Which companies need Customer Success?

Short answer

Companies where the customer pays continuously, has a real option to leave, and has to make an effort to get value. The larger the share of revenue that comes from existing customers, and the longer it takes to earn back what it cost to acquire them, the more important it becomes. But it does not always mean a separate department – sometimes the right answer is better onboarding or a better product.

The question often arises in a particular situation: churn is rising, sales is spending too much time on existing customers, or someone on the leadership team has heard that “every SaaS company has Customer Success”. It is then tempting to hire a Customer Success Manager and hope the problem solves itself.

That is rarely the best start. A better starting point is to understand why the discipline exists, and whether the same conditions apply to your own company. The background is described in Why Customer Success became a discipline of its own.

Discipline or department?#

It is useful to distinguish between two questions:

Do we need Customer Success as a discipline? That is: does someone need to own the question of whether customers get value, stay and grow?
Do we need a Customer Success department? That is: should that work sit in a separate team with its own roles?

The answer to the first is yes for far more companies than the answer to the second. Many small companies cover the discipline well with a founder who follows customers closely, good onboarding and a Customer Support team that spots patterns. Others have a large department with the title, but without anyone really owning the customer's outcome.

Five characteristics#

Customer Success becomes more important the more of these characteristics apply:

Characteristic	Why it matters	Question to ask
Recurring revenue	Revenue depends on the customer staying	Does revenue come from subscriptions, usage or transactions over time?
The customer can leave	Low switching costs make churn a real risk	How easy is it to cancel, switch or reduce usage?
Value requires effort	Customers who do not get started do not get value	Does the customer have to change, set up or learn something?
Long time before CAC is earned back	Early churn means a loss	How many months does it take before the customer is profitable?
Growth within existing customers	The customer base can become a source of growth	Can customers buy more, use more or add users?

Editorial judgement. The characteristics reinforce each other: recurring revenue and low switching costs matter most.

Two more characteristics increase the need for human follow-up: complex customer relationships involving many people and departments, and high value per customer, which makes it economically possible to give each customer personal attention. Their absence does not mean Customer Success is unimportant, but that it should be done at scale, with digital customer journeys and behavioural signals. See Customer Success in the SMB market.

A simple decision path#

Do we need Customer Success – and in what form?

Recurring revenue
Does the customer pay over time – subscription, usage or transactions?
If no
Lower need
Prioritise sales, delivery and aftermarket. The customer relationship may still have value through repeat purchases.
A real option to leave
Can the customer cancel, switch or reduce usage without major costs?
If no
Lower risk in the short term
Renewals, reputation and recommendations still count over time.
Value requires effort
Does the customer have to set up, learn or change something to get value?
If no
Product and self-service first
A small, digital programme may be enough.
Value per customer
Yes: account owners for the most important customers, combined with digital follow-up for the rest.
Is the value per customer high enough for personal follow-up?
If no
Scaled Customer Success
Digital customer journeys, signals and a person when needed.

Simplified model developed for this article. Many companies end up with a combination of the forms.

The decision path does not give a yes or no to a department. It gives an indication of how important the discipline is, and what form it should take.

Business models in practice#

Business model	Typical need	Comment
B2B software with large customers	High, often personal	Complex customer relationships, high value per customer
Software for small and medium-sized customers	High, but scaled	Many customers, low value per customer, higher churn
Payment and transaction services	High	The customer can stop using the service without cancelling – churn happens silently
Consumer subscriptions	Medium to high	Often organised as loyalty, customer service or customer experience
Consulting and projects	Medium	Often covered by account managers and partners
One-off product sales	Lower	Aftermarket and service matter more than ongoing follow-up

Editorial assessment of typical patterns, not results from a survey. The variation within each model is large.

The question is not whether you should have a Customer Success department, but who owns the customer's outcome.

When Customer Success is not the answer#

Sometimes the problem that makes management consider Customer Success is really a different problem:

The product does not solve what the customer needs. Then Customer Success will only delay the churn.
Sales is selling to the wrong customers. Customers who never fitted the product cannot be followed up to success.
Onboarding is too difficult. Then it may be more effective to simplify the product than to hire people to help customers through it.
Customer Support is understaffed. Customers who wait a long time for an answer need faster help first and foremost.

In these cases a Customer Success function can hide the problem instead of solving it. That does not mean the discipline is irrelevant, but that the effort should be aimed at the cause first.

Signs that it is time#

These signals suggest the company needs clearer responsibility for existing customers:

Churn is rising, and nobody can explain why.
NRR is below 100%, which means the customer base shrinks if new sales stop.
It takes a long time for new customers to get started, and many stall along the way.
Salespeople spend a lot of time on existing customers instead of new ones.
Customer Support gets many questions about how customers can get value, not just about errors.
Nobody can say clearly who owns the renewal.

How GRR and NRR are calculated is explained in How do you measure the value of Customer Success?

Where to start#

Four first steps

Measure the baseline
Calculate GRR, NRR and churn per segment for the last twelve months.
Define first value
What must the customer have done to benefit from the product – and how long does it take?
Assign the responsibility
Decide who owns the customer's outcome and the renewal. One person may be enough at first.
Close the biggest gap
Start with one programme where churn or friction is greatest.

A separate department can come later, once the work has shown what works and how much capacity is needed. Which roles are relevant is described in Roles in Customer Success.