Anusha.G Section A, Second Year

Department Of Management StudiesPondicherry University

Saranya.BSection A, Second Year

Department Of Management Studies

Pondicherry University

Type : PrivateIndustry : Internet Marketing Web Analytics Online MarketingFounded : June 2006Headquarters: Cambridge, MassachusettsKey people : Brian Halligan and Dharmesh Shah, CEO & Founder

3 skills for inbound marketing

• Compelling content• Content distribution• Engage Community

• Attaining Marketing Efficiencies• Sales + marketing = Smarketing• Building Relationships• B2B increased 37% inbound and 30% outbound

Benefits of Inbound Marketing

• Content Management System• Keyword Grader• Templates

• Exposure Optimization• SEO tools• Link Grader

• Lead Tracking and Intelligence• Marketing Intelligence analytics• Sales Funnel

What Hubspot provides?

SALES FUNNEL

Filling the customer funnel

COMPETITOR’S AREA & MARKETPLACE

• 2009-1000 diverse customer• Robust website -3,00,000

unique vistors in 2008• 8000- Linkedin- Promarketers• Hubspot TV• “Cold Calling is for Losers” –

35000 times• Salesforce called on all leads

Targeting Segments

Owner Ollie

s

Marketer

Mary

B2C

B2B

• Owners Ollie-68% 1-25 Employees• Objective:

Generate More leads (SEO)

•Marketer Mary-31%• 25-100 employees•Web consultants•Analytics and

reports

Business2

Business

Business 2

Customer

Complex Business

Model due to longer

decision cycle

Interested only in basic

template

Selective Sales Force

Derive greater value

from the lead

qualification

Sophisticated Web 2.0

users Highly performing websites

High social media

presence

Have web 2.0 consultants

B2B vs B2C

1. Target segments?2. Revised pricing ?3. Are we missing anything?

Hubspot – Problem Statement

B2B B2C

Marketer Mary Owners Ollies

Problem 1: Which customers to serve

Owner Ollies Marketer Mary

Pros Cons

Easier to Reach High churn rate-mainly concerned

about SEO

Low cost of acquisition - $1000

Revenue generated is less

Basic and simple solutions

Unstable business model

Shorter Selling Cycle

Pros Cons

Lower Churn rate Harder to reach

High Revenue per customers

Longer Selling Cycle

Longer relationship CMS usage is less than 2%

Usage of more inbound tools of

hubspot

Acquisition cost is high - $5000

OO MMChurn rate 4.3 3.2

Average customer life

23.36 31.25

Acquisition Cost $1000 $5000

Initial amount $500 $500Monthly Profit $250 $500

Customer Life Time Value (CLTV) 5340 11125

CUSTOMER LIFETIME VALUE

Average Customer Life=1/Churn Rate

CLTV=Initial value + (Average customer life*Monthly Profit)-

Acquisition Rate

Inference: Towards Marketer Mary

Business Type Sub-types Percentage of Customers (February 2008)

New Owner OlliesB2B>25 6%

B2B<25 56%

B2C>25 6%B2C<25 32%

Marketer Mary

B2B>25 41%

B2B<25 26%

B2C>25 18%

B2C<25 16%

Total B2B 65%

Total B2C 35%

New Customer Acquisition

BUSINESS TYPE AVERAGE CHURN RATE (Cancellations per

month) in %

Owner Ollies 4.3

Marketer Marys 3.2

Total B2B 3.3

Total B2C 6.0

CMS 2.1

Non-CMS 5.5

Total 4.1

CHURN RATE

Higher Churn Rate Towards CMS

In 2009, 13% of Owner Ollies went for CMS and Owner Ollies form 73% of the

Customers as of December 2008

Only, 2% of Marketer Mary chose CMS

B2B segment is found to have the least churn rate

CMS Non-CMSChurn rate 2.1 5.5

Average customer life

47.6 18.18

Acquisition Cost $1000 $1000

Initial amount $500 $500Transfer charge $500 $500Monthly Profit $250 $250

Customer Life Time Value (CLTV) 11900 4545

CLTV After Moving to CMS

• CMS- increases CLTV• Transfer costs- $500 offer for free• Restrict non-CMS• Prompt to move CMS

B2B SEGMENT

• B2B greater value• Long Term Relationship• B2B least churn rate• 68% of the current

customer

OWNER OLLIES

• 73 percent of the total customers

• 56% -B<25 category where only basic tools required

• Lesser churn rates -CMS• Acquisition cost is 1/5th of

MM

MARKETER MARY

• Have lesser churn rates• Increased lifetime value• Wide range of Hubspot

products.

Recommendations on Target Segments

Recommendations on Target Segments

• High Churn rate• Analyze reason• Attractive discounts• Product features be

expanded• If log-in is rare,

intimate the reasons for poor results

Problem 2: Pricing Model

• Diverse Segment• Reduce Churn rate• Pricing for new customer• Retaining the old customer

Problems in Pricing

• Software as a Service (SAAS)-renewal model

• Charging upfront for the software – locking in the customers

Pricing Options for Consideration

GIVEN PRICING

• Hubspot Owner - $500 consulting fee at start-up and $250/month

ongoing fee

• Hubspot Marketer - $500 consulting fee at start-up and $500/month

ongoing fee

• To move to CMS and extra of $500 is demanded.

Target Segments

Pricing Model

Marketing Mary

SaaS

B2B SaaS

Owner Ollie Option between Monthly and Yearly

Pricing Model

Initial payment -MM - $500OO - $750

For OO- CMS Monthly- $250 • Every 3 months Package- $750 - $600• Yearly package can be offered for

$3000 - $2500

Recommendations Based on the suggested segments

• Better to go for SaaS• low upfront cost for its products. • allows customers to pay cheaper monthly instalments

• HubSpot should address those people who rarely log-in to their accounts • HubSpot’s customers discontinue at 18 months stage.• Pricing change-discounts • Find reason – high churn rate

Based on the following Inference

Problem 3: IM vs OM

• IM - not capture market potential

• Loses a lot of potential revenue that OM can bring in,

• Competitors - both IM and OM

•Market leadership- A question mark?

• Should Hubspot concentrate on both IM and OM?

Missing Anything?

• OM UAC – 6 to 7 times higher than IM. • Hubspot - loses brand Image and loyalty• Inbound marketing -pull effect• IM - good awareness about Hubspot. •More active awareness will give more leads

Implications

• Outbound techniques might be partially applied like online advertisements• Logo on the client site• Need not go into expensive outbound methods like offline

marketing.• Outbound techniques might be later used in following

scenarios• For feedback mechanism• Subscription suggestions

Suggestions

Current status of Inbound Marketing (Hubspot)

• 86 percent to 117 percent year over year in bookings• 80 percent in MM, 20 percent in OO.• Towards simple integrated system.

marketer -> HubSpot sales person ->Salesforce.com

• Plan to go public• Pricing:

Basic-$200/mo , Professional -$600/mo and for Enterprise -$1000/mo . No of Contacts in Database (pricing change as of September 1, 2011) Cost for Small/Medium Business: $3,000/yr Cost for Enterprise Business: $18,000/yr Comparative package based on features.

THANK YOU