HubSpot: Inbound Marketing and Web 2.0
HubSpot is an online marketing software company that utilizes inbound marketing, a system which pulls prospective customers to a business and its products. Although inbound marketing has been highly successful and the company has reached its milestone of 1,000 customers, HubSpot is now faced with the dilemma of which direction to steer towards, while considering the viability of inbound marketing at a larger scale. HubSpot must decide whether to target the Marketing Marys (MM) segment, the Owner Ollies (OO) segment or both. We recommend that HubSpot focus on the OO segment. Our strategy is to actively grow this market segment, lower the churn rate and increase the retention rate. By targeting this segment, it will help HubSpot further its goal of becoming an industry leader in the Leads, Analyze and Qualify Traffic sectors of the inbound marketing industry. Our recommendation is based on quantitative analysis which showed that the OO segment is more profitable than the MM segment. Considering the $1000 acquisition cost of OOs and their current pricing, the breakeven for this segment is 2 months. In addition, the lifetime revenue for the OOs is estimated to be $1.3M (Exhibit B). In contrast, the breakeven time calculated for the MMs is 9 months with an estimated lifetime revenue of $1.6M. In addition to quantitative analysis, we also considered qualitative factors in determining our recommendation. We determined that inbound marketing should remain the primary marketing system because it is a user-friendly and a cost efficient product and most importantly, it is HubSpot’s guiding philosophy. Inbound Marketing, a core value and strength, will continue to differentiate HubSpot from its competitors as it grows. In choosing to target the OO segment, we are assuming that OOs will continue to migrate to HubSpot’s hosted content management system at the same rate. The plan is to foster the OOs through retention...
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