The events of the past year have transformed entire industries, upended the way people work, and re-shaped our behaviours. During this time, many companies in the UK have had to pivot client engagement strategies to meet customers, through innovation and adaptation.
HubSpot has grown rapidly over a relatively short space of time. We have gone from helping small startups accelerate their growth through our software and educational resources, to supporting iconic UK brands like Revolut and Skyscanner.
We now have over 4,000 employees worldwide and recently hit two significant milestones: surpassing 100,000 paying customers and hitting $1 billion in annual recurring revenue (ARR).
So what did it take to get to this level of success and what can other businesses learn from the decisions we made to help them grow, compete and win?
Don’t be afraid to go against the grain
Businesses have always struggled to find ways to acquire new customers while minimising costs. Customers have become savvier and are increasingly sceptical of traditional marketing tactics, making this an even greater challenge. Consumers like to understand what value they’re getting before making a purchase, and many different factors can influence the outcomes of this, such as education, trust and relationship building.
This is where the freemium model can benefit organisations. It’s one we started using around five years ago, as it aligns well with the concept of inbound marketing – and this is when you have to add value before you extract value.
The main benefit of freemium for the user is that it’s a natural process that allows them to discover the company’s product or service on their own. For a business, leveraging the freemium concept helps growth, as they acquire free users then optimise the upgrade paths to turn them into paying customers. The likes of Spotify, Atlassian and Zoom are great examples of companies that have succeeded in scaling their businesses this way.
The general perception of freemium, however, is that the model isn’t suited to B2B companies targeting long-term, large-scale growth. This is because it’s specifically designed to target consumers, since you need to have a lot of people signing up for your free products to make any freemium funnel work. In fact, the majority of freemium funnels convert free users to paying customers at less than 4%.
But this shouldn’t be an impediment to companies in the B2B space. As we’ve seen at HubSpot, a freemium model is, in some ways, better suited to the changing way decisions are made in businesses. Rather than a top-down approach to technology decision-making, there is increasingly a bottom-up approach, with companies looking at which products are being used and lobbied for by junior team members. A freemium model ties neatly into this paradigm. And this has proved successful for us, with nearly 60% of our current customers starting out with our free offerings upgrading to access our more powerful, paid-for tools.
Companies of all sizes shouldn’t be afraid to go against the grain – a lot of the time, the advice to not try something comes either from fear or a lack of experience. Taking risks in business brought the world the modern smartphone with the iPhone, the first truly attractive electric car with Tesla, and digital assistants with Alexa. Who knows what the next great innovation will be?
Put customers first
Customers will always be at the heart of any organisation. Forming strong, long-term relationships with them should be the top priority for businesses, but even more so in a time of global uncertainty.
The pandemic has triggered huge changes in consumer behaviour. It has brought about a decrease in spending, coupled with a move to online shopping, as stores closed around the country. As a result, customers now expect a seamless digital experience across all channels, which cater to their specific needs. This is where marketing, sales and customer service teams come into play, to deliver everything that customers demand.
But it’s no longer a case of just having a database that logs customer details and interactions. A well-integrated, fully utilised and successful CRM platform needs to focus on delivering on the needs of the customer, not just the narrow needs of sales or marketing.
At HubSpot, it became clear to us that existing CRM systems weren’t up to scratch. For well over a decade we’ve been customer-first. With this underpinning ethos, we realised all of our teams needed to work more closely together, but existing CRM systems wouldn’t let them do this.
So what did we do? We built our own CRM platform to fulfil the needs of modern businesses. Our platform allows businesses to keep track of their customers' journey, store personalised customer information in their database, track leads, and build reports to analyse overall company performance. Importantly it keeps it all in one place, so regardless of whether a marketer, sales rep or customer service rep is dealing with the customer, they are all drawing from the same single source. In 2021, this kind of experience is no longer a nice-to-have.
Use your own innovation to grow
Agility was important to most companies pre-pandemic, but the past year has turbo-charged the need for companies to be able to react quickly to seismic shifts in the market landscape.
Many businesses that provide services will be looking at offering new features to ensure they grow in 2021. The traditional way to add these offerings is through acquisition, so that capabilities can be brought online quickly, but this does have its negatives. The biggest issue is that it takes a lot of time and effort to entirely remove barriers for data to flow freely from acquired capabilities to the core proposition.
Organisations can avoid this problem by innovating within the business. We chose this path at HubSpot, and we are extremely proud that we have created the majority of our platform tools in-house. Today we have teams in Dublin and the US that develop all of our tools, and while it may take longer initially, it means we can create capabilities that are integrated from the start and which are based on customer feedback, to totally solve pain points.
In the past year, we’ve launched our refreshed Sales Hub, CMS Hub and Ops Hub to create a fully fledged integrated suite. And these suites are becoming increasingly attractive to clients, becoming the preference among marketing technology leaders, with demand doubling in 2020 alone. By carefully crafting in-house, customers can benefit from a product that’s cohesive, customisable and empowering.
The great thing is, because we started building our own in-house development capabilities early on, it has been a positive reinforcement cycle. As our team has built more of our platform, it has become more capable, with better tools.
Business can see the light at the end of the tunnel in terms of the pandemic, but the customer landscape we emerge into is not the same one we left behind in 2020. With so much uncharted territory, businesses should be looking at how they can steal a march on the competition and try a new approach to grow, always with the customer front of mind. With so much change comes the opportunity for rapid growth, and we look forward to supporting as many businesses as possible to help them achieve their dreams.
Image credit: Micheile Henderson via Unsplash