The importance of Customer Success with HubSpot

The importance of Customer Success with HubSpot x RocketX-1

 

Did you know that increasing customer retention rates by 5% increases profits by 25% to 95%? In the 7th episode of the xCollective we’re going to talk about customer success, an often underutilized function within early stage growth companies. But paramount to sustainable growth, especially in times of economic uncertainty. Let’s introduce our guest Oksana Afonina, an expert in building and scaling customer success teams. 

Oksana has been in the tech industry for over 10 years, with experience in client-facing and leadership roles at Google, Facebook and AppLovin, she’s definitely not new to the industry. “I love being in the tech industry. It's super dynamic, the newest and best things happen in this industry.” Oksana tells us. For the past two years, she leads Customer and Partner Success teams at HubSpot.


So, why is it so important?

Everybody knows that stats on why it’s so much more efficient to retain existing customers instead of acquiring new ones. Nonetheless, what we see, especially at early stage scaleups, growth is equal to new business. And setting up a customer success department, to develop as much business as possible from their existing customers, is definitely not a priority.

Something that surprises Oksana every time. “If you look at the metrics used at SaaS companies, it’s all about ARR and MRR, in other words recurring revenue. Of course, I’m not saying that you should only focus on existing customers. Continue your acquisition efforts, but constantly work with your existing customers and help them grow. When they grow, your business hopefully will grow simultaneously.”

How HubSpot drives business growth and customer delight

There’s no company out there that better understands the importance of customer success than HubSpot. They even developed their own, let's say philosophy towards it: The Flywheel. This philosophy conveys the importance of not only growing the number of customers but creating delight, loyalty, and love from the people who matter most - your existing customers.

An approach that is very different to the classical funnel approach, where marketing is driving awareness and leads, sales takes it from there to close, and eventually it all filters down to customer success, or anybody who handles existing customers. The idea of the Flywheel is that, all the processes are built in a way that they all revolve around the customer, and separate departments work together as a multidisciplinary team in the lifecycle of a customer. With the flywheel, you use the momentum of happy customers to drive referrals and repeat sales. And that’s how your business keeps spinning.

Although this philosophy may appear to be an approach only interesting for the bigger companies out there, that’s definitely not true Oksana shares. “This model is applicable to every type of company in whatever growth phase. Although the larger the company the bigger your flywheel gets, because there are most likely more people and teams involved, than at a smaller company.”



Positioning within the commercial team

This doesn’t mean that the customer success manager is all on its own. Like Oksana shared before, all teams are involved. As you can expect the customer success manger typically works closely with the sales, marketing and product department. Following up on upsell possibilities, identifying new features, customer feedback on the usability, success stories for marketing and so on.

To keep your customer success and the collaboration between teams structured and as effective as possible, it’s important to start with the segmentation of your existing customer base as early as possible - even if you don’t have that many customers yet. You can segment your customers by industry, geography, annual revenue, number of employees, budget, investors, or valuation. Whatever approach you take, it will help you with identifying vital customer trends and better understand what capabilities your customer success manager needs.

If you’re serving a large volume of small value customers you want to adopt a more data-driven no/low touch engagement strategy. Whereas a low number of high value accounts justifies a customized 1:1 high-touch strategy.



Measuring success, and no not just retention

Historically, customer success was particularly focussed on retention. Overtime there’s been a convergence between customers success and sales, making net revenue retention the key metric to success. “It’s my deep belief that if you work with a customer you’re supposed to help them grow. And fortunately, over the last few years, success teams are moving more towards net revenue retention. So, it's not only about retention of existing customer base or your ARR, but about how you have grown your existing customers.” shares Oksana.

Besides that there are other important metrics to track, and it’s important to know that every department focus on different metrics. You can focus on SQL’s - the number of opportunities you're surfacing to your sales teams from existing install base - or NPS - how happy customers are with your product, and if they would recommend your product within the industry. And you can look at engagement, for example: how often does your team engage with existing customers. But again this all depends on your strategy and segmentation.




The ideal customer success manager

It’s clear that customer success managers need many different capabilities, all depending on your product and customers. But what does it take to be a successful customer success manager? Oksana starts by saying, “I'm in client facing roles for the last 10 years, and at every company this means something different.”

For some companies the role can be oriented towards product adoption, and making sure the customer understands and knows how to use all the features. In this case the CSM is preferably a technical person. Whereas other companies focus more on building relationships with different stakeholders within the customer's organisation, they benefit from someone that’s good at establishing relationships. The ideal setup is different for every company. Although the ideal customer success manager diverse per company, Oksana does see a few trends.

 

Good business acumen: customer success managers tend to be people with good business acumen and great understanding of different business models and industries.


Technical aptitude: you don't have to be an engineer, but understanding your product, the integrations, API’s etc is important.


Interpersonal & project management skills: a CSM works with a lot of different people and stakeholders, from the customers side but also internally. That makes it absolutely crucial, to be able to communicate effectively and have great project management skills.

 

Prioritization:  as a CSM you’re covering a large number of customers, being able to prioritise is crucial.



Final piece of advice

For those companies that want to start implementing a successful customer success strategy, Oksana definitely has some last tips:

 

1.  Make sure that all teams are aligned

Like said before, as a CMS you’ll need support from other departments within the company. To make the flywheel concept a success, it’s crucial for all teams to be aligned on the operating model. And it’s not just about ‘handing over’ the lead from marketing to sales, it’s about being aligned during the entire customer success journey. 


2. Start with segmenting your customers

Understand the importance of segmentation, as it can help you identify trends and set up a customer success motion that completely fits your customer.


3.  Build a community 

HubSpot has one of the highest NPS scores in the world. And this is not just because people like the product. Oksana shares: “HubSpot is not just the platform for business. We’ve an amazing blog where you can find a lot of information about growing your business, an annual inbound conference, and an academy. It's important to embed customers into your philosophy, build a community around your product.”



3.  Iterate constantly

Don’t just set up your customer success strategy and leave it like that. As your business is growing, your product is evolving and your team structure is changing, you’ll need to make changes to your customer success strategy. So keep on experimenting and iterating.

Want to learn more about HubSpot journey and Customer Success? Listen to the full story on Spotify.

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