The old rules of marketing are characterised by companies bombarding consumers with marketing tools, such as TV advertisements, direct mail, telemarketing, fliers and spam. David Meerman Scott author of “The New Rules of Marketing and PR” describes the old rules of Marketing and PR as ‘Buy your way in with advertising, Beg your way in with PR.’ HubSpot, although a pioneer, is not alone in the move to inbound marketing. “Inbound marketing is a collection of marketing strategies and techniques focused on pulling prospects and customers towards a business and its products” when prospects are actively searching for particular products. (CASE) The new rules of marketing were that firms pulled leads “towards a business and its products, through the use of Web 2.0 and applications like blogging, SEO and social media.” (Case) It aimed to provide all relevant information for prospective customers searching for a brand or product and increase the sales/leads ratio. It not only provided additional sources of information but also aimed to create “interesting content, so that people want to hear what you have to say and come find you”.(CASE) According to Mike Volpe, HubSpot’s VP of Marketing, this approach is more effective than engaging in traditional advertising. This effectiveness is down to significantly lower costs of lead generation and greater conversion rate of prospective customers. We partially agree that the rules of marketing have changed. While it is true that outbound marketing is becoming less effective because people have begun tuning out from the constant flow of promotions yielding less new business (Case), HubSpot itself has been having great troubles trying to operate with the use of just inbound marketing. “I am not allowed to cold call prospective customers because HubSpot’s been preaching inbound marketing…if someone then gets a cold call from someone on my team, that can hurt our brand” (Mark Roberge, VP Sales). Based on these facts, the old rules have not changed but rather have been complemented by new inbound marketing tools.
HubSpot has evaluated the market and classified it into different segment profiles: Marketer Mary’s (MM’s) and Owner Ollies (OO’s) as well as B2B and B2C. The case highlights that B2B companies derive greater value from inbound marketing in comparison to B2C companies for a number of reasons. Firstly, B2B companies’ products are more complex and thus they require in-depth product specification and explanation, e.g. tutorials and blogs. In addition, since their customers have a longer decision making cycle, B2B companies are more selective about whom their sales forces focus on. Thus B2B companies also benefit from the lead qualification analysis that HubSpot provides. Consequently, they have a much lower churn rate than B2C companies– 3.3% vs. 6.0%. (Table A)
HubSpot has also made a distinction between small business owners, the “Owner Ollie” (OO’s), and the marketing professionals for bigger firms – “Marketer Mary”(MM’s). OO’s are usually small businesses with 1-25 employees and account for 73% of the generated sales. Their demand is fairly simple - they want simple solutions that will not take much of their time, since they have to manage all the different areas of the company. Also, OO’s have little knowledge regarding Web 2.0 and thus inbound marketing can have a bigger initial impact on these businesses. 13 % of OO’s host their websites on the HubSpot Content Management System (CMS), whereas only 2% of MM’s do so. MM’s are marketing professionals working in firms of 26-100 people, and account for 27% of Hub’s customer portfolio. Their demand is more complex, since they are more familiar with Web 2.0 – these companies have their own websites in which they have invested their time and money.
HubSpot aims to grow quickly in the market, increase its profitability and optimise its pricing strategy. Exhibit 10 shows that...