Founders Brian Halligan and Dharmesh Shah of upstart inbound-marketing firm HubSpot have come to a crossroads in their business model. The direction of the company must adapt in order to continue on the stated path of growing as big as possible, as fast as possible. HubSpot is facing two problems that it must address in order to accomplish its goals.
First, HubSpot has a corporate culture centered on an evangelical attitude towards inbound-marketing. HubSpot offers the services of inbound-marketing, which uses strategies such as Search Engine Optimization (SEO), the ability to write compelling content that attracts customers and the ability to attract and engage a community of followers who interact with the content.
It is what they do, and who they are. HubSpot has recently seen increasing pressure to explore both for itself, as well as for its customers, traditional outbound-marketing strategies. Outbound-marketing pushes a businesses message to a mass audience, regardless of consumer interest in the message being delivered. The hypocrisy of promoting and selling inbound-marketing while openly engaging in outbound-marketing services could tarnish the brand image and be seen as inferior and/or insincere.
Secondly, the pricing and service structure isn’t suited for the diversity of its current customers or the future customers HubSpot wishes to attain. Currently, HubSpot offers two types of services. Owner Ollies and Marketer Marys.
Owner Ollies are charged a $250 monthly fee for services catered towards business owners who need a simple system to generate more qualified leads to convert to sales. Marketer Marys are charged a $500 monthly fee
Owner Ollies made up 73% of HubSpot’s client base. The cost to acquire an Owner Ollie is around $1,000. They were an easy sell, enjoyed greater initial value from their HubSpot services, however. Owner Ollies had a churn rate of 4.3% each month.
Marketer Marys made up the remaining 27% of HubSpot’s client base. They’re charged a $500 monthly fee and whose services are designed for marketing professionals who require flexible, sophisticated inbound marketing tools, including closed loop marketing reports. The cost to acquire a Marketer Mary is around $5,000. They’re harder to reach, and require a longer selling cycle because they often had to get approval from managers higher up in their own organizations. Marketer Marys also have a greater customer life cycle.
Within those two types exists two additional segmentation points that are not being fully capitalized. Clients who conduct business-to-business (B2B) and clients who conducted business-to-consumer (B2C) exhibited differing patterns of attained value, required different levels of attention from HubSpot and churn cycles. B2B customers make up 68% of HubSpots customers.
Also, if clients hosted their websites on HubSpot’s content management system (CMS) they have a lower churn rate than customers who hosted with other companies. 15% of HobSpot’s customers use the CMS system. All services require a $500 upfront fee to provide installation and training of the different inbound-marketing services.
Alternatives for outbound-marketing
Addressing the first problem of whether to engage in outbound-marketing presents a tricky situation. Outbound-marketing can open doors for HubSpot and its customers alike, but in different ways. By completely avoiding such techniques itself, while providing such services for its clients HubSpot can provide added value and supplement their current services without having to engage in the practice itself and coming across as hypocritical in the marketplace.
HubSpot could also openly reject the idea all together. By sticking to its roots, it provides the perfect blueprint for companies who are hesitant to do away with outbound-marketing practices all together. It provides an authenticity in message from HubSpot to its clients. If HubSpot doesn’t need...