Investment Banking | Software

HubSpot’s Strategy to Help More Companies ‘Grow Better’

RBC Capital Markets CEO Derek Neldner speaks to Yamini Rangan, CEO of HubSpot, about the pillars and processes that will steer the software company’s growth into the future at RBC’s Global Technology, Internet, Media and Telecommunications (TIMT) virtual conference.

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By Derek Neldner and Yamini Rangan
Published March 14, 2022 | 4 min read
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Key Points

  • HubSpot is riding a wave of cloud software growth with additional services that add payments, billing and collection capabilities to its CRM platform.
  • The move into commerce-enabled CRM services meets an unmet need for HubSpot’s growing client base and gives the firm a new growth industry to monetize over the long term.
  • By becoming more deeply embedded in the operations of its users, HubSpot also expects to retain more of its customers.

As CEO of HubSpot, Yamini Rangan knows what it takes to put customers first. In the last few years, the software company has undergone a major transformation, evolving from a marketing automation tool to a fully-fledged customer relationship management (CRM) platform that helps scaling companies achieve superior customer experiences.

“Solving for our customers is a key value for the company,” says Rangan. “Our core mission is to help millions of organizations grow better. That's our focus.”

The B2B industry historically wasn’t delivering this “exceptional customer service and delight.” To build customer loyalty, HubSpot has focused on the importance of serving the customer, seeing their needs and meeting them.

“If you think about CRM historically, it’s really been about enabling front office marketing and sales departments – it’s focused on the needs of the seller. In today’s world, the buyer has a lot more power, so CRM must provide buyers with the support and enablement they need,” says Rangan.

It sounds simple. Every organization says they put their customers first. In reality, there's a big gap between the organizations that can live by those principles and put them into practice and those that can’t, particularly in today’s digital world. It’s a divide that has been magnified by COVID-19, but the shift to digital began before the pandemic.

“If you think about CRM historically…it’s focused on the needs of the seller. In today’s world, the buyer has a lot more power, so CRM must provide buyers with the support and enablement they need.”

Yamini Rangan, CEO, HubSpot

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Accelerating digital transformation to deliver ‘remarkable customer experiences’

“It’s definitely a trend that was happening pre-pandemic,” explains Rangan. “What happened during the pandemic was companies could no longer afford to delay their digital transformation. They needed to be digital first – or in a lot of cases digital only – right now, which was the only way to connect to their customers. The pandemic has made remarkable digital customer experiences a necessity. It's no longer a nice to have, it's a must have.”

A key question post-pandemic is whether this accelerated shift to digital will continue. “I do think this is a permanent change,” says Rangan. “People aren't going to go back to the ways we did business five years ago. Too much has changed.”

Interoperable hubs managed in one platform

HubSpot has also changed over that time, investing in an ecosystem of anchor hubs like marketing and sales, and accelerating innovation around emerging products like its operations hub. The end result is a platform that brings high-end features typically only available to large enterprises down to small and mid-market customers. It also allows HubSpot to bring human-friendly product and purchasing experiences traditionally seen in small and mid-market businesses up to large enterprises.

Much of HubSpot's magic comes from how each of the platform hubs can seamlessly work together. With more than half of HubSpot customers adopting multiple hubs, more and more companies are realizing the unique advantage that comes from managing their entire front office in one platform.

“I'm always excited to see where the needs of our customers will take us next,” says Rangan. “We want to build a world-class platform that allows businesses to be able to adapt and pivot. That’s what’s needed within this economy. That's our strategy.”

Segmentation driving innovation and results

Another strategic element is their segmentation approach. HubSpot serves companies with one to 2000 employees, which today, they split into three segments in order to target investment and innovation.

“We really optimized from a product and go-to-market perspective for each of those segments. The needs of a 1000-person company are very different from the needs of a 10-person company and we recognize that. So from a product perspective, over the last two years, you have seen us invest and innovate to be able to serve 1000-person companies exceptionally well. We super-powered our marketing hub last year, as well as the sales hub, and we've continued to innovate by adding enterprise-level features while maintaining a consumer grade look and feel,” explains Rangan.

“Traditionally, payments have been thought of as an extension of the back office…We approach that space very differently. For us, commerce as a part of CRM is about enabling growth, not saving money.”

Yamini Rangan, CEO, HubSpot

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A unique approach to commerce-enabled CRM

For Rangan, the next long-term opportunity for HubSpot is a bold move into commerce-enabled CRM. “Payments and commerce are going to be very important areas for us,” says Rangan. “It’s the next step in the journey for a lot of our customers. They’re looking to grow, they're looking to serve online, and they want to be able to help their customers purchase online.”

“Traditionally, payments have been thought of as an extension of the back office. It’s been about collecting revenue and driving cost efficiencies. We approach that space very differently. For us, commerce as a part of CRM is about enabling growth, not saving money. It goes right back to our mission of helping companies grow better.”

“A lot of our B2B customers are still in the early stages of online commerce. We want to be able to offer online commerce to them to open completely new revenue streams.”

Over time, HubSpot plans to bring its strategy of enterprise-grade features with consumer grade ease of use to solve the complexity of invoicing, contracts and payments that can often be a pain point for both customers and salespeople in the last mile of the B2B selling experience. Importantly, HubSpot will also be able to natively integrate commerce data to enhance other front-office sales, marketing and customer service functions.

“A key aspect of the commerce service is that, once you place all of that activity in the context of a CRM platform, every interaction with your customer, from a first engagement with a marketing campaign to abandoned cart, can be connected with the commerce data,” says Rangan.

“Having all of that context can really make your next customer interaction so much better. We're excited about the long-term opportunity for an integrated payment solution. I do think that we have a very unique approach to how we're thinking about this. I think we're still in the very early stages of this opportunity, and there are years of runway ahead for growth.”

This content is based on a keynote session from RBC Capital Markets’ Global Technology, Internet, Media and Telecommunications (TIMT) virtual conference, which was held on November 16-17, 2021. For more information about the conference, please contact your RBC representative.

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