CASE ANALYSIS OF

SUBMITTED BY: ARUN TOM (34) ARUNANSU KUMAR (35) ASHWINI G.BHAT (36) ESHA VERMA (54) BATCH – 17 STRATEGIC MARKETING (B) XAVIER INSTITUTE OF MANAGEMENT AND ENTREPRENEURSHIP

In the initial stages of its operations. This is also due to the mass marketing orientation of inbound marketing. With increase in prospective customers. HubSpot came to be known for its inbound marketing strategies and practices that pulled prospective customers toward a business and its products.SITUATION: HubSpot was formed by the combination of Brian Halligan’s marketing. PROBLEMS: 1. who made up the 73% and 27% customer portfolio of HubSpot. HubSpot had the advantage of being located in the vicinity of the entrepreneurial hotbed at MIT. as well as businesses selling directing to consumers (B2C). The situation which HubSpot currently faced was with respect to scaling up its business operations based on the huge market potential envisaged by its venture partners. It was a perfect time to launch. which made their customer set very diverse. as the effectiveness of the traditional marketing and sales methods were on the wane. sourcing of eager and passionate MIT students as staff. with the emergence of Web 2. through the use of Web 2. health care. In order to begin their expansion.0 tools and applications. qualify those prospects to determine which ones had the highest probability of converting to paying customers. The cost to acquire them was $1000 and $5000 respectively. it began qualifying leads before turning them over to sales force. and social media. They showed strong market sensing by recognizing the transformative power of the internet. HubSpot sold to any customer who was interested in buying its products. sales and venture capital expertise and Dharmesh Shah’s technological knowledge and experience as a successful entrepreneur. They observed their customers ranged from professional services. and a solid financial foundation. they had certain strategic issues to be addressed. This customer-based positive segmentation strategy of HubSpot was the basis of its expansion possibilities. search engine optimization. and close the sale. especially in the operations of the small businesses. The primary problem of HubSpot was that it was serving very diverse market. real estate. The software tools that it offered were also based on the same principle of inbound marketing.0. HubSpot’s customer funnel describes the critical processes firms undertook to attract prospective customers to their business. They broadly segmented their customers as Owner Ollie (small business owners) and Marketer Mary (marketing professionals). pertaining to the diverse customer base. like blogging. and the complexity associated with it. in 2006. software. The segmentation that they could observe were businesses selling to other businesses (B2B). . making it difficult to standardize processes across customers. to construction materials.

took what they caught. Was there any any change required in the pricing model due to high churn rate after obtaining initial burst of value? 3. The fact that this tool added more value to B2B customers more than B2C customers was also a problem. This left HubSpot with a very diverse customer base and made strategic planning more difficult. Traditional marketers prospected for new customers based on a predetermined target market that was strategic. lead to opportunity %.2. Was it the B2C or B2B market? Was it Owner Ollies which were more in number and were likely to stick around longer but with lot macroeconomic risk associated like recessional risks or Marketer Marys from more money could be extracted? 8. 9. 7. 5. EVALUATION: 1. 6. Difference in familiarity and comfort among B2B and B2C were totally different that posed as a problem for them. Different types of customers valued different features. Owners Ollie(The Small Business Owner Customer) gains the maximum value out of it initially when compared to Marketer Mary but the retention ratio of Owners Ollie is quite low than that of Marketer Mary though they are a harder sale upfront. They were also in a spot of fix in terms of whether a right mix of inbound and outbound marketing strategies should be adopted due to aggressive growth rates seen in the market. HubSpot was in a spot of dilemma as to which segments were the best customer segments to cater to. For example. 4. 3. and then figured out who their actual market was. Evaluations of the customer funnel in greater detail. analyzing the traffic to prospect %. The problem of customers not putting in 10 hours per week of work on hubspot was certainly another pain point for HubSpot which did not yield to desired results. Which customer segment to cater to? 2. and prioritizing items in the long list of potential software updates proved to very difficult. prospect to lead %. inbound marketers fished for customers. DECISIONS: 1. Was there a need of inculcating outbound marketing tools with inbound ones despite the company preaching and selling inbound marketing tools? This would be at the cost of losing its own credibility. and opportunity to sales % based on its . Due to high churn rate among the Owner Ollie the company also doubted its pricing model.

needs to be carried out.customer segments. B2B and B2C. Owner Ollies in the future can be a major customer for HubSpot. Highest churn rate is seen among 16-18 month old customers. 2. Assess whether they could achieve enough scale through inbound marketing efforts. This is required. or whether they need to supplement their inbound programs with traditional.0 might be found wanting. evaluating their product portfolio is essential. Owner Ollies and Marketer Mary have different needs to cater to. HubSpot should take keep this in mind and develop their products according to these needs not just creating developing different versions of the same product. and this has to be addressed during strategy formulation. 3. Major problem faced by them is which customer segment they should focus on as each segment has different needs. HubSpot should focus on retaining Owner Ollies as they form 73% of HubSpot’s customer portfolio and are easier to convert from leads to customers. The churn rate of Owner Ollies could be a part reason for this. there has been a decrease in the opportunity to sales %. More evaluation of Owner Ollies.0 is a uncertainty. relatively new concept. the historical data required to evaluate the role of macroeconomics in marketing strategies with respect to Web 2. Owner Ollies. . while the remaining 32% are B2C clients. as we observe that although the numbers of customers have increased. 68% of their clients are into B2B. Currently. Owner Ollie’s primary objective is to generate more leads for their businesses and Marketer Mary are more interested in the analytics and reports that HubSpot provided. HYPOTHESIS: 1) Catering to various segments HubSpot has 4 major segments of customers. apart from the CMS related retention. B2C customers have a higher average churn rate in all the business sizes considered. Also. Thus evaluation of the preferences will help them to understand better the customer segments. The growth pattern during the recession-hit year of 2008 has made the company realize that they need to relook at their strategy in line with their vision. Macroeconomic risks add more Since Web 2. and formulate their pricing and marketing strategies accordingly. 5. and attract new customers. Marketer Mary. This will help in maximizing the satisfaction and loyalty of current customers. This will also complement their existing HubSpot Owner and HubSpot Marketer portfolios. Evaluations of the product portfolio preferred by the various customer segments. To attract and retain them. interruptive outbound programs. 4.

including HubSpot customers. HubSpot should identify which customers cannot afford to do away with outbound marketing. HubSpot cannot shift from Inbound to total Outbound marketing as the founders have turned into evangelist for inbound marketing so. Marketer Marys were more educated than Owner Ollies and ran many more inbound marketing programs than Owner Ollies. This will lead to retention of the customers. They are already targeting customers who want to adopt inbound marketing so HubSpot don’t really have a problem in this regard. 2) Inbound marketing v/s Outbound marketing HubSpot has always preached inbound marketing so much so that the founders became evangelists of inbound marketing. By understanding the needs of the customers. HubSpot can segment its customers on the basis of who can be more effectively targeted by inbound. Such customers need a complete package which suits their needs rather than switching completely to inbound marketing. If they go for outbound marketing. They have to keep in touch with the customers so that they spend required time on the package. . outbound marketing and a combination of both. The only way HubSpot could grow is by targeting this segment and provide them with a comprehensive plan rather than not having them as customers. But the biggest advantage of Marketer Marys is that they stay with Hubspot longer than Owner Ollies. they will be going against the basic principle on which HubSpot was formed.HubSpot can provide basic package to Owner Ollies and for additional services like lead tracking and intelligence they can charge extra. 1. 3. OTHER ALTERNATIVES: Though the founders’ vision was centered around inbound marketing but the reality was that most businesses. information regarding the additional services should be provided which can help solve the problems faced by the customer. would likely have a mix of inbound and outbound marketing. They needed more robust and sophisticated tools to design them and measure their results. Marketer Marys had more money to spend but are harder to reach plus they have a longer selling cycle. They can offer packages which will have some aspect of outbound marketing but the main product is inbound marketing. 2. do so would go against their business philosophy and model and harm their brand value and credibility.

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