#39 Customer success excellence at Hubspot

Janis Zech: Welcome to another episode of the RevOps Lab. We're here with Daphne Costa Lopez. Welcome, Daphne.

Daphne Costa Lopez: Hi. It's so good to be here. Thank you so much for having me. I'm excited for this conversation.

Janis Zech: Very excited about this conversation. We met at RevOps AF in San Diego, had a fantastic conversation about all things CS. So today, we're gonna dive deep into CS. But before we start, who are you? What do you do?

Daphne Costa Lopez: Yeah. I am Daphne Costa Lopez. I am director of customer success at HubSpot. I have been in HubSpot for the better part of the last five years, so I've walked a long journey of seeing our organization double in size. I remember when I joined HubSpot about a few months after I joined, we got this massive kit in the post that said, you know, celebration, we have a hundred thousand customers, and now we have over two hundred thousand customers. So it has been a really big journey over the last five years. And as you can imagine, being in customer success, doubling the number of customers change everything that you need to do, how you service your models, how you hire, how you renew, how you expand. So it's been an incredible journey. Outside of HubSpot, I host a podcast called This is Growth, and I have a weekly newsletter by the same name that goes out every single week to over ten thousand customer success professionals. I love dissecting what's happening in customer success, what are the best practices, the innovations, how we can push the envelope. My goal is always to help people create a second engine of growth for their business using customer success. As we have the conversation today, you'll see that I always try to connect customer success to revenue, to growth opportunities. My mission is to really just bring everybody into this customer led growth world because I think there is so much potential in there.

Janis Zech: Yeah. Fully agree and super excited to dive in. So as we're living in a world where we went from growth at all costs to profitable, efficient growth, new logo acquisition has become a lot harder. And so I think, you know, many folks are actually waking up to the idea that, you know, your existing customers is where, you know, your future revenue potential lies and investing there. Maybe, you know, we wanna talk about a bunch of topics like CS metrics, onboarding, expansion, renewals, right, all the good stuff. But I'm super curious, like, you just mentioned your journey at HubSpot. Maybe explain a bit of the context, like, you know, how big is the organization? How is it structured? I mean, how many customers you serve, you already mentioned, but, you know, and then we dive right into the key topics.

Daphne Costa Lopez: Yeah. So like I said, HubSpot has over two hundred thousand customers and we are a two billion dollars organization. Our customer success team, I think now it's just over eight hundred people across multiple functions, not just customer success, but onboarding, success, renewals, consultants, professional services. So that would be the entire organization. And just by me saying all the functions, you can see how mature the organization is. We have, because we are so big, we are specialized. So we have onboarding services. We have customer success, which will be the lifetime management of the accounts. We have contract managers, what we call the renewals team, solely responsible for helping us successfully renew our contracts. We have professional services. So for customers that need more than just what the customer success manager can offer, they need more hands on help. We have professional services team that offers a bunch of different packages that customers can buy to help their business. We also have solution architects that we attach to our big customers to help them architect HubSpot, to think about the future of HubSpot in their organization, how it integrates to the rest of the ecosystem. So it's a pretty mature organization when you think about customer success. But like I said, it's been a journey to get here, right? Like when I started in HubSpot, we had just below one hundred thousand customers, and we already had what we called the contract management team at the time, but they were part of — so a big change there happened when we brought them into the helm of customer success. We already had onboarding, but it was kind of like a cookie cutter onboarding process. Everybody was going through the same. Now we're a company with five products, a suite of platform, which means that our onboarding has evolved a lot. So we've developed different tiers of onboarding. So the organization is, like I said, pretty mature, if you compare to other companies. But I think what is really interesting about HubSpot is that we have what we call a bimodal strategy, where we have a really long tail of very, very small customers, right? So if you want to sign up to HubSpot today, and you are a one person business, you're starting a side hustle, you can sign up and use HubSpot for, I think, fifty dollars. That's our starting point. But then we have all the way to Fortune five hundred companies using HubSpot, really, really large companies with thousands of users, millions of contacts, and that means that customer success looks very different, right, for a customer that's paying fifty dollars a month or a customer that's paying you hundreds of thousands of dollars a year. And that means that we have very different models within our customer success team. We have a tech touch. We have a scale motion. We have a kind of low to medium touch, and we have a white glove service. So we're kinda working throughout the entire segmentation strategy, which I think is quite different. Not a lot of businesses are doing that. Usually, you see a business that focuses on enterprise or corporate and enterprise, and then other businesses that focus on small medium businesses. So I think the fact that we have every single segment, and they're pretty mature segments as well, it's not like we just have a few customers in some of those — like, they're all very mature segments with thousands of customers in them. It means that we've had to develop strategies, processes, systems to serve all of those models, which is definitely a challenge, but it's an exciting one.

Janis Zech: Yeah. I can imagine. I mean, I think we could probably spend the whole episode on just dissecting the different teams and how they run and function. Let's switch gears a bit. So, I mean, you obviously bring in your HubSpot experience, but you also bring in your experience just looking at CS excellence, how I would call it. You know, like, what metrics do you run your team on today?

Daphne Costa Lopez: So I've been in customer success for over a decade, and I've kind of seen the evolution of customer success metrics. When I first started in customer success, really, the number that we looked at was churn, and happiness, happiness measured by a CSAT number or an NPS number — like those are the two things that we looked at. Now customer success has evolved and has a lot more of the SaaS economic metrics that you see today. For example, I'm a big fan of revenue retention. Revenue retention is basically a metric that encapsulates every single movement of dollar of an installed base. So think about it, you have — you start the quarter with a million dollars, and you finish the quarter with the same number of customers or the same group of customers and you look at what's the revenue in those customers. Obviously, goal is to end with a larger number than you started. And that is what revenue retention is. I love it because it is so comprehensive. Right? It literally — upgrades, downgrades, cross sells, cancellations — like, every single thing that happens in the customer, it will be impacting revenue retention. So I think it's a really great north star indicator of how your organization is operating. But it's not enough because things can hide in net revenue retention. Right? You can have a really good net revenue retention number. It could be a hundred and twenty percent. But you might have things that are working really well in there and things that are not working so well. So for example, maybe you have a quarter where you have great upsells and cross sells, but you also have a lot of cancellations. So your upsells and cross sells are masking your churn problem. So I don't only look at revenue retention. I also look at the gross retention, which is only looking at the cancellations and downgrades that happen in the install base. I also look at the downgrade number exclusively. I will look at the cross sells and upsells numbers exclusively. So the upsell and cross sell rate. So I basically break down that revenue retention into what are all of the drivers and then observe them separately. The other thing — so that would be kind of, let's say, lagging indicator types of metrics, but we also wanna look at leading metrics. Right? Because the lagging indicator by the time you see it is too late for you to do anything about them. So you wanna be able to monitor proactive metrics that you can see and act on to then impact the result. And that's where I'm a big fan of measuring customer outcomes. This is a very hard metric to get right, but basically, it is distilling what value your product delivers for your customer and then monitoring whether they're getting there. And I'll give you an example of that. HubSpot, one of the products that we have is a marketing automation tool. And in our marketing automation tool, one of the key business cases for you to buy that is because you wanna generate demand. Right? Independently of how you do it, you could do events. You can run newsletters. You can do ads. Whatever channels you're using, you're bringing it all to HubSpot, and then you want to create marketing qualified leads. So we are monitoring our customers' abilities to create contacts and transform them into marketing qualified leads. And that is a key metric that we call a value metric, that helps us understand if we are delivering on our promises. But more importantly, it actually helps us understand whether that customer is likely churning. Right? So if you bought HubSpot, and you're not seeing any leads coming through your system, you're not likely to stay with us for very long. So we wanna help you get there. So we monitor that metric proactively. We actually look at how customers like you are performing as well so that we benchmark you anonymously against companies like you, and that we decide whether you're performing well or not based on that. So it's a proactive metric of success. A lot of people measure health. Health is, I think, a little bit of a not a great metric depending on how you do it. A lot of the health scores are very static. Right? So you did an analysis of data from three years ago. You saw a few correlations of product adoption to your renewal, to your expansion, and then you bake that into a health metric and then you never look at it again, which means that because the customer has evolved, because the market has evolved, your health score ends up not being super accurate. So you see a lot of customers that have a green health score, right? You're not worried about them, you shouldn't be worried about them because the health score is saying green. But actually, when you dig into it, there is risk there and they end up canceling. So funny enough, I've talked to a lot of CS leaders and I hear very often that the health status of most customers when they churn is green. So that just gives you an indication of how poor the health score is. I think AI is helping with that, like actually having models that can learn on the fly and evolve on the fly. But, yeah, health metrics are something that a lot of companies are measuring. I'm not a big fan, like I said, just because of the static nature of it, but I do think that when done well it is a really good proactive metric as well.

Janis Zech: It sounds almost like there's different maturity levels — from I actually don't track health at all, to I have a health metric, to I have a value metric. I mean, the value metric, I really love because it's often something that, you know, should be clear when you talk to a prospect. You have actually a clear ROI, and then you can measure it and report on it. But, I mean, what are the pitfalls when developing such a value metric? I mean, it's pretty hard to do. Right? Like, and I think you just gave a great example, but what are some of the pitfalls you see when defining value or finding the value?

Daphne Costa Lopez: Yeah. No. I think it's a very valid point. It is hard, but it's worth doing. And the reason why it's hard is because a lot of the value that your product delivers is, let's say, not up to you. Right? It's, you know, you're providing a solution. You're providing a service, but it's up to the customer to realize that value. So in many cases, like, it's a little scary even to measure that. Right? Because once you start measuring it, then do you take responsibility for it? And there's all these other questions that come on the back of it. But, ultimately, my advice for anybody is to measure it because whether you measure it or not, your customer is going to make a decision on whether they're gonna renew and grow with you based on whether they get value or not from your product. The top reason why customers cancel their contracts is because they didn't see value. Right? So if you're not able to prove the value that you're delivering, your customer is going to cancel, especially today, the purse strings have tightened up, the CFOs are, you know, putting every single expense through scrutiny. So being able to prove that you're delivering value to customers should be your number one priority. It's the best way to actually renew and grow those contracts. But like I said, it isn't easy. But I'll give you an example that I think — I always go back to this because anytime somebody says it's difficult, I think this one is a good one for them to think about. I worked with an AI construction company. They have cameras that they put on sites. And basically what it does is it alerts the site manager to potential incidents that might happen because of safety. So somebody isn't wearing their helmet, or they left something in the wrong place, or you know, all of those things. So the entire business proposition is that if we do our jobs right, nothing happens, right? It's very hard to measure that you're delivering value if your value is that nothing happens. So I worked with their CEO and we had so many conversations around this. Like, how can you measure value when your value is nothing? So we talked about building proof of value inside the product and being able to surface, like, for example, how many incidents did you alert the site manager to? How fast did they resolve those incidents? What's the severity of that incident? Right? Is it something very small or is it something big that could lead to a lawsuit or something like that? So really creating those value proofs inside the product to then be able to meet a customer six months down the line and say, hey, we were able to alert you to a thousand potential incidents that were solved in an average of six minutes because the site manager got their alert. And that saved you a potentially x amount of money in lawsuits and damage payments that you might have had to pay or fines — like, creating that story and that narrative using data is really important. And actually, it's what, like I said, proves the value to your customer, not just to the customer you're talking to right now, which obviously is very important, but when you go to the market and you make promises to the market, right, and you say, we are here to help you improve your site security and safety, save your money — like, where are you taking that data to prove that that's what you're doing? Like, the strong proof of value, even if you want to acquire new customers, is so important. So being able to build this in product, I think it's key. And like I said, it's not easy. You do have to think creatively about it. But if a company whose value is that nothing happens at all can do it, then I think most of us can actually do it as well.

Philipp Stelzer: Like, a good way to understand the value that a company is actually looking for to get from — I think, in your case, HubSpot — is also to actually run a really good onboarding with them and really drive them towards, you know, getting that value from the product. From what point on — because, like, HubSpot has a very strong PLG motion. And then, of course, it's hard, especially for those fifty dollar tickets, to actually do one on one onboarding sessions. But, like, so from what point on do you start to do proper one on one onboardings, and how do you run those to make them really successful?

Daphne Costa Lopez: Yeah. So if our customers are buying our pro products, so if they're going beyond the starter tier, which is the first paid tier of our product, we recommend onboarding, whether it's done by HubSpot because they buy a package from us or with one of our partners who, by the way, do an amazing job at onboarding because they are so specialized in their field, in their region, in their markets. So either through a partner or through HubSpot. Once you get to that pro level, we highly recommend an onboarding. But if you're buying enterprise, like, that is a requirement. You have to do onboarding. And it's because exactly of what you said. Right? It's like those first few weeks in HubSpot are so important. If you don't see that HubSpot's the right solution for you, if you don't see value, if you don't start seeing proof that you made the right decision investing in this product, like, you might start losing faith, losing hope, regretting your decision. And once you start losing people, especially your champions, it's very hard to gain them back. Right? So time to value is a very, very critical piece of the puzzle if you want to retain your customers and grow them. And in fact, what we see is anytime you see early churn — and by early churn, I mean churn in the first possible exits, right, of the contract renewal window or the first payment window — when you see early churn, it comes from a poor onboarding. Like, nine out of ten times it is a customer that never got off the ground. So onboarding couldn't be more important. If I was a small organization and I was building my customer success team for the first time, obviously, the first hires you make is a jack of all trades, right? Somebody that's gonna do support and success and onboarding, they're gonna do everything. But as you grow a little bit and you have the opportunity to specialize, the first specialization that I would build would be support, right, to divide proactive from reactive. But then the very next one would be onboarding — like, get somebody that's dedicated to onboarding that really understands and learns how to manage an onboarding process quickly, knows how to get the customer from zero to sixty very, very fast. That's always — like, anytime I'm consulting and I'm helping people understand how to evolve and mature their success organization, that's always kind of the journey that I take them on.

Philipp Stelzer: Yeah. I think it's also so extremely hard to automate this, particularly with a product like HubSpot or, like, any really technical product. Right? I think there are some products where you have a very linear path of how to get to success and value with it, and the more of a point solution you have, I think the sort of like easier it is — in quotation marks here, because it's not always easy — but I would say it's at least easier. But then with HubSpot, I think you have lots of different paths to lots of different levels of value, so I would imagine it's extremely hard to track. And if you don't have this personal conversation about it with, like, a champion at the company or some economic buyer or decision maker to actually even get to the point where you really truly understand — what are they even trying to do?

Daphne Costa Lopez: And I think that the numbers don't lie, and HubSpot isn't exclusively and alone in the situation where, like, when you put a human into the process, the result goes up significantly, like exponentially. Because once you put a person in front of the customer who can have that personalized conversation, that can talk about the use case, can boil the ocean — like, HubSpot's a massive platform. Like I said, we have five products. You can do so much with HubSpot. If you don't have that person that will boil the ocean for you and say, hey, what are you trying to do? Okay, here's where we're gonna start. Here's the three or four things that we're gonna set up for you first so that you have the foundation to build upon. Nobody's gonna leave onboarding with everything set up perfectly. Right? Like, that's not how SaaS works. It's like an MVP, and then you iterate and you build and you change and you test. I like saying it's ever evolving, right, especially because we have so many new features that come out all of the time. But, like, onboarding is where you come out with the foundation of what's gonna set you up for success and allow you to be more autonomous, more independent as well because you learn how to navigate the product and how the interface works and things like that. Like, of course, we try to make it easy and intuitive. Like, that's a big part of HubSpot. Like, if you're to look at HubSpot versus some of our competitors, we are so much easier to use. Right? And I've used our competitors in the past. Obviously, I've been in HubSpot for five years, so I use HubSpot very heavily now. But HubSpot's easy. You know? You understand — like, as soon as you come in, you understand the interface. But even then, because there is so much power in terms of customizations, it's hard to know the art of the possible, what you can do in the product. So I think as soon as you put a human there that can boil the ocean for people and help them figure out what are the first few things that they can and they should do in order to succeed, their potential results go up, like, really high.

Philipp Stelzer: Yeah. I mean, like, I think, like, this other competitor that you're talking about — I think, you know, we know them very well. I think we understand what you're talking about, and I'm sure our listeners do as well. So onboarding is one side, I think, of the customer success side, and it's an extremely important one. I think another one that we alluded to in the beginning is also, you know, growth at all cost — sort of like those days are over — and I think it puts CS into this very interesting position now, where they are a very relevant and important part of actually also company growth. So I'm curious, like, how you look at expansion run via customer success.

Daphne Costa Lopez: I think, first of all, like I said in the start, get excited about customer success because of the growth revenue potential that CS has. And I've seen it firsthand — when customers get results from the product, they will come back for more, right? It's just a natural cycle. It's like they achieve their goals, they see results, their business grows, and then they need more from you. Right? So I think that when you do that first part right, you earn the right to sell more to this customer. And they trust you to do that because you've already solved the problems that you promised them that you're going to solve. So now they trust you. And one of the most common ways companies do this is customer success managers tend to be what we call the trusted adviser, right? The person that is having the proactive conversations about how you can extract value from the product, they help you unblock things, they connect you with the right resources so that you can unlock value, they challenge you, they challenge your strategies if they don't think that you're doing it the right way, they've seen hundreds of customers, they have a lot of intelligence to help you do better. So whenever they see an opportunity for you to grow, right, they will take that opportunity to have the conversation with you. And sometimes that means that they're gonna position more product to you. That means maybe, okay, you're a pro customer with HubSpot, but you wanna unlock some of the automation that we have. Well, you need to go into the next tier. Right? There's obviously money to pay to do that, but the value that you get will be greater when it comes to efficiency, when it comes to the ability for your business to scale. A CSM will have that conversation. We position that opportunity for you. And oftentimes, it's not — I wouldn't say a hard sell. It's over the period of many conversations with a customer, right? It's like you come to me and you say, hey, Daphne, we're trying to do A and B and C. And I'm like, okay, here's how we can do it. But if you had this other thing, you can do this in a better, faster way or you can report on this in a better way. I'll say that once. That probably isn't gonna convince you to go and upgrade to the next tier, right? Then the next time we have a conversation, I'm like, oh, you wanna do this other thing? So if you had this next tier, you could do this way, and it will be better. So suddenly, you have two, three, four reasons for you to go into that next tier.

Philipp Stelzer: Go ahead. No, it's just — like, I'm just sorry. Like, just a quick note here because it sounds like a performance marketing funnel, sort of like, initially, you create a bit of awareness, then you do retargeting and retargeting until they really become problem aware, and then you go for the conversion. So —

Daphne Costa Lopez: More or less, honestly, like, one hundred percent. Like, it is the awareness and the nurturing of that opportunity coupled, of course, with the value delivery, which I think on the first marketing funnel, you won't necessarily have. But in customer success, it's exactly that. You make them aware of the opportunity. You nurture the opportunity. As they get warmer and warmer, then you actually create what we call a customer qualified lead. Now, obviously, if you're a small company, your CSM might be closing those leads themselves. Those are deals that they manage. But in a company as big as HubSpot, what we do is the CSM will create that customer success qualified lead, and that will go back to the sales team. They will take it from there. They will do a personalized demo for the customer if that's the right thing to do. They will negotiate. They will get the buying committee together, etcetera. So the CSM kind of retains that consultative seat, and then sales takes over on the more salesy aspect of carrying on that opportunity to closure.

Janis Zech: Oh, this is pretty cool. Do you have goals for the CS team to generate CS qualified leads?

Daphne Costa Lopez: Yes. Yes. Absolutely. So one of the metrics, one of the targets that the CSM has is to create those opportunities to grow their customers. So obviously, this will be a tailored target depending on the size of the book of business that somebody has. Right? But we expect CSMs to create opportunities in their installed base and should do that regularly every single month. So that's one of the leading indicators that we will look at. Like, are we creating opportunities? Because if we're not creating opportunities, then we know we're not gonna have great revenue retention because our upgrade and cross sell number isn't gonna be great. The opportunities just aren't there. So, yeah, absolutely, that's a metric that CSMs in HubSpot have — and not just in HubSpot. Like, this is a pretty common metric. Once a company is a little bit more mature and has multiple products to sell, right, you need to have something to sell to have this as a metric for your team. But as soon as you do have those extra products, that becomes a very normal metric for a CSM.

Janis Zech: And is that based on the value of the opportunities that then later close or just on the amount of leads generated?

Daphne Costa Lopez: I've seen everything right in this. I've seen number of opportunities based on the size of the install base. I've seen number of opportunities plus the conversion rate of the opportunity. I've seen a close rate, like a quota number attached to that as a target — so I've seen various cuts of how you can actually build a target and build a metric and performance manage CSMs around this. I have to say, like, I don't have a bias right towards any of them. I think it really depends on what you need. In my experience, CSMs tend to overqualify opportunities, right? So they will wait until the customer is burning hot, like they're ready to sign the contract, to send them to sales, mostly because they're trying to protect the relationship. They don't want to go too hard, too fast on a customer, and then lose the trust. So they overqualify the opportunity, which means that in general, when you look at the CS qualified leads, they are the highest conversion rates in the business. I've seen success qualified leads that closed at an eighty percent rate. Right? So it's, like, incredible, but it's also overqualifying.

Janis Zech: You should probably be sending more deals earlier to sales. So I think having a good win rate for your CS pipeline — I think between thirty five and fifty percent is good.

Daphne Costa Lopez: Okay. And I think that, like I said, you don't want the CSM to overqualify. Right? Because sales comes in with an incredible skill set, which is actually selling the art of the possible to the customer, positioning it to them, having the more kind of commercial discussion. So I think sales adds a lot of value here. They aren't just the people that we send the customer on to so that they can create a quote and send a contract. Like, if that was the only reason, we would do it ourselves, right? It's just the end of the process. So I think we need to trust the skills of our sales counterparts that they come in and they add a ton of value. So if there's an opportunity there, if there's interest and the customer wants to have a conversation, we should be passing that on to sales. And, you know, if you think about football, we should be midfielders. Right? We should be setting the opportunities. We shouldn't be strikers. Yeah. I think that's, like, how I've seen it work the best. So I think, yeah, thirty five to fifty percent — that's a really good win rate.

Janis Zech: So I have a personal question for you. I mean, your goal, I assume, on NRR, GRR, right, like, kind of the lagging indicators — maybe that's wrong, but I assume that's part of your personal comp plan. But then a lot of that is driven by actually sales closing those opportunities. So I assume you don't run the sales team. Do you look at the forecast they have? Do you look at the pipeline? Do you actually have deal reviews with them? How do you handle that?

Daphne Costa Lopez: You are touching on probably the most contentious subject. You're welcome. Yeah, exactly. What I would say is I have never worked in a business where forecasting has been good in customer success. Right? And I mean good — I don't mean good as in acceptable. I just mean like, you know, it's aligned with sales, everybody's forecasting in the same methodology and together, and it all feeds up bottoms up to one thing — like that integrated view. I just haven't seen that really happen. I think that the systems aren't really great for that. Maybe it's because a lot of customer success teams work in separate systems than the CRM. They have their own CSPs. Not in HubSpot. We actually work CS in HubSpot. And we have just launched a few amazing CS features now into our product. But I think in many cases, what's happening is the customer success team has a renewals pipeline that they are responsible for. Right? They have all of the renewals in there. And then everything that's outside of the renewals — like the upsell deals, any contract changes that might happen halfway through the contract — those are being funneled elsewhere. Right? They're either going to the sales pipeline. So the pipeline is a little bit fractured. You have your renewals pipeline, and here you have your new business and expansion pipeline with the sales team, and then you have to kind of fill the gap by asking questions, jumping into multiple systems, using spreadsheets, you name it. Like, it's not perfect. It's not easy to do that. In HubSpot, we ask our CSMs to actually forecast for all of their deals because we use HubSpot. Like, all the deals live inside HubSpot — renewals and expansions, etcetera. So we are able to see that all inside of HubSpot. But I would say, like, in terms of having a forecasting process as a business where everything just feeds into the one view, etcetera — like, we're still working on that as a sales team, a success team. And to be honest with you, like, I do think that I would love to see — and if anybody out there has a business that's forecasting everything together, one process, one cadence, like, I'd love to see that. Please reach out to me. But, yeah, I think it's everywhere. It's fractured like that.

Janis Zech: Yeah. I mean, shameless plug and we didn't plan this, but we actually do that at Weflow, but not for HubSpot, only for Salesforce. But, yeah, you can basically forecast your new logo expansion and also renewals in Weflow, and then also manage your accounts and see account health, or like value leading indicators, however you set it up. I think most people actually don't have leading value indicators as you alluded to, at least not what we are seeing — and we typically work with companies between a hundred to, you know, two thousand companies in software technology. So it's also, you know, a lot smaller than HubSpot. The maturity level is different. But I mean, I think it's not just a tooling problem. Right? I think it's also an operating cadence, ownership, and accountability problem. Who reports into who? You know, how are these meetings run? How are they set up? But I strongly believe it's such an important aspect. And, yeah, it seems like you tend to agree, which is good to hear from somebody who's that experienced in CS. Quick question on

renewals. So I mean, that's probably another huge topic. But like, can you quickly lead to like, how do you manage renewals? and kind of especially like how do you try to prevent churn? I think that's like the most interesting one. And when does that rescue mission actually start and when should it start? Because I think that's often starting way too late, right? It's like kind of the lagging, right? And I think you already said that like ever boarding, but yeah, I'm curious like how exactly specifically it's done.

Daphne Costa Lopez: What I would say is like if your customer arrives to their renewal window, not having seen success, you're now scrambling, right? Because you're trying to sell them into another 12 months of your contract, or more or less, whatever, but you're trying to sell them into a new period without having anything to back it up, right? You can't go back and say, here's the things that we've done for your business. That's why you should continue to give us your business. Now you're already on the back foot of that negotiating table. The best outcome that you're going to get there is renewing them for less money. You're now negotiating on the basis of price, which is never, never good. So my number one tip for people is make sure that if you have a 12-month contract that the first nine months, that you really sweat the delivery of value on those first nine months. So by the time you get to the window of renewal, We call the window of renewal the three months around the renewal. Some people do 45 days, but depending on how difficult obviously your renewal process will be, how many people you need to engage with in the renewal committee, a lot of people are using RFPs in the larger segment, so that takes more time. Or if you are still in an enterprise company, you have like a procurement team, whatever. So depending on how difficult your renewal process is, it's going to dictate how big your renewal window is. But I would say make sure that you arrive to that point where you're going to say, let's start having a renewal conversation, that you arrive there having delivered value. What I also say is, especially for CSMs, is if you are halfway through the life of the contract and there are problems, the customer isn't seeing value, they haven't put the right resources in place, maybe they deprioritize the execution on the project that they're doing inside your product, call it out, call the elephant in the room, bring it up to them. Because whether you say it or whether they find out themselves at some point, that conversation is going to happen. But if you are the person who brings up the fact that they are not seeing value, they will respect you more and they listen to you. Because you are acting like a trusted advisor. So let's say you're a HubSpot customer and you're not using HubSpot, you haven't done the things that you said during onboarding that you're going to do, I come in into our conversation and I say, hey guys, I want to do a value check in with you. Here are the things that you said you wanted to accomplish. Here's where we are with them. We haven't achieved any of those metrics. We're behind by X amount and every single one of them. I'm concerned. I'm concerned that you haven't been able to extract full value from HubSpot. And I'm committed to making sure that you do that. Here's the things that I think we need to do. What do you think? And have that conversation, because that might be just the wake up call that they need, right? To be like, oh, we have paid six months for the subscription and we're not seeing value, and this is important to us. Or it might be an opportunity where you say to a customer, like, I think you need external help. It doesn't sound like you have the internal resource through that. Can I connect you to a partner? Can I connect you to one of our professional services? So that conversation, that come-to-Jesus moment that you have with them to say they're not saying value, it's actually really fruitful. So my advice for anybody who customer success is have that hard conversation, don't hide from it, poke the bear because whether you are the person doing that or whether one month before the renewal, the customer wakes up to the fact that they didn't get value and now you have no time to make any difference, that conversation will happen one way or another and you're better off having it early.

Janis Zech: Yeah, especially right now, given the economic environment.

Daphne Costa Lopez: I like it. The other thing that happens is like company strategy changes, right? How many times have I been in HubSpot or before HubSpot and our priorities changed because something big happened in the business and if the customer's priorities changed and you come into that conversation and they're like, you know what, this thing is no longer important for us. Now, you can have a conversation about what is important to you. Can I help in some way, shape, or form here? Can I attach my product and the solution that I provide to something that is valuable to you? Right? So, I think that whatever outcome of that conversation, whether it is the customer wakes up and it is important and they commit to putting the effort, whether they need help and you get them the help that they need, whether you find out that this is no longer a priority you have an opportunity to find something that's important and attach yourself to it, or whether the customer has given up and they say, you know what, we're not going to do this. All of those four outcomes are better than not knowing. So I think that my advice is always have that conversation. So to go back to your question, which is like, okay, what do you do then to the renewal? Hopefully you get to the renewal, having had those conversations, have validated the value and have an opportunity to deliver value. So now, your first conversation on the renewal is a softer conversation of confirming the value that you've delivered. And I always say that I like the CSM to be part of that conversation, even if you have a renewal stream. The conversation is the business POC, hopefully the executive sponsor on the customer side, and it's like a review. Companies call that quarterly business reviews. I don't like doing it quarterly. I don't think it actually lends itself for every customer very well. I call it an enterprise business review. So we do exactly what I said. It's like, what you said you wanted to accomplish, what we've done, what are the opportunities of what we can do next together? And that is an alignment conversation. As part of that conversation, you will weave in the fact that your renewal is coming up in the next three months. Here's how I think we should proceed with this. I think you need this extra product. I think you need this extra service. I think looking at how you're growing, I think we should lock in a price for extra licenses for you now in this renewal to make sure that that stays cost effective for you. You should come in with a really strong renewal proposition and then give them time to think about that, analyze it, to have conversations internally, to secure the budget, all that kind of stuff. And then that's when I think a good, if you have a renewal stream, that's when a renewals manager can come in and carry on that conversation. It's like now they have that renewal proposal, and now it's all about the negotiating piece of that. It's like, okay, we want some of this, we don't want that, we need a better discount, whatever. That's the renewal pipeline or then kick in with all the stages of the negotiation, the agreement, et cetera. So that's ideal, right? That's ideally what you want. And I know a lot of people talk about this renewal as a non-event, right? It's like, oh, if everything is going right, the renewal is a non-event, the customer doesn't even each talk about it, the auto-renew. That's a myth. That's a myth in B2B. That is not how renewals go. If your credit card $50, like at the bottom of the long tail, yes. But if you're working with customers that are paying thousands of dollars a month, there is no event renewal. Renew is a conversation over multiple conversations over a period of time.

Janis Zech: Well, I think often it's treated that way, but internally, the buying committee and the conversations that are going on between the finance department and the key stakeholders and the champions, they are certainly there, right? And you just ignore the fact that they are there. And I think it's very risky to ignore that. And I think we've all been there, right? Like you basically bought a software and then one month before, Hey, I'm your new CSM, you know, your renewal is up. And I hate it so much. I think it's so bad practice. You don't hear from them for so long. And then suddenly they show up. And I think it's on purpose, right? It's on purpose. And some even do it with like, you know, ordering new clauses and you know, two months and then you look at the contract and you already ordering you. It's such a big topic, right? That's actually gotten banned on the consumer side in Apple. There's now a law that you cannot order in you on consumer subscription. In B2B, I think some companies try to get away with it, but it has nothing to do with creating value and basically delivering on that. I think it's a great point. Philipp, do you want to ask our closing question?

Philipp Stelzer: Yeah, I think it's a great point, and it's a great point to end And before we go even deeper, I think it's great. And we definitely have to repeat this with a second episode sometime in the next couple of months. But yeah, we always try to ask one closing question and to recently change that to looking back at your career, your over 10 years in customer success. What's one of the kindest things you've experienced in your career that has really helped you?

Daphne Costa Lopez: Kindest. Wow, what a great question. I have to say that I've had incredible advocates for me in my career, people that like really believed in me and invested the time and gave me the hard feedback when I needed to hear it and gave it to me blunt, right? Not sugar-coated, not like, you know, in roundabout ways, like they just said the thing. And they did it in a way that it was very clear that they cared about my success. They weren't doing it to hurt me, to be personal. And I'm not going to say it didn't sting. You get critical feedback that's difficult to hear. It's going to sting. But the fact that they did it in a really kind and they wanted what was best for me, but they were taking the risk, I think, of saying the hard thing, having the hard conversation, even when they didn't need to. I had a lot of that, and I've grown because of it. So I've had that quite a few times in my career, and it has really changed the leader I am, the professional I am. So I think that's the kindest thing. The honesty, the radical candor, that's the kindest thing anybody can do for you. So yeah, that's for me, that's the kindest thing.

Philipp Stelzer: Beautiful, like a good renewal conversation.

Daphne Costa Lopez: Yeah, exactly.

Philipp Stelzer: Yeah.

Daphne Costa Lopez: Yeah. Perfect. Definitely.

Philipp Stelzer: Thank you so much. It was great to talk with you. Thank you very much.

Janis Zech: Yeah. Thanks.

Philipp Stelzer: It was awesome.