An overwhelming majority of people—including founders and CS leaders—feel that it’s wrong to ask buyers to pay extra for customer success.

I know this because I have been around in the customer success industry for far too long and I interact with dozens of company founders, CS experts, and customers every week. Most people I talk to are vehemently against the idea of charging customers for customer success.

We at Avoma are totally in the same camp. We currently don’t charge for customer success, but do have strong views on what kind of CS services should be free and what you can charge for.

However, there are plenty of examples—although in the minority—of companies that charge for customer service and their buyers don’t hold them against it. And I bet that lots of companies that aren’t asking any money for customer success today will have no problem making it a paid-for service in the future.

So what gives? Why is paid customer success such a contentious issue for so many companies (and customers) while some companies get away with it without any repercussions?

Should you hand out customer success as a free lunch or price it as a fancy dessert?

Like a lot of other things in business, there is no quick and dry answer to this topic. Look at it from the customers’ point of view and you will understand why most of them will have a knee-jerk reaction to it. Making customer success a paid service is like asking your customers to pay for customer support—not completely unheard of, but it can be very tricky to do so.

But if you get into the weeds of things—especially from the business perspective—you will discover that there’s a time and place for making customer success a paid line item, which is acceptable for most customers too.

In this blog, we’ll unpack some of the nuances around if and when you should charge for customer success.

Customer success is a very nuanced business offering

Whether to charge for customer success depends on a lot of things, like asking yourself these three important questions:

  1. What does customer success mean for your business?
  2. How mature are your product and the CS org within your company?
  3. What segment of the market does your product serve?

Let’s slice and dice these questions from all possible angles so that you can get to the answer that’s right for your business.

What does customer success mean for your business?

It sounds like an awfully simple question, but you would be surprised to know the number of businesses that don’t have a clear answer. And it’s a question you should have a concrete answer to—without or without the dilemma of charging for customer success.

In many small startups, customer success usually borrows many aspects of customer support. The role of customer success managers (CSMs) in such organizations is very mixed: they onboard customers, offer customer support, handle account management, work on renewals, and manage upsells.

In other growing companies, it’s a combination of onboarding, configuration assistance, and periodic strategic conversations such as quarterly business reviews (QBRs) with customers to help them hit their goals. 

Bigger companies might have a very mature CS function that goes beyond the usual onboarding and configuration assistance, where each CSM is specifically assigned to a few accounts whose goals are more than improving retention and maximizing net revenue retention. It is about adding strategic value at a business level as their partner.

So if you were to ask what kind of CS orgs, out of the above three types, were likely to charge for customer success—it’s obviously the third one.

That’s because the customer success they offer is an add-on on top of their main offering. CS in the previous two companies is pretty basic and doesn’t merit additional fees. More on that later. 

You first need to identify what customer success means for your business and the value that they provide to the customers to figure out if customers are willing to pay for customer success as an extra value-added service.

How mature are your product and CS org?

It's critical to gauge the maturity of both—your product and your CS org—to understand if you are ready to ask customers to pay for customer success. Here's why.

If you are just starting up or have secured a couple of rounds of funding for your company, you are likely growing your product rapidly. You might have hired your first few CSMs, and you likely have achieved the product-market fit—but it's not quite there yet. Ideally, you should have lower ratios than the typical industry standards and build a tight-knit product and CS collaboration.

At such a crucial juncture of your company's growth, you might want to overinvest in CS as a business function—not charge for it! That's because the CS team at that stage of any company's growth is getting a lot of good data, which helps you drive useful insights into the product and make it even better.

On the other hand, if your product is mature to the point that customers don't need a lot of handholding in terms of usage, CS becomes an optional variable. You can make a judgment call to make it a paid-for line item, depending on your customer's response to that decision.

Source: Key questions to ask when hiring your first Head of Customer Success

What segment of the market does your product serve?

Just to be clear—we are not referring to a niche, domain, or industry when we say “segment.” By segment, we mean the maturity stage of your customers to which you are catering, such as small and medium businesses (SMBs), scaleups, or enterprises. It’s important to understand which segment of the market—regardless of the industry you serve—buys from you the most to align your CS operations and map them to their requirements.

And while you’re at it, it’s also worth considering what their expectations are from your product. As you can imagine, the expectations of a large-scale enterprise are going to be vastly different from an average SMB.

An up-and-coming startup might be narrowly focused on fighting churn, while a large enterprise might have wide-ranging expectations to build customer loyalty, maximize customer lifetime value, or identify revenue expansion opportunities. Therefore, the resources you need to pour into hitting or exceeding those different levels of expectations will be very different.

When does it make sense to charge for customer success?

A few years ago, we Avoma bought HubSpot’s all-in-one solution after doing extensive homework on the best software to help us streamline our go-to-market (GTM) operations. As a small startup, we obviously needed help to implement some of the workflows that HubSpot offered in its wide range of offers.

To our shock, the HubSpot team wanted us to pay extra for the onboarding help we needed to set up the software for our use cases. We felt betrayed because we had bought HubSpot's annual subscription after discarding all other software options while they were demanding we pay more money instead of offering us a smooth onboarding experience.

As a business institution, we believe that onboarding is an integral part of the customer buying experience. But our beliefs and expectations around paid-for onboarding, customer success, or any other value-added services have changed since then, owing to a few first-hand experiences like that.

As we continue to grow, we understand that for many companies that are serious about helping their customers grow, offering customer success is less like a token org function and more like a consultative function.

I believe that there's 100% value in charging for add-on services like customer success, onboarding, initial setup, and implementation, or any other forms of technical help—if these services add a ton of business value to your customers.

There's a lot of consultative work that businesses have to invest in for that kind of business value. That kind of consultative work is more than just helping the customers set up the software or showing them how to use it.

Instead, it's about giving them critical insights on how they can leverage the software to get ahead in their business and helping them see and avoid the usual pitfalls. Many customers expect you to not just sell a software solution but give them the industry best practices that can elevate their business to the next level. With an extra service component, you can help them with the change management and all the other “soft things” that aren't limited to just setting up the actual application.

Think of it as hiring experts from one of the big five consulting companies like McKinsey or BCG to help you unearth the best practices and data points that could take you years to discover if you were to figure them out on your own.

Was HubSpot wrong in charging us for onboarding?

I think that HubSpot has its reasons to ask customers for onboarding as an additional service—but the way they do it could have been better. For instance, we came to know about the extra onboarding cost only after we went through with the annual subscription plan which, in retrospect, feels like a “hidden fee” that we weren’t informed about.

There was/is no mention of it on HubSpot’s pricing page and the salespeople we spoke to didn’t inform us about it through the entity of our buying process. So it was natural for us to feel surprised when they dropped that extra price bomb on us.

If you are evaluating HubSpot’s CRM or any of its other software solutions, here’s what Vanguard 86 has to say about its different onboarding costs:

“​​The costs vary in line with the tools available. With HubSpot Marketing Hub onboarding, for example, the costs for guided onboarding range from $250USD for Starter to $6,000USD for Enterprise onboarding support. HubSpot's Sales Hub onboarding, however, ranges from $250USD for Starter to $3,000USD for Enterprise.”

Had the HubSpot salespeople who closed our deal given us a heads up about the onboarding fee, it would have been a much better customer experience on our part. 

That incident raises an important question:

If you were to charge a fee for customer success, how should you break it to the customers?

It’s always the sales team’s responsibility to give customers the full context of what they are signing up for—including the additional services that would incur extra fees. As a norm across all industries, the sales team is commissioned for any services they sell.

So it’s in their best interest to really understand the value of these add-on services and articulate its extra benefits to the customers ahead of time.

When you shouldn’t charge for customer success

We have already established that it’s premature to charge for customer success (and perhaps other add-on services) when you are a young startup that can use CS to create a feedback loop with your customers.

That’s because an add-on customer success shouldn’t be an excuse for a poor product that’s not fully mature yet. Here’s what I mean.

Many companies use a customer success or setup fee as a crutch for their bad products. They roll out half-baked product experiences that aren’t fully capable of solving the customers’ problems. It’s hard for customers to set up and start using the product on their own because of how buggy the tool is.

In such a scenario, it’s best not to charge for customer success because—why should customers pay for something lacking on your part? It’s foolish and lazy to build products that require you to have experts who can fix gaps in your products—and charge customers for it.

Instead, it would help if you aimed to provide an out-of-the-box solution that can help customers be up and running quickly in no time. This is true even for relatively sophisticated tools requiring manual configuration or basic integrations.

As a rule of thumb, it’s better to hire more product experts who can build a seamless self-service product experience than to have more implementation managers. That’s because the former can compensate for the manual hiccups in your product and fix the gaps in the onboarding flow—making your product more customer-centric in the long run.

Having several implementation experts assisting your customers on a 1:1 basis, on the other hand, will continue to be a manual process that creates friction and doesn’t solve the problem at scale.

As a brand, it’s your responsibility to iterate on your product so that it offers seamless and product-led onboarding thus accelerating your product’s time-to-value for the customers.

Don’t use the extra service component as a negotiation tool

Many sales teams keep extra line item services as a trick up their sleeve to get the upper hand in sales negotiation and to close deals faster. They might introduce the price of all line items during the initial sales conversations and discount it heavily when negotiating the price.

You have to be careful about using paid-for customer success as a sales tactic because it devalues the service’s offering. When you aren’t intentional about making your product implementation-ready, the extra services and fees look like a cheap trick to inflate the price and slash it later as a discount.

Here’s a hypothetical example that we keep seeing in and around SaaS circles. Let’s suppose you have a one-time customer success fee of $5000. As a CS leader, you might have spent a lot of time packaging together a set of high-value consultative items that make a difference in the customers’ business. You might even have carved out a good compensation model for the sales reps who can upsell the services to interested customers.

But if your salespeople aren’t aware of the business value that this service offers, they sometimes discount it to zero—sometimes to get a deal across the table and other times to meet their annual quotas. The customers might see through the sales tactic and perceive the extra service to be “garbage”—since discounting it to zero means it had no value to begin with.

A better alternative is to sell the value of the service component internally to the sales team first and help them align on the same page. Roll out the CS service component first with the sales leadership before launching it to the customers. Help the sales team see the value in the service offering and have meaningful conversations with them on:

  • How are you going to price it?
  • What does the flow for discounting look like?
  • The maximum possible discounts

If you face backlash from customers or find that customers aren’t willing to spend money on your service, you need to change gear, re-enable the team, and package the service better to communicate its business value. Perhaps you can include case studies of previous customers who saw tremendous value through the CS package.

If you package the service component nicely, you should be able to sell it without any hiccups. But don’t use heavy discounts as an afterthought to make your sales negotiation easy.

How to package an add-on service component

Although we don’t charge for customer success at Avoma, we do a lot of debates around several modern SaaS topics, including how businesses should package their paid-for customer success.

  • Should you have it as an additional line item on top of your core SaaS product?
  • Should you bake it with your core SaaS pricing?

There are arguments for and against both options. If you charge the service as an extra line item, it might look like you are charging customers twice—once for the core product and again for the add-on service. But doing so makes the pricing information transparent and upfront so that there aren’t any last-minute surprises.

On the other hand, factoring in the extra service as part of your core SaaS offering is a psychological manipulation tactic that might or might not serve you well. Granted, customers might like your pricing with the fringe benefits—even if the price looks steep at a glance. But it can end up creating more problems at a later stage.

For example, let’s say you have designed your SaaS pricing to factor some level of customer success pricing baked into it. Perhaps your starter plan doesn’t offer customer success, the middle tier plan offers a CSM on an as-needed basis, and your enterprise plan offers a white glove service with dedicated CSM plus a QBR thrown in the mix.

But what happens when a huge client—who pays you in seven figures subscription fees—chooses to buy the starter or the middle tier plan? Will you not offer them the privileges of the enterprise plan because they are paying for the low-tier subscription? They might be contributing to 1 million in ARR (annual recurring revenue), but a concierge service can raise the revenue potential to 6 million in ARR three years down the road.

In such situations, it can be tricky explaining why you are offering them all the bells and whistles when they deliberately went with a plan that didn’t offer the extra toppings.

In contrast, having it as an upfront line item has many benefits. It shows confidence in your service quality, makes your conversation with customers more transparent, and keeps your core product’s value metrics separate from the add-on service.

This allows you a lot of room for flexibility to offer a customer experience that aligns with their expectations. For instance, you can automate the experience of customers who expect to be left alone and invest your resources in high-ticket customers who need your expertise every step of the way.

Customers who opt for a dedicated CSM as an extra service can get a high-touch KAM (key account management) at their behest, faster response time, and additional benefits related to SLAs (service level agreements).

Is customer success a cost center or a growth lever?

The entire discussion around “should customer success be free or paid-for service” circles around a fundamental question: how do you perceive customer success as a business function? Is it a cost center or a growth lever?

If you think of it as a cost center, you will always look at it from the angle of covering your costs. That’s why businesses have compensation structures for CSMs based on accounts, retention, upsells, cross-sells, etc.—just like in sales. They look at the short-term and want to recover the time and resources they are pouring into the CS function to justify the unit economics.

Objectively speaking, CS is a powerful engine for growth because it helps you:

  • Keep the gross churn low
  • Improve your product because of the healthy feedback loop with the customers
  • Maintain a high net retention rate and drive additional adoption

When you see CS as an enabler of growth, you can truly enable your CSMs to help customers achieve their goals so that you can help them grow and retain them in the long run. You can get your return on investment from the CS function when the CSMs help you maximize the customer lifetime value, identify expansion opportunities, and build brand loyalty. In that sense, customer success is a growth lever for your business in the truest sense.

Source: How to identify potential customer churn and improve retention

Parting advice

If you have the opportunity to charge for customer success as an add-on service component, keep it as simple as you can. Adding a paid-for service is tricky to play around with, and it can get complicated if you don’t pay attention to the small details.

You might want to think through how to charge: should you charge for the service by the hour or buckets of hours? Should you have a flat fee structure for CSM? Should you offer a certification program—if you are rolling out technical implementations?

Make sure you offer the service component at the right time of your company’s growth—combined with the right packages priced at the right price points—so that you have all the resources you need to manage it well. And finally, don’t attach yourself too strongly to one strategy. The answer to whether to charge for customer success or not isn’t written in stone—do what’s mutually beneficial for your customers and your business in the long run.

Perhaps you don’t have it as a paid-for service right now—be open to positioning CS as an additional line item in your pricing strategy as you evolve to become a more mature brand. If you are already doing it and there’s less traction for it, plug it out and bake it in as a free offering as part of your subscription plans. Revise the service offering as your company evolves, moves up to a different market segment, or the product advances to offer a self-service customer experience.

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