Hubspot Case Study

HubSpot Case study

To a certain extent, I do agree with HubSpot that the rules have marketing have changed. Hubspot's "inbound marketing" has led to a large increase in the use of the Internet as a primary promotion tool. Many professional marketers have also realized the importance of web marketing and have begun to use it as their main source of customer acquisition. However, I believe the concept of inbound marketing doesn't apply to all kinds of firms. There are many products that are advertised through television, print and Internet ads. A large majority of those products are very similar to each other and differ only in very small details. Therefore they are competing with each other and proclaim that their product is of the highest quality and of a greater value for money than that of their competitors. In this aspect, inbound marketing doesn't play a major role because consumers wouldn't be actively seeking products, which they already know exist. In addition, inbound marketing is intended for more specific and particular services that don't have many competitors in addition to not being completely understood by the consumers. This is shown in Hubspot's case where the B2B companies seem to gain much greater value from inbound marketing than B2C companies. Since the products offered by B2B companies are much more complex and need buyers to understand the product on a much more detailed and technical scale, inbound marketing serves that purpose and leads the buyer to actively contact the producer to get more information.

Furthermore, I don't feel that the "marketing system" that HubSpot offers is completely offering inbound marketing policies. In today's world, search engine optimization is being used to such a great extent that often certain queries made by a user will bring up advertisements and links that are completely unrelated and have nothing to do with what was originally searched for.

Having said that, for the companies that offer products that would benefit from inbound marketing, I feel that it is definitely the way to go. Firstly, the cost of customer acquisition is "five to seven times less" than outbound marketing, which would help them to get a much larger customer base over time with the original budget. Secondly, smaller firms would be now able to compete with much larger firms creating a "level playing field".

2. To effectively establish which market segment HubSpot should target, both Marketer Mary and Owner Ollie segment's customer lifetime value should be calculated.

An effective approach would be to must weigh their benefits and drawbacks separately and then come to a compromise, tweaking the strategy already in place. As Mary's new customer figures are increasing, and according to Lopin, the head of the HubSpot services group, these customers have a higher customer age than Ollies and profits in the long run will be higher than Ollie profits.

Furthermore, Ollie customers are more profitable for the first 15 months, both categories are equally profitable at the 16th month and from that point on Marys are the most profitable category. Firstly, 73% of HubSpot's customers are the Owner Ollies. This means that HubSpot collects more revenue from the Owner Ollies than from the Marketer Marys. Secondly, the customer acquisition rate for small businesses is also much larger than that for larger businesses. This shows that HubSpot has higher prospects from converting the Owner Ollies into their customer and can derive greater value from them. To fine-tune their approach, I think that they should target Owner Ollies that sell high involvement products and offer a slimmed down version of their marketing system, which they can both provide and produce at a lower cost, maximizing profits. In terms of Marketing Marys, they should tailor their service to bring in more Marys as this segment is growing faster but has a lower churn rate. HubSpot should also target their focus on the B2B customers. This is because the acquisition rate for the B2B customers is a lot higher than that for a B2C customer. Furthermore, the B2B companies also derive greater value from the lead-qualification analysis that HubSpot provided due to their buying processes.

Since the B2B companies are the ones that benefit the most from HubSpot's products, they will be more loyal to HubSpot and will not hesitate to commend its services. Finally, the churn rate for B2B at 3.3% is much lower than the churn rate for B2C 6%. This means that the B2B customers have higher CLV. Overall, The two most effective ways to improve HubSpot's business would be to find a way to reduce their churn rate and increase prices

Owner Ollies Marketer Marys

Monthly fees $250 $500

Customer acquisition cost $1000 $5000

Consumer Lifetime 23.26 months 31.35 moths

Churn Rate 4.3% 3.2%

Customer Lifetime Value $4815 $10,625

3. HubSpot must target the customer segment that fits in well with its product positioning. I feel that, HubSpot should not broaden its attention to serve every single customer that comes its way. By doing this HubSpot will need to cater to a wider range of customers who have different understandings and comfort levels with the web 2.0 software. Furthermore, different customers will value certain types of features over others. Due to this, HubSpot will need to work on dividing its product development processes further, hence increasing the cost of production or updates. Additionally, it will not be able to concentrate on advancing the products that are most valuable to their existing customers, effectively not maximizing its profits.

Instead, I believe that HubSpot should focus on marketing to its valuable customers. Although, HubSpot will risk losing a lot of potential customers in the short run, narrowing its focus will allow it to concentrate developing better targeted products, as there is much less conflict