Hubspot Case Study

BACKGROUND

HubSpot was a newly developed internet company which was considered as the leader in Web 2.0 and was promoting inbound marketing with search engines, blogs, and social media. Instead of traditional marketing methods, HubSpot was merely using innovative inbound techniques to gain consumers. However, as the company is now entering a bottleneck stage in need of further development of sales and profits, which included targeting segments, revising pricing strategies, and whether using both inbound marketing and outbound marketing or not.

INBOUND MARKETING

Online blogging, social media platforms and search engine optimization increase while traditional marketing and sales methods were not yielding results. Information overload was beginning to form as traditional marketing methods were bombarding customers and customers turned out. Instead of using TV ads or direct mail, inbound marketing uses social media, blogging and search engine to build relationship with its future customers. The rules of marketing have not totally changed because whether the method is inbound or outbound, the purpose of marketing has not changed. However, due to the advancement of technology, inbound marketing may be more effective. It costs less to generate a higher customer conversion rate as it would be beneficial to more developed companies. Start-ups have not built their brand, and if they are competing with developed businesses in a similar industry, it would be harder to build a fan page on Facebook, or become one of the top searching key words in Google. Thus, while inbound marketing is more effective, outbound marketing is still necessary for developing companies.

SEGMENTATION STRATEGY

Owner Ollie & Marketer Mary

HubSpot differentiated its customers based on two broad segments, including Owner Ollie which is a small business owner customer and Marketer Mary which is a marketing professional customer. Regarding to the target marketing approaches, it is suggested that the company should focus on core business in order to differentiate itself in the industry. Thus, it is recommended to narrow its target market and focus on Owner Ollie segment. There are three major advantages of choosing to focus on Owner Ollie segment. Frist, Owner Ollie made up 73% of HubSpot’s customer portfolio, which was much higher than Marketer Mary did. Second, the acquisition cost of Owner Ollie was only around $1,000, while the acquisition cost of Marketer Mary was $5,000, which is five times higher than acquiring Owner Ollie. Third, Owner Ollie was easy to sell because it offered quick and simple solutions while Marketer Mary needed more sophisticated tools to operate and had a longer selling cycle, which is not good for a star-up company like HubSpot. Therefore, HubSpot should narrow its target and focus only on Owner Ollie.

B2B & B2C

It is recommended that HubSpot should put more emphasize on B2B customers. First, B2B customers derived more value than B2C customers did. Because B2B companies provided more complex products that made it necessary for their consumers to have the in-depth understanding of their product before investing in it, HubSpot should provide the perfect products to fulfill the needs of B2B customers. Second, B2B companies would like to stay longer relationship than B2C companies. A B2B company needs to more focus on relationship building and communication using marketing activities that generate leads that can be developed during the sales cycle than a B2C company. Third, from the case, the churn rate of total B2B customers is almost half of that of B2C customers. Fourth, B2B made up 68% of HubSpot’s customer portfolio, which was much higher than B2C. Therefore, catering to B2B customers will maximize profit for HubSpot.