, and then how many friends.

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Add work friends to that number -- the ones you gossip with over drinks.

Go ahead and add your dog, too. She’s cooler than most of your friends

anyway.

+

Add clients or your equivalent; journalists have

sources, for instance.

+

Now imagine you’re a customer success rep

who manages

200 accounts.

Technology allows us to handle more relationships; that’s why some of us can have

thousands of Facebook friends without feeling overwhelmed. The difference is in how

intensely you manage them.

+1842

If a rep is expected to manage each of those 200 accounts closely, she has far exceeded

her relationship capacity, because those are high touch customers. Alternatively, if 50 of

those accounts were high touch, and 150 were low touch (those Facebook friends you

keep but don't talk to much), she'd be in good shape.

Of these two sorts of customers — low touch and high touch — we’re going to

focus on the latter (those that would show up in Dunbar's number).

Assuming your reps like their families, have friends, and speak to their

colleagues, they probably shouldn’t be closely managing more than 50 (or so)

accounts on top of that.

Note: This isn't one fits all, but it's a good way to deduce which ratio works

for your business.

125

50

33

51242?17

Now we have a working ratio ceiling; no more than 1 rep to 50 customers.

The second thing you need to keep in mind is that ratios aren’t static.

1:50

5:30

Most customers experience a learning curve at the start of using any product. In

SaaS, we often call this onboarding, or the period after the customer has converted

when she's just starting to use the product. Nailing this transition is critical.

Think of it like a luxury hotel stay. If the resort staff nails your arrival from the

most basic standards — a clean room — to the bells and whistles (a lei around your

neck, a bottle of champagne on ice), they're more likely to earn your trust.

This line of thinking comes courtesy of Ed Powers,

principal consultant at Service Excellence Partners, who

has worked in both luxury travel and customer success.

The same goes for your company. Nail the arrival. That means front loading your ratio — more customer success reps to customers in the first month of the customer relationship,

or however long onboarding takes for you.

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Onboarding is usually a high-touch relationship, which means reps managing it will need to oversee fewer accounts at once.

Over time, that relationship becomes less intense.

So for each customer, your ratio will change over time, from more

reps/customer to fewer reps/customer. That also means each customer

becomes less expensive.

And that’s good for business.

Most companies need to spend 12 cents on customer success to protect every

$1.07 in ARR, according to Pacific Crest Securities.

So let's stress test the 50:1 ratio for a company whose average account value is

$25,000.

50 x $25,000 = $1.25 million

$1.25 million x .12 = $150,000

That's a conceivable number for the fully loaded cost of a customer success manager.

So use Dunbar's number as a conceptual bar to figure out a ratio that's good for you. And remember

to nail the arrival.

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