HubSpot’s CEO Yamini Rangan on ditching the funnel for the Flywheel

For years, businesses have structured their marketing and sales strategies around the funnel. But as we devise better ways to engage with our customers, maybe it’s time we evolve our metaphors, too.

The idea behind the funnel is quite simple – marketers craft campaigns to capture potential customers’ attention and slowly nurture them until they are ready to be handed off to the sales team, which guides them through the purchasing stage until they become paying customers and, hopefully, loyal advocates.

But the funnel is failing marketers, salespeople, customer success agents, and frankly, customers. It doesn’t take into account third-party review sites, peer-to-peer recommendations, or word-of-mouth; the handover process is messy and puts teams at odds with each other, and more often than not, it rewards high quarterly numbers rather than providing a good customer experience. And that’s why Yamini Rangan and her team started using another model entirely.

Yamini is a tech industry veteran with over 25 years of experience. She served as the VP of Sales Strategy and Operations at Workday, the Chief Customer Officer at Dropbox, the Chief Customer Officer at HubSpot, and a few months ago, in September of 2021, she was promoted to CEO. Passionate about customer-centricity, Yamini believes the key to sustainable growth is customer retention and aligning all teams around the customer – and for her, the Flywheel model is just a better metaphor for how today’s organizations interact with customers and how they can drive business growth.

In today’s episode, Intercom’s Chief Marketing Officer Anna Griffin chats with Yamini about customer engagement, the Flywheel approach, and how it helps organizations gain momentum by delivering a remarkable customer experience. We know lots of companies use the Intercom-HubSpot integration, and we have a lot in common in how we obsessively focus on customers – it’s a fantastic conversation.

Short on time? Here are a few key takeaways:

• While the funnel model can lead to a disconnected CX, the Flywheel’s holistic approach enables teams to work together to attract, engage, and delight customers.
• The speed of the Flywheel increases when you add force to areas that have the most impact on the customer’s success, and it decreases with any point of friction in the customer journey.
• Chances are that customers have done their research on your business. Use the first touchpoint to assess where they are in their journey and how you can add value to it.
• Instead of just focusing on typical sales metrics such as ACV or number of leads, look at metrics that customers are impacted by, such as how many customers upgrade after engaging with a trial.
• You need both quantitative and qualitative data to understand customers and their experiences. Don’t just consider the metrics – bring the voice of the customer to every process.

If you enjoy our discussion, check out more episodes of our podcast. You can follow on Apple Podcasts, Spotify, YouTube or grab the RSS feed in your player of choice. What follows is a lightly edited transcript of the episode.

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The road to HubSpot

Anna Griffin: Yamini, welcome to the show. We are so delighted to have you with us today. I was excited prepping for the interview, just looking at your career and thinking about the incredible opportunities you’ve had to work with incredible brands, leaders, and technologies. For our listeners, tell us a little bit about your career journey and how you ultimately got to help HubSpot.

Yamini Rangan: Anna, thank you so much for having me on your podcast. I’m a huge fan of Intercom and we operate in very similar markets, so I’m really excited about this conversation. I started as an engineer – at that point, I was fascinated by technology. Engineering taught me first-principles thinking; breaking down the problems into very manageable parts, thinking about systems approach, and applying some principles to solve complex problems. That’s what I took away from my engineering career.

Then I went to business school, and I found myself in tech sales. That was not an intentional choice. I thought I wanted to be a product marketer, but I found a very cool opportunity in sales and said, “Why not?” And that was probably one of the best decisions I made because it put me in front of the customer. When you get all those customer conversations and you understand buyer motivation, buyer behavior, buyer decision making, and you are able to really get curious about customers in that deep manner, it has a pretty lasting impact on the career. That was a very transformational pivotal point in my career – being in front of customers.

“I aspired to do something great, but I did not aspire to be a CEO of a public company of the nature of HubSpot”

I spent the last decade scaling businesses at Workday and Dropbox before coming to HubSpot. Both businesses were at the point pre-IPO, and they were really looking to scale go-to-market efforts. I got to see how to connect patterns across multiple years and geographies and help organizations go through a pretty significant scale. That’s what brought me to HubSpot. HubSpot is a phenomenal company. It’s very customer-centric and obsessed with buyer behavior and trends. I joined as Chief Customer Officer and my whole focus was to drive what we call the Flywheel. Now, a year later, I’m the CEO of the company. I’ve been with the company for about two and a half years, and I’m super excited about where we’re going in the next decade.

Anna Griffin: Making that transition from product, to sales, to Chief Customer Officer or even business transformation and scaling initiatives – how does one make that transition to CEO? But you already answered it. That is the magic pivot. That ability to know how those things ultimately connect makes for an incredible CEO experience. You become the CEO of HubSpot, what was that like? Literally, you’re told you’re getting the job – what’s your first instinct?

Yamini Rangan: Exceptionally emotional, partly because of my journey. Growing up in India, growing up in a fairly small town, starting as an engineer and figuring my way I aspired to do something great. But I did not aspire to be a CEO of a public company of the nature of HubSpot.

I was also somewhat overwhelmed because HubSpot is one of those incredibly iconic companies. Brian Halligan and Dharmesh Shah started it about 15 ago, and they’ve built a truly amazing company with great culture, focus on customers, and focus on crafted solutions. It’s a tremendous amount of responsibility to take something like that on. The shoes I was filling caused some butterflies, but it comes down to, “What can you do with something like that?” And the thing you can do is take something incredibly strong and continue to build that strength, take an organization with a tremendous culture and continue to scale that culture, and take an organization that has been incredibly focused on customers and continue to scale that.

The Flywheel Model

Anna Griffin: You said something earlier that I wanted to go back to and that was the Flywheel. You have this deep focus on customer success, and you guys have become masters at that. Tell us more about the Flywheel advocate approach.

Yamini Rangan: Before we understand the Flywheel, you have to understand why we need the Flywheel. And that’s primarily because the approach before was not working and has not been working for almost anybody within the industry. And that’s the funnel – we call it the funnel vision. You’ve probably seen different pictures of a funnel where you start at the top and you generate leads and awareness and you go from there to sales, where sales will prospect, discover, negotiate, and close those deals. Then, there is some kind of bell that rings because you win the customer.

“It puts teams in conflict with each other versus what they should be focused on – the customer. It’s not what the handoff looks like, it’s who they’re serving”

There are a bunch of issues with that type of funnel vision. First off, it puts marketing, sales, and customer success at odds. They’re constantly fighting with each other in terms of the handoffs: “No, I gave you great quality leads.” “No, you did not give me enough quality leads.” “Well, you didn’t select the right customers.” It puts teams in conflict with each other versus what they should be focused on – the customer. It’s not what the handoff looks like, it’s who they’re serving.

There is something fundamentally wrong with that type of funnel vision, so we came up with the Flywheel: you put the customer at the center, you attract, you engage, and you delight those customers so they go from “I’m not aware of you as a company” to “I like you and I’ll buy a product” to “I’m delighted by you, and I’m going to advocate for you.” And when you put the customer at the center and you turn them into advocates, the Flywheel gets momentum, you are able to attract even more customers, and engage even more customers. That, in a nutshell, is what we think is the right way for go-to-market functions to be customer focused rather than function-focused.

Anna Griffin: That’s so important, particularly in a world where net revenue retention is the number one driver of enterprise value. How to drive more customer retention is on everyone’s mind. Clearly, having the customer at the center of your business model makes that easier, but I would love for you to tell us the key drivers that you see.

Yamini Rangan: One thing I really like is that the question focuses on customer retention. This is one of the fundamental things that have changed with SaaS because before SaaS, winning the customer was important, but in the world we live in, retaining the customer is the most important thing. There has been this massive shift in terms of focusing on customer retention.

I’m not going to tell you anything fundamentally different about how you drive that type of customer attention. It starts with, “Are you attracting and engaging the right customers? Once they sign up as the customer, are you onboarding them right? Are you providing enough support so they can engage with the product? And are you delivering ongoing value?” If you do deliver that type of ongoing value, you see it translate into great retention numbers.

Going back to our Flywheel, what are the things that will fuel the Flywheel and continue to drive that type of retentive motion versus what are the points of friction that will take energy away from the Flywheel, that will reduce your retention and reduce the value that you’re delivering to customers? That’s how we think about it. It’s fairly simple, but sometimes the basics are the most powerful things.

“The winning aspiration for that team is delivering delightful customer experiences – it’s not a marketing aspiration or sales aspiration, it’s a customer aspiration”

Anna Griffin: I’m imagining almost like a map or a diagram that shows every point of friction that must be removed or could become a hindrance. Do you ever graph your Flywheel?

Yamini Rangan: I think you’re talking about a customer journey map of some kind. That type of visualization is what we all aim to do. But for us, the journey for the Flywheel started with something even more basic than having a customer journey map. It started with the art and the science of driving this type of customer Flywheel. I start with the art piece because frankly, art is culture. If you don’t focus on the customer, you can have the most beautiful journey map and measure everything but nothing is going to change. Our cultural values start with solving for the customer. That’s literally the mantra we have, the north star we have. Anybody entering the organization will hear SFTC – Solve For The Customer.

Now, it doesn’t stop there. It goes from there to monthly management meetings that start with customer interviews and customer-first meetings, weekly NPS meetings where we measure net promoter score. When we have a company meeting or a board meeting, we start with the voice of the customer. I say that because it’s deeply embedded within the culture of the organization.

The science part of it is quite different. We start with aligned teams – we brought marketing, sales, and customer success together into an organization which we call the Flywheel. Then, we created a strategy that was customer-focused. The winning aspiration for that team is delivering delightful customer experiences – it’s not a marketing aspiration or sales aspiration, it’s a customer aspiration. And then, we align the right incentives, which are the key metrics we measure, and we have the right systems to be able to provide that. Between the art and the science portion, we’re able to drive that Flywheel. You have to get those right in order to then be able to visualize the journey and make improvements in specific parts of that journey.

Engaging with customers at the right time

Anna Griffin: Fascinating. We share very similar thinking. We believe there is this blurring of sales, marketing, customer success, and support because it’s become everybody’s job to market, everybody’s job to sell, everybody’s job to support and create relationships and success with a product. It’s everybody’s job to engage with the customer. It can’t just be put in silos. I’d love to hear your philosophy on modern-day engagement. What does that look like at HubSpot?

Yamini Rangan: It’s fascinating. May I ask you a question? How do you think of engagement at Intercom? I’m very fascinated by this.

Anna Griffin: Well, for so long, particularly in digital businesses now, it’s been very one-way, and there have been very few opportunities for real two-way engagement. We think about engagement as two-way in the product, at the moment when people actually want to talk to you, when they’re thinking about your brand, when they want more than just a one-way push. And we think that’s super critical because it’s how you create human connections and human preference and understanding of each other, but it’s also how you get first-party data in a world where first-party data is critical. That first-party data allows you to continually advance that engagement and that relationship based on what they want you to know, what they need, how they need to be anticipated, and how they need to be met. So that’s how we think about it at Intercom.

“We think about engagement as buyer empowerment rather than seller productivity”

Yamini Rangan: I love it, and that’s exactly right. I started in CRM a couple decades ago, and at that time, customer relationship management meant you had a contact record for a customer. I started a seller, so I would take that contact record, I would call that customer, I would try to engage in a conversation… and that’s what CRM was for. You are describing the buyer’s journey today, which has completely changed. The buyer has so much more access to information. They could go to your website and look at your product. They could download a free product and engage with your product. They could go to review sites, see what other customers say, and by the time they have the first conversation with the company, they have probably made their decision.

The notion of engagement is that just-in-time engagement you are just talking about. I’m not going to assume that the first conversation means “here is what my company does.” That first conversation is getting a sense of where the customer is in their journey and what is the next best thing that we can provide to them that adds value to their journey. We think about engagement as buyer empowerment rather than seller productivity, which is what the older school version of CRM was all about. I think it’s shifted pretty significantly.

Anna Griffin: I think you’re dead-on when you talked about the time of it. My children asked, “Mom, what do you do? Help me understand what Intercom does. I don’t get it.” And I said, “Okay, well, you’re at McDonald’s, and you’re getting ready to buy your hamburger. When do you want to talk about French fries? In an email you receive two days later after you’ve left McDonald’s? That’s not the time to talk about French fries. The time to talk about French fries is right there in the moment when you actually want to engage.” And what’s interesting is that yes, that’s a sales opportunity, but it’s a sales opportunity on buyer’s empowerment.

Yamini Rangan: Correct.

Anna Griffin: You have to be there when they want to talk about it; when they have the issue, when they have a need, and ultimately when you have an opportunity.

Customer in, not function out

Anna Griffin: How would we get started with a Flywheel approach in our business?

Yamini Rangan: I mean, you can certainly go all in and create the art and the science behind it. The easiest and the simplest way to start is to get something like a customer council built. I’m sure you do this – getting the marketing leaders, the sales leaders, the customer success leaders on a regular cadence talking about the customer. The first step is to go from functional thinking to customer thinking. We say this is like customer in rather than function out.

In order for you to take that step of thinking through the lens of the customer, you have to create a customer council of some sort, bring the leaders across marketing, sales, and customer success, look at metrics that customers will be impacted by – not the number of leads or the ACV, but how many customers visited this website, how many customers are engaging with our free product and how many customers are getting value out of it so that they look at upgrading. Think about the metrics from a customer perspective. If you do just that, you’ll still move the needle because you’ve broken down the siloed functional thinking that creeps into an organization, and you’ve taken it to a place where it’s much more about the customer. That’s the first step.

“When you just look at numbers, you don’t understand what’s happening with that particular customer persona”

Anna Griffin: Yeah. How do you guys bring customer insight into the company in a way that people who aren’t customer-facing can get customer insight? Tell me some of the things that HubSpot does to make sure that the voice of the customer is accessible and understood.

Yamini Rangan: The voice of the customer cannot be one and done. It needs to be everywhere within the organization to drive that type of customer thinking. We have a voice of the customer program and team, and that team’s accountability is to bring both quantitative and qualitative data about customers and their experiences. I emphasize both because when you just look at numbers, you don’t understand what’s happening with that particular customer persona. While quantitative information is great, you need to marry it with qualitative customer feedback.

Earlier, I mentioned our customer-first meeting. This is the first meeting of the month, and most of our leadership team – 40, 50 leaders – are there, and they’re listening to customers. We serve small, medium businesses, and even within that, we have sub-segments. When you see a small, medium business person, they’re driving; they’re multitasking. They have a kid behind that they’re helping. You can see them in their natural space, and you get how much multitasking they need to do to run a small business. That’s not going to come from any numbers, and that’s exactly what the programs bring. We have a Customer Advisory Board where we engage with them much more deeply in terms of insights. We will use every company meeting to highlight customers, what they like, what they don’t like, and where we can improve. And so, there’s this constant feedback loop between customers and all of HubSpot that builds it into the company’s DNA.

Anna Griffin: That’s fantastic. Before we wrap, I do want to ask you, what’s the future of HubSpot? What are you going to be able to make possible next? What are you most excited about?

Yamini Rangan: I love that question. I’m really excited. We’re in the middle of a transformation. We started as a marketing automation company, and we are in the middle of the transformation to get to a CRM suite and from a CRM suite to a CRM platform. Providing crafted solutions to customers across marketing, sales, customer success, and support to enable this Flywheel is a huge opportunity that customers in small, and medium businesses need. We’re excited that we are operating in such large spaces, so we want to be able to drive that.

“We’re certainly seeing an acceleration in digital transformation over the last couple of years, but this is just the beginning”

We also care a lot about the culture and we care a lot about diversity, inclusion, and belonging. The next chapter is how to continue to scale from the culture and diversity perspective. The market potential is huge. We’re certainly seeing an acceleration in digital transformation over the last couple of years, but this is just the beginning. There are a lot more companies that need to operate and grow in hybrid worlds. I think the next chapter is even bigger than the previous one.

Anna Griffin: I can’t wait to see what you’re going to make possible next. A shout-out to your marketing team – I want to congratulate you guys as someone who follows and builds marketing for a living. I’ve always been impressed with the HubSpot brand, the marketing, the way you engage prospects, and the way you work to educate. It’s really world-class.

Yamini Rangan: Thank you so much, Anna. I really appreciate it. Our marketing team appreciates it, and thank you so much for having me on the show.

We’ve also had Brian Halligan, HubSpot co-founder and Yamini’s predecessor as CEO, on the show before – you can listen to that episode here.