The Customer Success Economy

25Scaling: How Do I Grow Customer Success without Throwing People at It?

The end of the calendar year for many businesspeople means three things:

1. Holiday fun
2. Closing Q4

and . . .

3. Microsoft Excel!

What we mean is budgeting season! Who's fired up? Anyone?

Thousands of Customer Success leaders around the world enter “fun” discussions with their CFOs. They debate ratios, cost structures, and scaling models. They are asked for the thousandth time, “How can you prove your team is having an impact?” (We've heard a rumor about some CFOs having “amnesia”—forgot where we heard it, though!)

But most notably, CS leaders and CFOs are annually faced with an almost impossible challenge. How do they scale their businesses and continue to get the benefits of CSM without breaking the bank?

Customer Success and the Rule of 40

This problem is particularly acute for companies trying to hit the “Rule of 40.” As context, the Rule of 40 is a financial concept in SaaS that's all about balancing growth and profitability. Simplistically, the Rule of 40 is a calculation of your revenue growth minus your loss as a percentage of revenue, the idea being that number should be greater than 40.

So if you grow 100%, you can lose 60% of revenue (100 – 60 = 40). If you grow 40%, you should be breakeven. If you grow 20%, you should make 20% margin on your business. As companies mature and their growth goes ...