Why Your Post-Sales Budget Should Be 7% of Revenue (Not 10%) ft. Abbas Haider Ali (Github)

I’m going to give you 1% more of our revenue to go and invest. You would have to sign up for more return on that. And if you look at that money and you’re like, I don’t know about this, I think I’m doing what I can and I just don’t have anywhere to spend it, then I think you have to say no. And similarly, if you look at your budget and you’re like, I have a lot of people doing a lot of things, but it’s not clear to me that every one of them contributes. And if you don’t see those connections, then you should be questioning them before your CFO does. That’s sort of the advice I give to leaders, is don’t wait for someone to question your budget.

Abbas Haider Ali:
You question it, Red team your budget. Be like, someone came to me and said, what would be the impact if I took away, you know, 10% of your budget? If you find it really hard to answer that question in terms of the negative consequence to your business, then I think you may be overspending in your function.

Josh Schachter [Host]:
You’re listening to Unchurned, brought to you by the Gainsight podcast network. If you’re a CS leader, you’ve probably been asked some version of this, okay, but how much should we actually spend on post sales? Not headcount per rep, not revenue per csm. A real budget rule. Abbas Haider Ali runs customer success at GitHub. Everything after the sale. And when he stepped into CS, he went looking for a benchmark he could take to a cfo. What percentage of revenue should cover the entire post sales? Engine support, CSMs, TAMS renewals, even pro services. So he called CFOs a lot of them.

Josh Schachter [Host]:
And the pattern he found was surprisingly consistent in most high growth SaaS companies. The post sales envelope, as he calls it, lands around 10% of revenue. And as AI starts taking real work off the team’s plate, a boss thinks the target drops towards 7% without sacrificing retention. I’m Josh Schachter. This is unchurned. And today we’re talking about the financial model behind customer success. Hi everybody and welcome to this episode of Unchurned. I’m your host Josh Schachter and I’m here this week with Abbas Hater Ali.

Josh Schachter [Host]:
Abbas is the senior vice president of customer success at GitHub, which means pretty much everything post sales. Abbas, I’m very excited to have you here. We’re going to talk about a few different topics, three or four separate segments of the show. GitHub is just a huge, huge, hugely successful business. You’re covering 180 million developers. Last time I checked the numbers that are out there, 26 million Copilot users, 4 million organizations using GitHub, including 90%, the Fortune 100. That’s a lot of responsibility for a leader of post sales. Thanks for being here.

Josh Schachter [Host]:
Welcome, Abbas.

Abbas Haider Ali:
Thank you for having me.

Josh Schachter [Host]:
Okay, so we’re going to talk about some cool stuff here. We’re going to talk about CS operating models. We’re going to talk about the role of CS, especially in this world of AI generalist versus specialist versus specialized generalist versus generalized specialist. We’re going to talk about AI at GitHub and some of the cool initiatives that you’ve taken on. Um, and then we’re going to talk about how you should be spending 10%, or is it 7% of your revenue on post sales. And you’ll explain more exactly what that means. I know I’ve butchered that intentionally so a bit. But before we go into all the nitty gritty that are going to help CS leaders in this episode, I want folks, you know, a lot of our.

Josh Schachter [Host]:
Our listenership viewership is through YouTube. So for anybody who’s actually out there watching this episode, two things to take note on the video feed. One is that I constantly have drips of sweat beating down my forehead right now. And that’s not because Abbas is so intimidating. You’re actually one of the nicest, kindest, most amicable leaders that I’ve met. But I’m in Singapore right now and it is humid and I made the mistake of going to the gym not so so long ago. That’s number one, if you’re looking at the camera. Number two, the much more interesting thing is that, Abbas, you have the most impressive zoom background home office setup that I have seen in the last five years, since the COVID days.

Josh Schachter [Host]:
So, Abbas, I want you to walk us through and I want you to actually get up at some point in detail and show me what. Show everybody what you showed me about your zoom background.

Abbas Haider Ali:
All right, so look, the zoom background thing has a story, so I’ll give you as condensed a version as I can without skipping any of the fun bits. So we moved into a new place about Two years ago, you know, coming out of the pandemic era, everyone sort of built like a studio at their house, right? You had a mic set up, you’ve got lighting, you’ve got multiple screens, standing desks, treadmills, the whole deal. And part of it is you have to have something interesting in your background, unless you’re planning on being one like a blur background person, which I’m not really a huge fan of. So I picked a room in our new house that is not actually designated as an office. The house actually has an office set up in it. But there was a room that had really nice natural lights, gave me some plates to look out to give my eyes a break during the course of the day. But it had one very significant problem and that was the ideal spot for the desk. Gave you the world’s most boring background.

Abbas Haider Ali:
Literally a pure construction grade white closet. So I asked my team, I said, look, if you could choose your background in this sort of space, what would you put in? And they had all sorts of great ideas. Plant walls, library, personal memorabilia, things that are sort of little clues and gifts from like family pieces, something that reflects a little bit of you. Now a normal person would take one or two of those ideas and put them into effect. I do not do those sorts of things. So what I did was I over engineered the entire problem. I hired someone, a designer whose work I saw who does amazing work with metal. And I said, look, I want something specifically for my background and specifically for video meetings, because I spent a lot of times in meetings.

Abbas Haider Ali:
And he said, don’t worry, I got you. He went off and designed this thing and came back with this. What this thing is, is about 500 pounds of metal that is welded together in this custom setup that goes all the way up the ceiling. So if I’m in standing mode on my desk, there’s another level, kind of like this one up all the way here. You can just see the edge of it in there. And the whole thing is designed to capture little bits about me and be a very functional part of my meetings. So if, for example, someone was to say, or if you were at some point in this interview to say, abbas, give me a book recommendation, I would literally slide back in my chair here, pull a book off the shelf and I’d be like, Josh, this is a book that I love to read. Now the funny thing is I have not read any of these books in the background, not in their physical forms, because I am a Kindle reader.

Abbas Haider Ali:
The only purpose these physical books serve is a Real world bookmark to remind me of a book that I can pull off and share with someone as a recommendation. They also contain little, little pieces of like, I’m a comic book guy. There’s little comic book pieces in there. There’s some books that people in my team have written that are in there. Little, little Easter eggs throughout the background.

Josh Schachter [Host]:
I love it. I love it. And it opens up too. If you, if you scroll, if you, if you go back there, the whole thing just like people like to see.

Abbas Haider Ali:
What happened to the closet. So the closet is still there. You can come right in here, slide this thing open, and behind there you have a fully functional closet, which you might imagine. Well, what would you put in that closet? Well, we all have that box of cables that we don’t want to get rid of, but we don’t actually need those things. Plus random things like swag from prior companies, that sort of stuff. This is my miscellaneous work closet that just like holds secret stuff at this point.

Josh Schachter [Host]:
That’s the money shot right there. Okay. In my mind, I’m writing a LinkedIn post about how Abbas, you know, senior CS leader is Democratic and collaborative with his team based on his Zoom background choices. And he’s a servant leader demonstrated by that.

Abbas Haider Ali:
Yeah, I mean, it may be a little bit too, too early in the YouTube video a look inside my brain, but you now you’ve gotten it, so it’s too late to back up.

Josh Schachter [Host]:
Okay, let’s jump in. So where should we start? Abbas, I want, you know, you’ve. You’re very prolific in a lot of what you’ve written and your thought leadership, a lot of the conferences that you’ve attended and spoken at. You, you wrote about this CS operating model. It was part of a Andreessen Horowitz article a couple years ago, but not, not so far back. And you talk about the customer hierarchy of needs and I’d love for you, you know, in brief detail to walk us through that customer hierarchy of needs.

Abbas Haider Ali:
Sure. So, well, let’s talk a little bit about like this statement around like being prolific about writing things. So. Yeah, you know, one thing that I find is sometimes people assume that I’ve been doing customer success my entire career. That’s actually not true. So this is like my fifth, sixth year of really having like solely focused on like post sales teams. Prior to that, I’ve done other things. I’ve led product engineering, sales engineering, marketing, all the functions in a company.

Abbas Haider Ali:
And so when I get got into this thing the very first few times, I had many questions, many Questions to which, like I thought I knew answers but there wasn’t like clear recommendations. And what I would do is I would ask people, I’d ask people who I knew I trusted. I would ask Nick a lot, right, or read things that he was publishing about things. And over time I sort of formed opinions on things. And then when I was like, I think this actually is kind of true and applies to lots of places because now people ask me about it, when I say it, they say it makes sense. So I’m going to start writing it down or share it in a podcast or a writing or an event. What that does is lets me test ideas at scale. And I love to be challenged on these things, right? Like come up with a perspective, share it, open it up for challenge.

Abbas Haider Ali:
And this is no different. I had many conversations with companies with in venture, back in the venture backed world, with startups who are asking me the most common question I get from customer success leaders, which is, what does customer success do? Like, what do these people have to do? What’s an important outcome that they produce? And for me, the thing that I found that was consistent across the most successful CS teams was that they were excellent at managing only two things, risk and opportunity. That was their primary signal, was to go through and manage the risk and opportunity in the accounts that they were responsible for. This specifically is about the CSM roles. Now that is a little bit of simplistic piece. And so something that we got a chance to test out initially at Segment and then at Twilio and I’ve shared with many other companies since is what are the dimensions in which you think about risk and opportunity? And it’s really the same thing and it reflects really like a hierarchy of needs and it does build on itself. So at each layer you’re really testing to say, are we good here? And you can think about in the most simplistic sense, is it red, amber, green? Now, in this particular model, there are six layers that you can sort of merge and combine or add more if you want to. But I think there’s sort of six critical pieces that are part of it.

Abbas Haider Ali:
The very base of the pyramid really is about the technical health that your customer experiences about your product. The simple question you’re trying to answer is, does your product work? Because realistically, you’re going to have a ton of risk in your account if your product does not work. Your opportunity only comes into being when that product actually works. Otherwise you have that to solve as a core base, foundational need. Above that, you’re looking for feature completeness now, you can still grow a little bit, but you just need a complete set to actually solve more things. Your product might work fine, but if it’s miss has significant gaps in features, you’re not quite there yet. So that’s like the next level up in this hierarchy.

Josh Schachter [Host]:
And this is feature completeness in generally or this is feature completeness related to the needs of each customer, to the.

Abbas Haider Ali:
Needs of the customers you’re trying to serve. So if you think about your icp, do you have the right features to actually deliver the ultimate benefit that you want to from your product? For those capabilities, let’s say as an example, it’s a product that doesn’t have reporting, and reporting really is key to unlock their growth and success. You don’t have reporting yet at reporting. You’re missing analytics, you’re missing some feature that’s part of your overall feature set that should be on your immediate roadmap. The other piece that comes into next is going to be your relationships. Do you actually have good relationships, good champions, good economic buyers, good relationship with stakeholders? Because you may have the absolute best product in the world with the best feature set. But if you have no relationships with your customer, it is very unlikely that they’re going to grow beyond a certain PLG business. Maybe to some, to a large extent.

Abbas Haider Ali:
But in most sales, that businesses where you’re going to have CSMs, it’s not going to happen unless you have those relationships. You know who they are and they’re healthy. And then there’s customer sentiments. Does your customer agree with your perspective that your product works, you have the right features, your relationships are adding value because they think you suck. Guess what? Like, you’re not going very far, right? So you need to have like, strong customer sentiment that you’re managing as well. And it goes all the way from I don’t like you as a vendor to you know what, I’m going to be an advocate for you publicly. Like, that’s the range you’re looking at in terms of customer sentiment and then there’s outcomes. We love talking about this, right? Are you delivering business value? So the customers generally will buy a product from you with a vision in mind for the ultimate value they’re looking for.

Abbas Haider Ali:
And once they’ve realized that value, you’ve delivered the outcome. That’s where that’s kind of a healthy state within there at the very top of this is, is the CSM’s ability to signal what the commercial health of an account look like. Are they going to. Are the Customer set up to renew, expand or, or what sort of the potential commercially within the account. And if you have a CSM report on all of these layers and just simplistically, red, amber, green, that’s all you need, that will give you an amazing perspective on the health of your account. And each one of these layers, whether you have risk or opportunity, the CSM owns the plan. And if you have those pieces together, you’ve got the model and you’ve got the plan for whatever the state is you’re set up for that team to succeed.

Josh Schachter [Host]:
So I’m staring at the pyramid here. So just to reiterate, at the very top, the North Star here is commercial health. That obviously makes sense. Red, yellow, green. But all of the layers beneath that North Star are what build up towards that North Star. Those are the foundations of it. Right? So you’ve got commercial health on the top, followed right underneath it by outcomes, customer sentiment, then key relationships, feature completeness, mapping to the needs of the ICP and technical health. So that’s the pyramid.

Josh Schachter [Host]:
That’s a lot. I mean it makes sense. There’s like no, no debate there. But it is a lot to manage when you think about it. Right? So how do you get your team and by the way, approximately how many folks are working in your cs Org?

Abbas Haider Ali:
So in all of the scope of my team, it’s 550 people.

Josh Schachter [Host]:
Okay, that’s a lot to manage. How do you get 550 people to, you know, indoctrinate them towards this methodology and these priorities on a day to day basis?

Abbas Haider Ali:
Well, look, ultimately this, this a challenge of, of just aligning the organization to say, is this something that we actually believe is someone’s job? Right? Like do we think it’s important? Why is it important? Because we’re not. No one wants to do this just as like a science project, right. Ultimately it has to deliver value. And so when you think about managing a customer account, having a rigorous structure for doing it is really helpful. Now what’s in it for the CSM was like, man boss, this is like a ton of administrative work. Like why are we doing something like this? Really the key behind this, it’s super prescriptive. When you get up in the morning, you kind of know what the state of your customer is. And by the way, you have a playbook for each one of these layers.

Abbas Haider Ali:
Like what do I do if the features are incomplete? Like what’s my, what’s my plan for this customer? Well, you know what, that’s where you build a mechanism to say Let me grab the feedback from my customer, validate that it actually is important, combine it across the entire portfolio and have that delivered to our product team so they can prioritize what unlocks the business. It allows you to go through and determine like who are the people who I should go out and travel and see. Do I need to go and travel with this customer or not? Depending on my, on the health of my relationships. When I’m sitting down in a forecast meeting, it’s not just an AE leading the forecast. I’m contributing input into forecast. Someone at the very top of the pyramid is calling expansion and there are three layers below this thing that are rent. Could the deal still happen? Absolutely. But what the AE should know is there’s a lot of risk in this deal.

Abbas Haider Ali:
Right. And lets you manage your risk, manage your forecast. So the key behind this is it cannot be busy work. It has to be actionable. Actionable for the CSM has to be visible to the rest of the organization to know this is a joint perspective we have on the account that has to be consumed by people and use. Going through an exercise where you build this as some artifact that you just look at every little while for reporting purposes, we pat ourselves on the back and then go home. That’s not the purpose behind it. This is a core component of how you actually run the team operationally every day.

Abbas Haider Ali:
And every IC looks at this model and thinks about their business through all of these lenses.

Josh Schachter [Host]:
Like we said up front, you have 4 million organizations using GitHub. You’ve got 550 folks in your org. That’s customer success managers or that’s including all post sales functions.

Abbas Haider Ali:
That’s everything.

Josh Schachter [Host]:
That’s everything. Okay. I can only imagine. Well, I think this pyramid is probably the steady state foundation, right? This is like the rock that doesn’t move very often. Maybe it’s refined over quarters or years, but it’s, it’s the foundation. Right. But you did mention Playbooks and I could imagine sitting in your shoes how there would be lots of pull from such a large organization to like for these things, to these Playbooks to be very dynamic and to be constantly evolving. And again for like those changes then for them, how do they get up to the top to you and your team of reports and how did the changes get back down to the rest of the organization? Can you talk a little bit about that? Like how are you creating, managing some of those playbooks? How are you actually tactically executing and like delivering them to the team? I think that for somebody with such A large remit, it would be interesting for others to learn from.

Abbas Haider Ali:
So I think operational is probably more of a question for my directs and for me, a lot of this stuff gets abstracted.

Josh Schachter [Host]:
That’s the first lesson that we’ve learned here, is that when you get, when you, when you grow to that top, it’s the operational folks.

Abbas Haider Ali:
Yeah, you have to abstract away some of these things. But look, I’ll tell you in general, like, if someone asks me, like, their advice on, like, how do you like operationalize these sorts of concepts? And then also like, how do you actually build these in sort of a stable state? What I’d say, what I, what I guide people to do is say, look, first of all, I mean, it’s, I’m going to disagree strongly with the point that you made earlier around, like, hey, some of these things have to stay steady. And the reality is, no, I don’t think actually any of these things stay steady. In fact, in any given organization of scale, and I talk to my peers all the time, you have to be evolving every function. So when you think about any given organization at scale, the pace at which core technology is moving, the pace that any given company’s products are changing and shipping, all those things influence what you do. So if the only way that anyone’s playbook should say static are under a very limited set of conditions, your product is not changing, your market is not changing, your customer needs are not changing, you’re not trying to increase the influence of your team to cover more customers and more depth. If those three things are true, then, boy, you’ve got yourself a nice stable place to hang out. The reality is every organization, whether it’s customer success, sales, product engineering at any company really has to evolve at the pace of those things moving.

Abbas Haider Ali:
And if they’re not, you’re naturally going to fall behind in terms of what you’re able to do for yourself.

Josh Schachter [Host]:
But I guess my point was that this pyramid that you have, and we’ll link to it in the show notes, but like technical health, feature completeness, key relationships, customer sentiment outcomes, commercial health, that for the most part has its own inertia and is staying as the steady foundation. The playbooks are constantly evolving, I think is your point.

Abbas Haider Ali:
That’s right. Now we haven’t shared sort of what our GitHub internal model of this looks like. This is sort of a representative model that I’ve used at segment that I’ve used at Twilio, sort of informs how I think about lots of different capabilities. It is not explicitly GitHub’s model, but it is a model that, you know, services across lots of different.

Josh Schachter [Host]:
Okay, so, so let’s move on then. Abbas, on that note, to the next segment here, which is you’ve published, you know, a few times, you talked about this on stage that CS post sales, well, 10% of sales revenue should be invested in the operations of everything post sales, which is your support, your cs, your, your account management, technical account management, renewals, proserve, et cetera. And like, that’s the optimization of where you get the most ROI bang for your buck is 10% of your sales revenue. And well, you might, you’ll, you’ll take me down the AI path of that. But, but how did you get to this magic number? Like what was your process for that? And maybe explain that to start out?

Abbas Haider Ali:
Sure. Well, look, like I said, this is not like something I’ve done my entire career, right? Where I can say like, hey, I’ve like gone through and knew this thing kind of coming up through all these things across many, many companies. What I can tell you is that when you think about the inputs and outputs of an organization, the fuel that goes into any organization is going to be some sort of investment envelope. And when I first started leading CS teams, I found a real gap in data about what this number should be. I could get things like, here’s how many CSMs you have per sales rep, or I could ask people about what is the amount of revenue coverage per csm. But those are not numbers that translate into an investment model. You just can’t actually really back into them because they’re so variable. It depends on the growth rate of business, how you segment it, where you assign CSMs versus where you don’t.

Abbas Haider Ali:
So I talked to a lot of people, I asked them this question around their budget and looking for the measures. And what I tried to do is basically collect it from lots of different peers at companies that were, you know, $50 million run rate all the way up to multiple billions and get a sense of where they fell in this graph. And I really asked them two questions, by the way.

Josh Schachter [Host]:
Did they, did they know like, like immediately blink reaction what that number was?

Abbas Haider Ali:
Most people actually did not know off the top of their heads. They had to go and say, let me actually do a little math on this. Like some could bring up like a spreadsheet on the side or you know, their most recent budget deck and kind of reverse engineer the math. And the question I specifically asked is what is, what is the percentage of your revenue that you invest in all of your post sales functions. That was the first question. And then the second question was if you do monetize any of your post sales functions that obviously would be, that should be separate from that envelope because it is self funding at that point. What is the margin that you run? That and those two numbers combined give you sort of the envelope that your CFO hands to you as a post sales leader and says hey boss, go run the business in this mode. That’s how it should work.

Abbas Haider Ali:
It should apply to every CS leader should actually know this number. But it was very surprising to me that actually this is your rule of.

Josh Schachter [Host]:
This is a boss’s rule of 40. Basically this is supposed to, I don’t know, it’s the rule of X.

Abbas Haider Ali:
But yeah, and, and what I did is it took me a while to actually really center on this number. I think I must have pinged Nick on this several times before and, and he’d sort of be like you should talk to all these people and we’d like try to quote the information. It was very difficult. So you can actually Google this and say like someone give me a number. And it’ll be very hard to find anyone writing about this specific sense of how you financially structure a post sales organization. You’ll probably actually find more references to me than anyone else. That’s just the reality is setting expectations if you look at it because it’s, it’s very difficult information to come by. But you know, I talked at lots of places and then once I found the number I was like okay, I’m going to share it with more people so they can look at it and be like yeah, that’s actually true and sort of reinforce that this is actually a reasonable model.

Abbas Haider Ali:
So in the fall of last year I shared, I think that was the first time I shared the number publicly to say here’s what I believe from all the data that I’ve looked at the at this point a hundred plus company that I’ve talked to about their budgetary structure and I said the number’s 10%.

Josh Schachter [Host]:
Did you talk to over a hundred companies about what, what this number looks like for them?

Abbas Haider Ali:
So remember I, I spent a lot of time in the investment world as well. So I run a sort of hobby venture fund. I work with a lot of venture backed companies as at guiding them on advice on this at scale plus I know a lot of my peers and this is something that I am very deliberate about. Like if I’m going to do a thing I want to learn about it. And so that Means talking to a lot of my peers and getting to know those things. Communities that, including gainsight that puts together are a great place to. To go through it is I will pester people to be like, hey, do you have this number? No, you don’t. Do you mind looking at it and then texting me when you do? And so like to actually correlate us number.

Abbas Haider Ali:
And there’s a range from sure. So it’s not perfectly 10%, but the median across all these different company stages, especially in high growth businesses came right around this 10% mark. And so like I was like, all right, this is a number. And I shared it at the TSI Envision event last fall, which had, you know, a few thousand people in the audience and things like that to be like, here’s the number. It was validated in the group. They sort of like all go back and talk to each other and stuff as well. And I was like, I think this is pretty good now in that presentation and you can link to it. I think you, I think you have the link.

Abbas Haider Ali:
This TSI at TSI deck is a YouTube of the talk, if you wanted to hear the talk. That as a side note was also the very first presentation I did where all the images were generated by AI. That was my very first AI generated presentation.

Josh Schachter [Host]:
Pre Nano Banana.

Abbas Haider Ali:
Exactly. That was pre Nano Banana. Then you can actually see the progression in the decks as. As the. As things have gone, gone through different model iterations. And so I shared it as like that was a number. We got lots of input, lots of people sort of validated it. I put an asterisk there though.

Abbas Haider Ali:
I said, look, here’s something that’s going on in this world that you may have heard of is AI. And right now I feel like we’re still experimenting with a lot of AI use cases. I feel like we’re very quickly going to move into, you know, production stages and really start to see the benefits we can get. And that will probably change this number. But I can’t tell you what it’s going to be yet. I just know right now this number is true and when it changes, I’ll provide an update. Didn’t take very long. So in the spring of this year at Saster back in May, I changed the number.

Abbas Haider Ali:
That was the first time that I said, hey look, I was saying 10%. Now if someone says Abbas does at 10% as of right now, that number is wrong. I’m actually going to say that number is declining from 10 to 7 depending on how quickly you’re able to get AI into production in a customer facing capacity. The actual number now is 7% and that’s, that’s my belief.

Josh Schachter [Host]:
So Abbas, is 7%. The, should that be the North Star and the goal for folks or, or, or is that more of like the median or, or mean of percentage of sales revenue?

Abbas Haider Ali:
If you, if basically you’re starting a new business right now that was going to start bottom up, no history of previous technology, process, structure, anything like that. I would say you aim straight to the 7% of your revenue is what you spent on post sales. If you’re an operating business today, you’re probably going to be spending somewhere around the 10% mark or you should be. If you’re sort of meeting the right criteria for investing in your, in the adoption and growth of your revenue, then you should be looking for that number to decline to 7% as you sort of have your business grow. So it’s not like you just kind of like slam on the brakes and take it down 7%. You have your growth curve and your investment rates are to meet at that point.

Josh Schachter [Host]:
So, so this concept, like you said, you’re, you’re the world’s foremost leader, I think are around percentage of sales revenue of revenue, you know, that should go be invested into post sales operations. Is that because, you know, this was such a unique insight or maybe again like you came from a multidisciplinary background and so you had a new lens to look at, which is very important or is it because it wasn’t like it wasn’t as relevant before? You know, I, I guess the question then is how do CFOs respond to this number when you bring it to them, are they like, oh, like this is exactly what we need to be showing at the board level.

Abbas Haider Ali:
Yeah. So I will say there’s an element of, in times of plenty, no one really pays that much attention to this stuff. And so as soon as in sort of a, you know, ZIRP world, money’s kind of free, as long as you’re growing, you’re like, all right, what do you need? Like, we’ll come up with some rationale for it and we’ll figure it out. And what happens when you do that? You either underinvest or over invest. But there are two things that happened that I observed in, you know, I basically started leading full base like you know, CS teams really in like 2020ish, actually coming right into like the pandemic era. And what I found was, you know, you could kind of do whatever you wanted There was not a ton of accountability. But as soon as things started tighten up, people start asking questions, start asking questions about roi, like, what am I getting right? And there’s two dimensions. This, they would be like, well, what’s my return? That goes to the first topic that we started with, which people would say, like, what does this team do? Like, I don’t have total clarity on what this team actually owns that is unique that they do.

Abbas Haider Ali:
You get things like, oh, like quarterbacking the account or, you know, orchestrating things. I’m like, what does that mean? Like the R and the ROI is squishy. So when things get tight, people are like, CFO is like, well, you know what? Then maybe that’s where we cut from if we’re not clear in the R side, right? Like, those things become considerations that CFOs have to have, large companies have to have. And then the other side of this was the I side of it, right? Which is like, are we investing the right amount? And so it was only when we came out of Zerp World that people started asking questions. And the questions would be asked by boards and CEOs and CFOs of their leaders in every function. And they would say, what am I getting for putting in? Because money is no longer free. And so now we have to justify the investments that we’re making and how we’re doing them. And so the question comes into, people start looking for this data.

Abbas Haider Ali:
Now. This is the era that I was in and so this is generally my style anyway. I like to get a sense of who are the best people in the world doing these things and what can I learn from them. You know, like I. Everything I know is built on the knowledge of other people who’ve been kind enough to share that knowledge with. People are incredibly generous with their time. Say like, boss, watch out for this, this hole. Don’t fall into it, it’s going to hurt.

Abbas Haider Ali:
You know, you’re going to trip over this thing. Please don’t do that. This is a really bad idea. There’s so many people who have been really, really helpful to me. What I try to do is write these things down, take detailed notes. And one of the conversations that I had was with unnamed company CFO was he, he, he actually guided me to say, you really should look for this number. He said, like, because this, he’s like, like, you know, that’s a question that he had. Like he asked his fellow CFOs and he’s like, you know, I don’t really get a lot of clarity on this.

Abbas Haider Ali:
And so I spent time really looking for this information to write down. And actually I knew that I, I’d like dialed this in enough where it was interesting to CFOs when a CFO substack wanted me to talk about it with his audience. Right. Or actually their audience. To be clear. I actually don’t know who the person is. They’re anonymous. It’s the only cfo.

Abbas Haider Ali:
Only CFO substack. Fantastic substack by the way. Like one of my favorites I subscribe to. But they were interested in actually me publishing more details about the model. And I was like, Now I know CFOs care about it because a substack oriented towards CFOs is like let’s write some of this stuff down in detail. Like and push me very hard to be like give me the number, tell me, give me some examples of why you’d break it out by team. Like what would be the structure? You know, what would be per function within the post sale world? What are the KPIs, how do I measure the ROI? And so it actually forced me to actually really concentrate my notes into what is actually now one of my favorite pieces of writing is that particular subset of.

Josh Schachter [Host]:
It’s a great. But first of all I’ve read the article. It’s a great article. I love how you break down so anybody. We’ll put in the show notes also. But like any. You guys should go check it out because you break down not only you know, 10 or 7% but like you know, this is customer support and this is your technical account management and you know, like, like per. Per line item within that only CFO is a great substack.

Josh Schachter [Host]:
We’d also love to have you maybe contribute something along these lines to our unchurned substack would be great one day as well.

Abbas Haider Ali:
Yeah. Yeah. I will say there is one nuance though that does not show up in the substack post that I think might be interested for, for the audience if you don’t want to walk through. So you know, people always ask me saying like all right, so here’s how this works. I go to my cfo, they’ve read this substack, they’re like, no questions asked. You know, here is, here is 7%. What do I just follow the formula? Like how do I start? Like what’s the, what’s my mental model to think about spending that 7% wisely? And I would say look, the first pathway that you have to think about in these, in a company is what is the most important thing that, like, a CCO needs to think about for where they spend their money? Well, really, the place you’re going to have to start is in your scope is you’re going to have to start with support, because if your customers cannot get resolution when they’re in trouble, then your entire business is best stuck. And so what you’re looking to do is actually decide what the waterfall looks like.

Abbas Haider Ali:
So you want to start with support. Now here’s sort of the secret though, right? You can, you can’t overspend on support, because if you do, you’re starving everything that comes next. And support is reactive in nature. It’s reactive customer success. It is a model where customers calling you because something has gone wrong.

Josh Schachter [Host]:
So you definitely can or you, you can or cannot overspend in customer support.

Abbas Haider Ali:
You cannot overspend here in the sense of, like, you don’t want to spend.

Josh Schachter [Host]:
You should not overspend. I see, I see that you’re saying.

Abbas Haider Ali:
Like, too much of yourself. Got it there, Got it. Sorry, language. Do not overspend there. Yeah, you got to minimize your spend there enough so you deliver the level of service you need to get the job done. And it’s a little. I’ll come back to like, another asterisk on that path later because, of course, I’m not advocating for the bare minimum in terms of making customers tactical support experience. Great.

Abbas Haider Ali:
But, like, that’s sort of what you want to do because the rest of it gets to be spent on more of a proactive customer success motion, which drives adoption, durable growth, focuses on that pyramid, and ultimately drives growth of your business. Right? So that’s what drives GRR and nr. So you want to make sure that you’re saving as much as 7% envelope to flow through to the part that is more proactively driving customers to be successful versus reacting to their support. Now, that’s the 7% envelope. Like, the cascade goes down that way. But there is an option. Now, you’ll recall I said there’s two numbers I actually care about. One was what’s in the envelope that the CFO gave me.

Abbas Haider Ali:
But also I’m going to ask for the right to say if I can monetize things, I get to keep that. Right? Like, in the sense of if I basically get to eat what I hunt for, right? Like, that’s sort of that particular example. And that’s where I have optionality at every layer, including the first place I apply, it is support. Because if I go to a large enterprise customer and I say, look, do you want the regular support experience that you pay for as part of the product subscription or I have an upgrade option for you. It’s somewhere between 5 to 8% of your subscription fee that you spend, whether it’s usage based billing on a monthly basis or an annual subscription. For that uplift. I’m going to give you some additional features. What are the most common features you get? You get an sla, you get to be front of the line.

Abbas Haider Ali:
You know, we’ll update like, there’s like all like the things that are premium support things, but guess what? That’s how you provide excellent, amazing technical support capabilities. And customers are generally willing to pay for that because there is a time window where when they really want help, they want guarantees. And this provides an ability to provide guarantees and then it still allows you to save that 7% to spend in other areas.

Josh Schachter [Host]:
Yeah, I know, I know. At Gainsight, our head of, our VP of customer support, Kartech, he’s very proud of how he runs his P and L, you know, similar types of operating principles. And yeah, it’s definitely a mark of pride that he’s able to sustain that business unit.

Abbas Haider Ali:
That’s right. And it’s really important. And look, it serves the needs of the business, it serves the needs of customers generally. It is one of those rare operating principles that is win, win on all sides, right? CFO is happy, customers happy, team is happy. You’re able to kind of grow with the needs of the business. It’s a great way to actually react to that. And of course professional services is another area of monetization that comes in as your business grows, your adoption energy that you provide to customers. Some level of that intensity is available for what you invest as a, as a business.

Abbas Haider Ali:
But some customers are willing to pay for it. It’s normal as part of their interaction for especially highly complex technology. And so you want to build a professional services business as soon as you’re, you’re able to and then dial in the margin for that as well.

Josh Schachter [Host]:
Let’s put a pin in the proserve for a second before we go there. This, this level of investment, the 10% now receding to 7%, it’s predicated on like what is the goal that you’re, that you’re seeking to accomplish with that level investment, right? Are you trying to get to a 50% NRR or a 150% NRR? So you, you do have, and I looked at your materials you do have in here that talks about the return you should expect on this investment. Can you share those details with everybody?

Abbas Haider Ali:
Well look, I think ultimately when you’re looking at any of these examples the, this, you know we’ve been talking about the I side of roi, but the return is super important. Right? Like what should people expect when they get actually when they look at this. So what I did was try to get data on what are the common attributes for companies that land around this investment. Right. That we about talk talk about. Right. 10 sliding back to 7 sort of rate. Generally speaking when I collect this data, you know, over time it’s still fairly true.

Abbas Haider Ali:
Maybe it’s a little bit lower on NRR, but it’s right around 120 to 120 to 125% net retention. If you’re delivering that, you’re earning the right to basically hold on to that investment rate. That’s a, that’s a reasonable return. You also want to be returning between 80. If you’re running a SMB mid market sort of business in the 80s of GRR is what you need. If you’re running an enterprise oriented business, it’s gotta be 90% plus gross potentially is what you’re delivering for that. And then in terms of, if you’re, if you are monetizing depending on the stage of your business, you know, series B all the way up to public, you can afford to lose a couple, you know, 10, 20 points of margin on services or you can up to 70% there. You’re also trying to go through and actively reduce the, this is for professional.

Josh Schachter [Host]:
Services, the margins background services.

Abbas Haider Ali:
Yeah and support is similar as well. Support generally runs a little bit higher margin.

Josh Schachter [Host]:
Okay so, so the, the, the highest, the, the, the most premier packages for, for the most mature companies are around 70% margin on their performance.

Abbas Haider Ali:
You should be able to throw off 70% margin but in between support and, and, and services you feel okay. Um, and then the other piece you want to deliver, it’s ROI is if you have built the right investment of your 7% it’s acting as a shield for your product and engineering work. So you’re not just like sending noise that way. You can measure that in terms of escalation rates from support tickets. How many feature requests overwhelm engineering. There’s several measures within there but generally I just blump that together just into a simplified your engineering and product organization signal to noise ratio. You’re trying to minimize the noise. You’re also driving.

Josh Schachter [Host]:
Is that an, is that an actual metric signal to noise or that’s, that’s kind of how you’re really.

Abbas Haider Ali:
Well, you, you can build like an aggregate metric that captures a bunch of different things, but it’s going to be things like signal to noise ratio, bandwidth allocated for customer features, disruptions to roadmap. There’s like several tiers, KPIs. I think they’re actually in that, in that only CFO post. In terms of how you calculate it, if I recall, I don’t 100%. I think there’s pieces in there certainly, or maybe a topic for another day. But yeah, generally speaking, part of the reason you get that investment is you’re a shield to making sure the company is able to go through and deliver on the product vision and not get distracted by random things that are coming in from the marketing.

Josh Schachter [Host]:
Sure.

Abbas Haider Ali:
The other thing you want to focus in on is productivity for other parts of your organization. If for example in your post sales organization you include renewals and account management, which some teams do, I’m a fan of that. Because you want to have some level of commercial responsibility, then that should be actually working in the sense that your sales team should be able to run at higher productivity. What does that mean? More quotas, faster deals like essential core sales productivity has to be coming in as well. The team has to be signaling opportunity, going way back to early conversation risk and opportunity signals. How those opportunity signals ultimately show up. They show up as CS qualified leads. Your team’s not able to go through and generate those.

Abbas Haider Ali:
And I don’t think you’re earning that investment within that organization. And then the last and very important piece is customer advocacy. Your team is not able to generate consistent, strong customer advocacy, whether it’s with product launch or ongoing case studies or customer references, then you know, deserve a 7%. And that’s, that’s ultimately how I think about this is you have to focus on not just on the I side and be like here is the budget I should have, but you have to be realistic about the return. And when you don’t have that, I think organizations have the right to question the investment envelope, the style, the team, the structure of the team, what they do. I think those things rightfully should, should be questioned.

Josh Schachter [Host]:
Before we move on, I want to summarize this because I think there’s some really important points here that if I’m a CS leader, I’m taking note of this, this recipe book that you’ve provided. So you know, again, cost should be between 7 to, excuse me, 10 to 7% of your revenue, that, that encapsulates your post sales operating operating costs and check out the blog if you want the breakdown and you know, each of the subgroups within that on the return side of that investment, you’re looking at things like, you know, upwards of 125% net retention is the goal. Is the goal.

Abbas Haider Ali:
That’s right.

Josh Schachter [Host]:
80% on the GRR side if you’re more on the commercial SMB segments but really in Those, those low 90s plus if you’re at the more enterprise grade and scale margins on both independently respectively customer support and professional services of negative 20% if you’re a startup and you really, you know, you just got that series B and you’re all in now on the White Glove service but all the way upwards to 70% as the true kind of, again to use that term, North Star of how you’re operating with your team in terms of its profitability and then being able to deflect a lot of the noise in escalation tickets, the support tickets that otherwise might encumber your product and design team. That’s something that you want to measure as well, right? Is how you’re kind of saving them the time and bandwidth so they can just go build, build, build and focus on new feature development where possible. Revenue team productivity is the next piece that you put in play there. Basically freeing up similar to the product engineering team but freeing up your sales team to focus on new logos. So giving your post sales your CS teams a and renewal teams a, you know, their own accountability of, of revenues again so your AES can focus on new sales and then CSQLs and advocacy and making sure that you’re measuring and giving goals towards those as well. That’s right.

Abbas Haider Ali:
And the real test of this is, let’s say Josh, you’re, you’re now cco of a $500 million run rate business. Your CFO comes to you and says, Josh, you know, I’m feeling pretty good about what things are looking like for our next fiscal year and you’ve been super efficient with budget. I’m going to give you 1% more of our revenue to go and invest. You would have to sign up for more return on that. And you might say, you know what, I’m totally into this. I can do this because I know that we have more room to run in terms of the account management side of things. We can take on more renewals. That frees up the bandwidth for net new ARR from our sellers.

Abbas Haider Ali:
I’m going to sign up for that and that’s where I’m going to spend that money or I’m going to take that money and spend it on driving up what we’re investing in our professional services that we give to customers, maybe lower the margin a little bit, but invest on what we’re putting in on behalf of our customers. Because I feel like that’s the blocker. I’m looking at our customer health and aggregate portfolio and I see like adoption is blocked by a couple of phases. And if I just throw a bunch of energy into like stage two adopt feature set adoption, I know that’s going to unlock a bunch of net new ARR above and beyond where we are now. That’s where you, Josh, would be like, I will sign up for this, right? I will take the dollars, but I’m going to commit to an outcome. And if you look at that money and you’re like, I don’t know about this. I think I’m doing what I can and I just don’t have anywhere to spend it, then I think you have to say no. And similarly, if you look at your budget and you’re like, I have a lot of people doing a lot of things, but it’s not clear to me that every one of them contributes.

Abbas Haider Ali:
And this is not an exhaustive list that we just talked about. Right. There are other ways you’re measuring impact as well, but if you don’t see those connections, then you should be questioning them before your CFO does. That’s sort of the advice I give to leaders, is don’t wait for someone to question your budget. You question it, red team your budget. But like someone came to me and said, what would be the impact if I took away, you know, 10% of your budget? If you find it really hard to answer that question in terms of the negative consequence to your business, then I think you, you may be overspending in your function.

Josh Schachter [Host]:
Love it. Thank you for that sage advice and playbook. Last piece that I want to talk about with you here today and we’ll go through the high notes. We’ll see how much of a rabbit hole we go down on this one because we could is given the rise of AI, what are the implications for the role of the CSM moving forward, the future role? So I know you’ve got some thoughts around this. Introduce us to your, your notes around the specialized generalist.

Abbas Haider Ali:
Yeah. So look, I think this is one of like the newer things that I’m trying out in terms of like testing. So I, I tested this in New York at, at an event that we held there across several teams across that have showed up that we talked about, and I talked about the evolving skill set of the CSM role. And if you think back to the history of how all of our functions really in any part of the business have gone is we’ve incrementally been specializing all roles, right? If you start all the way in, go to market from SDRs, BDRs, SMB, seller, mid market seller, enterprise seller, you’ve got an SE, you’ve got a specialist SE, you have field CTO, got, you got CSM, CSAs, TAMs, technical CSM, services delivery engineers, you know, customer reliability experts, you’ve got, you know, service delivery engineers, you’ve got forward deployed engineers, you’ve got all these roles, we’ve got these super hyper specialized roles we’ve built out. And it’s because as complexity has increased, we’re just human beings, right? So at that point you kind of have to specialize to get really, really good at a thing. If you go into earlier stage companies, those specialized roles don’t exist. It’s because you’re looking for unicorns, right? You basically like have a unicorn who has enough skill to cover all those things. And look, it’s hard enough to find one unicorn, much less a herd of unicorns.

Abbas Haider Ali:
And so what you wind up doing is specializing to create the focus, to find the people to scale up these functions. But I think we’re like an interesting moment when we think about the traditional skill sets that when you look across the organizations, they have sort of these radar charts of skills, right? So there’s commercial skills or relationship tactical depth, domain knowledge, portfolio management, like all the various skills that are in there. I think there’s a reference in the talk that the slides are public, we can share as well. And so you have all these roles that are some variation of strengths in these areas. And you’ve had to do this because there’s no other way to find a person who could cover all those things. But we have a new style of option here that I believe represents a change in how we think about some of these functions. And that is that a lot of our functional capabilities are limited by the knowledge any one person can retain an expertise that they can have. But you know, the LLMs that we use are actually really good at knowledge retrieval and combining things and building together context across different domains.

Abbas Haider Ali:
And so I actually see like a skill coming out in terms of very successful CSMs who have, they have like a general skill where they’re pretty good at a whole set of areas around the skill model that I described earlier. But they’re Specialized in one specific way. They’re really good at at utilizing AI tools when you give to them. And when you do that, what they wind up with the ability to do is they’re specialized at using these tools. They’re generalists in the concept of post sales and they can apply them across all these disciplines. And so now you can talk to a person who is a pretty good services consultant type person, a pretty good question to answer your person, to answer your support question, pretty good at answering your technical CSM questions. They can cover a bunch of different domains. It doesn’t mean that they’re the absolute best in the world at all those things.

Abbas Haider Ali:
But you know what? They’re pretty good at lots of different functions. It simplifies your customer journey, your customer relationships you have because you have a person who can cover a lot of ground instead of handing you off to a bunch of different people. And now the specialists who are in those roles that we talked about before, the benefit to them is they stop dealing with the repeated problems. They’re not dealing with the same five things that they have to deal with all the time. They’re moving up the value chain. And so ultimately what I believe this provides is a couple of benefits. Ultimately it’s this sort of thing that gets you from that 10% to 7% because you can cover more ground. But at the same time, the benefit for everyone who’s in the mix is they’re not doing rote work.

Abbas Haider Ali:
They’re applying their skills where they can add the most value and each one of their engagements becomes more valuable to the customer and more it more interesting to that they grow better in their skills as well. And this is true across all the disciplines where we see it and we’re seeing the early parts of this in teams that use these capabilities. A lot of like AI native organizations have these sorts of structures. The reason they’re able to scale up very quickly by when measured by revenue per employee is because without necessarily talking about it in this way, that’s what they’re doing. They have all the scale levers available to them in these AI native models to go out and capture and apply this knowledge out to their customer base.

Josh Schachter [Host]:
You basically created a T chart for the skills and capabilities of a csm. But the north south pole of that T is AI tooling and your familiarity and capability with AI. I really like that. Obviously that applies to all functions, right? To leadership, to pretty much every domain. It’s like it’s AI is going to give us more breadth, but we will need to really become experts in how to use it for all those different pieces of our work.

Abbas Haider Ali:
And look, I think this applies on a very personal basis as well. Right. I think we talked this briefly in our conversation last time is, you know, like even as an individual, I can only retain so much knowledge, even about the things that I’ve talked about, written about, you know, think about, have notes on. I can only actively retain so much. And so you can actually apply the same abilities to your own knowledge, personal knowledge graph as well, not just your professional knowledge graph. And there’s ways to do this for these tooling as well. I’ve probably gone, as we talk about the crazy background, I go too far with things. I’ve gone kind of far with this particular one as well in my own case.

Josh Schachter [Host]:
Abbas, we’re at the, we’re near the turn of the new year here. What’s your CS resolution for 2026?

Abbas Haider Ali:
So my, my CS resolution is actually to do a better job in terms of normalizing how we do learning and development in cs because I do feel like we’re in this mode where the technology is evolving so quickly, the use cases are evolving so very quickly that I want to like take a beat to make sure we’re not leaving people and skills behind and not leaving opportunity on the table for people to grow. I think we wind up in sort of a interesting 8020 rule where 20% of people are really, really good, 80% are still learning how to apply these capabilities. I think it’s really important for organizations to set very explicit goals around the fact that they want them to use it, create space for how they learn from each other, how you capture and codify best practices. And I think one very important lever in this that is part of this organization is how you think about knowledge management and how do you think about collecting knowledge and making it available to everyone. But I think in particular, you know, I do believe in this sort of general direction of specialized generalists for all functions. But I think that then means that if we deliver about how do we actually build more of these specialized generalists.

Josh Schachter [Host]:
Thank you for being on the program today. Lots to learn from you here. I certainly did and I hope our viewers and listeners did as well. Abbas Hater Ali, we look forward to having you back. We’d love to have you back sometime later in the year.

Abbas Haider Ali:
Happy to do it. Josh it’s, it just allows me to battle, test more, more opinions.