How Hubspot Reduced User Churn and Reached $100 Million in ARR
Hubspot has become a choice sales and marketing organization and automation platform for 50,908 businesses as well as an authoritative voice in marketing trends and education.
At one point, Hubspot was under a tremendous amount of pressure from VCs to rapidly acquire new customers and reduce churn, which was high. Many SaaS startups have been or will be in this position as reducing churn is one of the biggest determiners of long term revenue. Customer acquisition costs for SaaS tend to be high and consistently having to replenish a user base every few months to maintain growth is not an effective strategy; it typically doesn’t maintain support from investors.
To break out of this phase, Hubspot took a few key steps to reduce churn and make the changes necessary to reach a place of exponential growth.
Here are a few of the ways Hubspot has reduced churn and maintains over $100 million in annual subscription revenue:
The sales team’s initiatives changed to a focus of reduce churn:
Hubspot made a strategic decision regarding their sales team to avoid signing up customers who would churn. Their sales team would be comped $2 for every MMR they brought in only and only if those customers surpassed the four month mark. The ogoals was that the sales team focused on converting leads that were truly good candidates, not quick sales and nurtured the relationships in the right way to make sure they stuck with Hubspot. Obviously with the help of training and the support from the product team necessary, their sales team has been wildly successful at signing leads who are good candidates and creating offers and support that match their customers needs.
They made customer support and onboarding a priority:
Through the initial sales process, hubspot realized that what they had created was not a simple self explanatory tool that they could just leave with customers and hope they could implement on their own. Hubspot, like many other SaaS products, is complex with many features and different ways teams can employ it. Many times SaaS teams fall into the trap of understanding how to use their own tool but not doing a great job at helping customers to also understand in order to keep them onboard. Hubspot blew customer support, documentation, and education out of the water, really. To support customers and create a ton of inbound leads, they created massive banks of content on sales and marketing related and unrelated to Hubspot directly that now makeup Hubspot University. Customers can learn how to not only use Hubspot through all of their content but also how to improve their marketing and sales strategy overall which inadvertently keeps customers happy. It also positions Hubspot as authoritative in these areas, winning trust.
Employees switched their focus to CHI (Customer Happiness Index):
Knowing that customer churn will always be a focus, Hubspot created and uses a metric called the Customer Happiness Index or CHI to determine how they’re doing in keeping customers on their side. CHI is interesting in that it’s really a score that measures how well and how often a customer is using Hubspot and seeing success from using it. The system works in a way that CHI awards points when customers blog regularly, track leads through the Hubspot system and run effective email and conversion campaigns. It’s really a measure of both engagement and success for customers. They’ve found that the customers with the highest CHI are the biggest promoters and have the highest renewal rates. They’ve taken their insights from this and determined what they need to do with the products, onboarding, and support process and resources to help customers up their CHI score and continue to succeed with Hubspot. The results? A complete focus on personalized teaching and showing organizations how they can make inbound marketing using Hubspot work for them.
They built integrations for the tools companies already loved:
Instead of asking customers to make a “switch” to Hubspot, Hubspot made their platform compatible with tools customers were already using. It made it much easier on the sales team to show customers how they could integrate Hubspot into their processes. It also makes it more likely that customers stick to using Hubspot if it works with what already works for them and improves how they work with other tools. For instance, the Zapier integration allows customers to automatically update customer profiles in Hubspot when certain action are taken elsewhere like on a website, email, or on social media. By making Hubspot work well with other tools more customers are likely to sign on and stay.
They made onboarding solution-focused like their customers:
What Hubspot, and many other SaaS companies, have realized is that customers are not interested in products, but solutions. You can’t offer a product and features and expect customers to know how to turn it into a solution to their problems. If you take a look at Hubspot’s onboarding process, it’s clear they want to walk users through how they can leverage Hubspot to solve their problems rather than just start using a product. This idea permeates the landing pages and the product design itself. They break their product into three different platforms for the different areas customer want help with rather than just listing off features of one big conglomerate tool:
Once clicking into explore one of the more focused areas (in this case, Marketing), you can see them address the areas marketers are most concerned about and show how Hubspot helps with these:
They are constantly improving and letting users know:
From new integrations to new platforms entirely, Hubspot has grown and changed quite a bit. Throughout the process, they’ve paid close attention to customer feedback to build the features and functionality users want and need to keep using Hubspot. With the CHI and customer surveys, Hubspot watches closely what users react to and improve to match customer needs. They make sure customers are aware of changes and updates to keep customer re-engaged and aware that Hubspot is working hard to improve for them. Hubspot has a company news section on their site and sends email newsletters with regular updates. Showing a dynamic product is important to keeping users engaged with SaaS products.
If you don’t have as big of a tech team as Hubspot you can actually use a tool called Beamer to keep your users updated. Beamer is a notification center and changelog plugin that lets you send announcements to users and site visitors for important news, latest products, special offers and more. No coding required and easy installation. Beamer can help you get over 10x more user engagement and convert more visitors into paying customers.
Though Hubspot’s success has been a trial and error process for the formula to growth, using a few of these concepts in your own strategy will be beneficial to yours. Like Hubspot, you too can boost engagement and keep customers in the know. Try Beamer for effortless and effective way to engage users, gather feedback, and keep them engaged.