Hubspot: Inbound Marketing and Web 2.0 Essay Example

evolution in the rules of marketing.

As more and more consumers use the Internet to get information, inbound marketing offers an extremely effective and cost-effective way to attract potential customers and generate enough interest to convert leads to sales. Customers, customers, customers Initially, HubSpot’s sales force would entertain all leads that come their way given their position as a start-up; however, as the company grew and its customer base grew, the company started filtering leads, establishing algorithm for the leads ranking them by quality and weeding out the bottom 50%.

From this and how the company was presented in the case, it looks like HubSpot is a highly metric-driven company. The approach that HubSpot is a good strategy that focuses on quality and emphasis on long-term growth. However, I think that given the company’s position as a start-up, I don’t think they can afford to weed out customers yet. As a recommendation, in addition to the free software that they offer such as the Website and Social Media grader, perhaps they can offer a 1 month free trial for their main product – potentially transforming most of the leads to high-quality leads. HubSpot was able to attract a diverse set of customers, from small business owners dubbed as “Owner Ollies” to marketing people dubbed as “Marketing Marys”. Further, HubSpot also uses an additional metric to segment its customers, Business-2-Business (B2B) customers and Business-2-Consumer (B2C) customers. As the company continues to grow and mature, HubSpot is wondering if they should focus exclusively to a particular segment in order to grow faster. Based on my analysis, HubSpot should focus more on Marketing Marys.

As per the tables below, although Marketing

Marys have a high acquisition cost and takes 9 months for the company to achieve beak-even point per Marketing Mary customer, profitability in the long run grows at a significantly high rate, out-profiting a Owner Ollie customer by $500 after 18 months and as much as $2000 after 24 months. In order to maximize profitability for Marketing Marys, HubSpot needs to lock them in; hence, long-term contracts would be best to do this. To justify the long-term contracts, HubSpot is to add value-added services to its product for Marketing Marys.

Although I recommend that HubSpot focus more on Marketing Marys, this focus will not be exclusive – the company is to keep its Owner Ollies customers. What I suggest is that HubSpot will focus a significant amount of its resources targeting Marketing Marys, perhaps around 70-80%, while the remaining would be for Owner Ollies, since this particular type of customer has a much simpler and easier acquisition process. Product and Pricing Strategy HubSpots did a great job differentiating its products as it has learned more about its customers.

In addition, I think the software-as-a-service pricing model is working for both Marketing Marys and Owner Ollies; however, to avoid the problem of customers cancelling in the first few months after getting the initial value of HubSpot’s products, the company should lock them in with an annual contract. In addition, since I think the value of HubSpot’s products are intrinsically high in the first few months of usage, perhaps structuring the price such that customers will pay more in the first few months and decrease the monthly payment as customers continue to stay, with a minimum payment cap.