Beyond the benchmark: rethinking the ARR-to-CSM ratio

By Andrea Spillman-Gajek

Brighteye mentor in Customer Success

In the early stages of a SaaS company, a strong ARR:CSM ratio might be somewhere between $500K and $1M. In some, highly optimised cases, it might stretch to $2M. Higher ratios are likely to be more common as AI automates more of the work.

However, just because a CSM can manage up to $2M of ARR at one company does not mean that they can at every company. Some things that play into how close to the ideal ratio your company CSMs fall include: 

1. Percent of time spent managing customers: ARR:CSM ratios assume most of the CSM’s time is spent managing customers. However, CSMs at early-stage companies often wear multiple hats, filling gaps in documentation, process development, support, sales, onboarding, or product education. What percent of their time is actually dedicated to being a CSM?

   
   

2. ARR future-state vs. current-state: Many SaaS businesses rely on a land-and-expand motion. A $20K customer today may represent $100K in future ARR, but only if nurtured effectively. Ratios based solely on current ARR can underestimate the true workload.

   
   

3. Product gaps and workarounds: Incomplete features, complex workflows, or missing integrations often require manual effort from the CS team. Often it makes sense to buffer these gaps with CS time while product works on higher-value features. But don’t underestimate the time these work-arounds take.

   
   

4. Lack of infrastructure: Without tooling, enablement, or automation in place, CSMs may spend time creating custom decks, writing their own marketing copy, or manually onboarding each new customer. They’re also often learning the product as they go. That overhead adds up. Budget for it

Set a realistic ratio and build a path to scale

While industry benchmarks are a helpful guide post, most companies find they’re not helpful hiring guides. Here’s a more contextual, strategic approach that’s often more effective:

1. Understand actual capacity

Start by analysing how your CSMs currently spend their time. How much goes to managing customers versus everything else? Are they also covering support? Product planning, prioritisation or marketing? Running sales demos? Often at early stage companies, it’s necessary to wear lots of hats. If that balance feels like the right prioritisation of their time, budget for it. If it doesn’t, implement boundaries, systems, or guidelines to fixe it. 

2. Define what “good” looks like for you

What does your customer journey look like? What activities are essential for retention and expansion? What can be automated or removed? Once you define the ideal workflow, you can start estimating time required per customer or ARR $.

3. Acknowledge and budget for “extra” work

If you expect CSMs to contribute to internal tooling, process development, onboarding of new team members, documentation, etc, make sure to account for that time in your resourcing plans. While this might mean a temporarily lower ARR:CSM ratio, it sets the foundation for greater efficiency going forward.

4. Allocate by potential, not just present ARR

A small customer today may represent a large opportunity tomorrow. Consider total revenue potential, not just current ARR, when deciding how to assign accounts.

5. Invest in the right improvements

After considering #1-4 above, your ARR:CSM ratio might feel low. Don’t hire a CSM and expect them to instantly fix it. Instead, invest in:

• Automating what you can, and making repeatable what you can’t.

• Segmenting customers, and creating lower-touch tiers.

• Improving internal tooling, playbooks, templates.

• Offloading support, enablement, sales calls, or other less-aligned functions

• Streamlining customer training and onboarding

• Dedicating 1-2 product sprints to fix the “manual” CS work.

Recognising when your ratio is too low or too high

If you’ve followed the process above but still aren’t sure if the ratios are right, we have added some things to look out for below... These could be signs your ratio is too high (they could also be signs of poor prioritisation or skill gaps, so look at the big picture while considering these):

• CSMs are stuck in reactive mode, prioritising urgent over important and proactive.

  • Renewals are consistently last-minute or at risk.

  • Everything is a fire.

  • Documentation, reporting, internal comms, or other important but non-critical tasks aren’t getting done.

  
  

• CSMs' performance is inconsistent - they’re on top of some things while others slip. They manage one customer well, but not all the time, or at the expense of another. They’re often good at their job, but miss things inconsistently. 

  
  

• Customers reach out through various channels to get what they need - they try support, sales, escalate, and tell you point blank their CSM isn’t giving them attention.

  
  

• Cross-functional teams are stepping in to fill CS gaps. 

  
  

• The team is stressed, tempers are high, little things feel big. Team members work weekends, or don’t take vacations, or work through those vacations.

There are also some tell-tale signs that your ARR:CSM ration is too low:

• CSMs are spending time on low-impact work. They’re keeping busy, but not adding the value their time warrants (could also be a symptom of poor prioritisation)

  
  

• CSMs spend a significant amount of time working with other teams (this could also be a sign of poor prioritisation and boundary-setting)

  
  

• CSMs are constantly looking for new projects (could also be a sign of proactive folks growing their career, but look at the cross-team trend).

  
  

• Everything is working great on paper…too great - nothing’s breaking, nothing’s stretched, in spite of growth. (A bit of tension can be good as you scale.)

  
  

• More effort isn’t improving outcomes. 

  
  

• Customers aren’t responding to higher-touch models. 

  
  

• Nothing’s automated or streamlined. You KNOW there are untapped opportunities for efficiency gains.

A truly scalable ratio is one that your team can maintain without sacrificing customer outcomes or team well-being.

Other metrics to consider

At the end of the day, ARR:CSM metrics exist as a guidepost, and to support healthy financial models. 

If you’re looking for other ways to assign accounts, you can also think about:

• Customers / CSM (ideal state depends on size of customer)

  
  

• ARR / fully loaded CSM cost (ideal is about 5x. This can be particularly useful if you pair up CSMs – say an enterprise CSM + Junior CSM partner on enterprise accounts)

Other metrics that can be a bit more meaningful from a financial modelling perspective can be:

• Customer Lifetime Value (CLTV) / Cost to Serve (3x is good, 5x is better)

  
  

• OpEx / $1M ARR (CS costs should be <15–20% of ARR, under 10% is best)

These will all have the same challenges as described above: your starting place might not be the ideal state. They’re worth considering though as you model CS costs into the overall business.