When Is the Right Time To Purchase a CSM Software Tool?

Over the past 2 weeks, I have spoken with over 20 Customer Success Management leaders struggling with the same question, “When is the right time to purchase a CSM Software Tool?”

To be clear, it is a tough question to answer.  Implement a CSM tool too early and the return on investment could takes years to turn positive.  Wait too long, and the amount of churn that is lost will take years to get back. 

If only it were that simple. There are other critical questions that are top of mind for customer success leaders:

·         Does the team have the time to adequately evaluate the tools on the market to choose the best one?

·         How disruptive will the implementation of a new tool be to my team? Or (gasp) my clients? 

·         Do I even have the bench strength and internal knowledge to implement a tool?

·         Can I afford what I need or will I need to settle?

·         How do I justify the price of a new CSM software tool?

·         And…. Worst of all… what happens if the needed results are not gained after I implement a CSM software tool?

Fear not…. I’m here to help.

Bad Reasons for Purchasing a CSM Software Tool

Often ruling out the bad reasons for purchasing a CSM software tool is the best place to start.  Narrowing down the why by ruling out the why not can help narrow the focus.  So here are some reasons I hear ALL THE TIME that are bad reasons for considering a CSM software tool.

1.      For my team to collaborate more and better.

2.      To better engage my customers.

3.      To provide more insight.

4.      To focus attention on higher priority items.

I could continue but the fact is that these are BAD reasons for purchasing a CSM Software tool.  These are all important aspects and should be expected byproducts of implementing a CSM Software tool correctly.  However, they are almost impossible to measure and can’t be directly translated to the financials.  Furthermore, a year from now, how are you going to measure the success of the tool?  I guess you can survey your clients and see if they are better engaged.  But does that translate to more revenue or lower cost?  It’s difficult to tell.

Good Reasons for Purchasing a CSM Software Tool

Though this is overly simplistic, you would be amazed at how many people don’t think of the decision criteria for purchasing a new CSM software tool with even this level of discipline.  You can get as complicated as you want here and analysis-paralysis can rule the day.  Thus, I like to take a simple approach to start.

There are two reasons to invest in a CSM software tool: 

1.      To reduce churn

2.      To hire less in the future

Both are hard dollar impacts.  One impacts the top line, the other impacts the bottom line.  We like to over-complicate things but these are really the only two reasons why it would make sense to consider investing in a CSM software tool. Visually, the decision matrix is as follows:

growth_churn visual.jpg

Let’s start with the obvious.  If your SaaS company has low churn and low growth than it can be assumed that your budget allocations should be almost entirely diverted to sales and marketing. Step one is to focus on driving the growth rate up and fast.  If this is your company, then you will do more for the overall valuation of the company by focusing on growth than anything else.  You should therefore kick the can on a customer success management tool… at least for now.

Likewise, in a high growth rate / high churn environment, the decision is equally obvious.  You need to invest in a tool that gets the churn under control and fast.  Every day delayed is a lost opportunity with compounding effects on your renewals.  Due to the growth rate, one can assume that your CSMs are drinking from the fire hose.  If you are not paying more than you should for customer success now, you will be in the future.  The time to start looking for a CSM tool was yesterday.

The “maybe’s” are not as clear cut.  In either case of high growth/low churn or low growth / high churn you have a problem that needs to be rectified and just like most other business problems you have three primary solutions:

1.      People

2.      Processes

3.      Tools

The allocation of dollars against these three solution sets depends on a lot of factors that are unique to different environments.  The following provides a framework to evaluating those solutions sets.

High Growth / Low Churn

The first thing you must do is understand why the churn is low. The answer is rarely singular in nature.  Peeling the onion as far back as you can to truly understand is critical as the combination of variables are resulting in a low churn rate – there’s rarely only one root cause.

The second thing that is critical to understand is the size and turnover of the customer facing team.  A successful team with high turnover is not really a successful team and is costing your organization more than it should.  High turnover is typical in a role that requires more time on research and reporting than actually providing value.   

Once both of the two variables described above are understood, you can compare that to anticipated future growth and extrapolate out the future need of resource allocation to process changes or a CSM software tool.

Low Growth / High Churn

The same variables as described above are necessary to understand in the low growth / high churn scenario.  However, your organization is going to need to allocate resources to both problems immediately as this scenario is the fastest road to extinction.  I am often asked by companies in this scenario which they should focus on first.  My answer is always the same “If I give you $1,000 but rip the dollars in half, do you really have $1,000 or are you still broke?” Indeed, you are broke.  In other words, you need to deal with both problems now because you are about to go broke.

That being said, you have to understand when and why the churn is occurring.  Many organizations have drastically improved their churn percentages by focusing entirely on client on-boarding or getting real in the sales process.    

What Comes First: The CSM Team, Process or CSM Software Tool

But how do I know that I should purchase a CSM software tool as opposed to just fixing my CSM processes or people? A common philosophy when considering to procure a tool for any business function is that the tool should be purchased only after the process is mastered.  In such a scenario, the sole purpose of the tool is to make the team more efficient and therefore effective through that efficiency.  However, this philosophy ignores the significant lift that can occur by adopting the best practices that are inherent in today’s applications and CSM software tools are no different.  The CSM leader should consider the cost effectiveness of resolving a people and process problem by procuring a CSM tool and adopting the best practices that have been born out of others utilization of that tool.


Purchasing a CSM software tool doesn’t have to be an anxiety filled decision.  We help clients every day decide if now is the right time to invest in a software tool or if there are more effective ways to deploy finite capital that will have a greater impact on the goals of the company.  If you do decide to purchase a CSM software tool, please be sure to set goals from the onset that will be realized on the company financials.  Failure to do that will create uncertainty within the organization in the future if whether the benefits outweighed the costs. 


Brian Norusis