Hubspot - Case Analysis

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HubSpot: Inbound Marketing and Web 2.0

Dr. Korgaonkar

April 26, 2011
Presented by:
Jeannette Chambers
Balaji Govindarajulu

Table of Contents
HubSpot was born3
Inbound Marketing4
Inbound Marketing – Three Distinct Skills4
Advantages of Inbound Marketing5
HubSpot Product Components7
Content Design7
Search Engine Optimization7
Lead Tracking and Intelligence8
HubSpot – Marketplace8
Customer Funnel9
HubSpot Customer Funnel9
HubSpot – Customer Diversity10
Customer Segments10
Owner Ollies Vs Marketing Marys11
B2C Vs B2B11
Churn Rate12
HubSpot Pricing Model13
Cost/Benefit Analysis of a Diverse Customer Base14
Problem Statement17
Exhibit 1 – The HubSpot Customer Funnel19
Exhibit 2 – Lead Generation Budget Spend19
Table B-1 – Owner Ollies – Customer Lifetime Value20
Table B-2 – Marketer Marys – Customer Lifetime Value21
Table B-3 – Marketer Mary - $3,000 consulting fee – tier pricing example21 Table B-4 – Marketer Mary - $5,000 consulting fee – tier pricing example22

Today, companies are striving to increase their profitability and to gain a competitive edge over competitors with unique marketing tools. The customer base that had responded well to traditional marketing techniques (direct mail, trade shows, and telemarketing campaigns) in the past was shrinking. In addition, impulse buying behavior was being replaced by internet comparison searches. Modern day shoppers spend more time researching products and rely more on statistical assurance to make a buying decision. These traditional marketing techniques were classified as outbound marketing strategies. The internet was changing how the customer shopped and purchased. Businesses wanting to reach this new savvy customer needed to find ways to understand the new purchasing power. Social networks once considered chat rooms have turned out to be valuable marketing tools, especially to capture data about the consumer’s buying behavior. Both marketers and consumers have started taking advantage of social networks. The social networks gave small companies a unique opportunity to take the market share from major companies. Businesses began to see social media, search engines, and blogs as new channels of product awareness to new customers. However, the small business entrepreneur and the many company marketers were inefficient in their awareness of how to harness the data of the internet consumer and thereby how to best reach the consumer.

To solve this problem, two MIT graduates founded HubSpot, a software company dedicated to help companies bring in new customers rather than go out to find new customers. They coined a new phrase in marketing – “inbound marketing” and believed this was the only type of marketing needed to be successfully in the new world of Web 2.0. HubSpot was born

In 2006, HubSpot, a software company based in Massachusetts, was founded by Brian Halligan and Dharmesh Shah. Their mission was to become the market leader of inbound marketing helping companies supplement or replace their traditional outbound programs. They created a software product that could “help businesses grow” by penetrating new markets, increasing an organic search presence, and converting a greater number of leads into customers. In 2009, HubSpot reached a milestone of 1,000 customers solely utilizing “inbound marketing”. Halligan and Shah found themselves in a similar predicament as their clients – wondering how to increase growth profits. Would they need to revert to outbound marketing techniques to increase their profit goals? Halligan and Shah realized HubSpot had to make clear choices on their target customers and pricing strategies. Most important of all, the founders needed to evaluate whether HubSpot could go to scale with just inbound marketing strategies or did the company need to have a mix of inbound marketing and outbound...
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