HubSpot Case Study

Allie Gluck October 25, 2011 BMGT450-0201 Professor Fiddler

1. The rules of marketing are changing as the Internet propels our society into a new era. The traditional media channels have become inundated with marketing messages, and technological advancements have created new marketing techniques that cannot be ignored, such as social media, blogging and search engine optimization. Marketers feel pressure to tear away from outbound marketing and focus in on newer inbound marketing tactics. However, in reality these methodologies are not competitive, but rather complementary. Inbound marketing cannot be the answer, as marketers still rely on outbound for critical functions that inbound cannot provide. The two techniques serve different purposes. Inbound pulls and outbound pushes. According to Is Oubound Marketing Dead?, inbound is more a day in and day out consistent technique, while outbound can be used for a one-time bump.i This temporary increase is important while introducing new products or promotional offers, during slower periods, and for products with a seasonal lifecycle. Outbound is also useful for time-sensitive messages, when targeting a certain group, or when the audience does not frequently use the web.Marketing Insights makes the point that outbound is more effective for marketing to an individual who already has an existing relationship with the company, as it is more direct.ii Outbound helps to increase awareness and actually create demand for your product; but is slowly waning in usage. On the other end of the spectrum, inbound is becoming increasingly important for its unique functions. As discussed in The Zero Moment of Truth, the number of consumers who research online pre-purchase is substantially rising.iii Inbound helps to attract interested consumers, and since they have sought you out, they are automatically qualified targets. Inbound is more effective in building lasting relationships with consumers, and is often less expensive. Time: The Hidden Cost of Oubound Marketing demonstrates that inbound is quicker and also enables an easier and more accurate measurement of success.iv Inbound marketing messages can

be tweaked almost instantly and updated everyday, while outbound is cemented in its final stage. Inbound is increasingly becoming more important and is already vital for most companies today, however, we cannot completely write off outbound marketing just yet. A mix of inbound and outbound, maximizing the strengths of each, would optimize the effects of the marketing program. 2. HubSpots challenges stem from the fact that they have high demand from so many customers with such a wide variety of needs, which is a natural result of employing inbound marketing. The nature of the business is extremely complex when facing the challenges of market segmentation, the inability to fulfill demand, uncertainty with how to select which customers to serve, and problems pricing the product to align with value received. To lessen the complexity while still in the start-up phase, HubSpot should focus exclusively on Marketing Marys. Turning away customers at this stage is acceptable because the company cannot handle demand as it is, but it is important to select the base of consumers that will be most profitable. Marys are less risky, remain loyal for longer, and have the highest customer lifetime value (see table).v They cost more to attain, but by investing in them over other customer bases, HubSpot will see the greatest return. By targeting just one group, HubSpot lessens the monetary and time costs of dealing with multiple products and competing demands, and can focus their efforts on creating efficiencies within processes to be able to keep up with growing demand for their product. While targeting solely Marys, the company should begin building a solid foundation and developing multiple products at different price points for all potential customers. HubSpot should only begin widening their customer set once they have developed the ability to handle the variety and sheer multitude of those customers.

3. Halligan and Shah are making the right business decision to continue solely using inbound marketing. For any other company, a mix of both techniques is ideal, but because HubSpot sells inbound as its product, it is necessary for them to rely on inbound alone. How could a potential customer trust HubSpots claim that its business should and even needs to utilize inbound, if HubSpot were distributing that message in an outbound format? That would greatly lessen HubSpots integrity as percieved by the consumer, and could have a negative effect on sales. The company needs to prove to their customers that inbound works by using only inbound to attract their customers. Granted, using outbound techniques would help develop leads at the top of the funnel, and by not using outbound, HubSpot is missing out on these potential customers. However, the company is in no state to handle any more customers as it is. Also, it is noted that using inbound alone produces the challenges of market segmentation, selecting customers, and pricing; but by focusing on one customer set at first as aforementioned, HubSpot should be able to develop a strong foundation to eventually solve these problems and widen the customer base. In the end, CMO Mike Volpe said it best, If we couldnt make inbound marketing work for our own company, then we shouldnt be selling software that helps other companies do it.vi
Churn Rate Ollies Marys B2B B2C 4.30 3.20 3.30 6.00 Lifetime 23.26 31.25 30.30 16.67 Mo. Profit 250.00 500.00 375.00 375.00 Lifetime Profit 5813.95 15625.00 11363.64 6250.00 Acquisition Cost 1000.00 5000.00 3000.00 3000.00 Customer Lifetime Value 4813.95 10625.00 8363.64 3250.00

Endnotes

Morettini, Phil. "Is Outbound Marketing Dead?" PJM Consulting. Web. 25 Oct. 2011. <http://www.pjmconsult.com/index.php/2011/05/is-outbound-marketing-dead.html>.
ii

Dodd, G. David. "Is Inbound Marketing All You Need?" Marketing Insights. 2010. Web. 25 Oct. 2011. <http://www.scribd.com/doc/44494981/Is-Inbound-Marketing-All-You-Need>.
iii

Lecinksi, Jim. Zero Moment of Truth. Google. Web.

iv

Green, Anthony. "The Hidden Time Costs of Outbound Marketing. Take Care of Biz - The Business Blog for Businesspeople. 27 Jan. 2011. Web. 27 Oct. 2011. <http://takecareof.biz/outbound-marketings-hiddencosts/>.
v

Steenburgh, Thomas, Jill Avery, and Naseem Dahod. "HubSpot: Inbound Marketing and Web 2.0." Harvard Business School (2009). Print.
vi

Steenburgh, Thomas, Jill Avery, and Naseem Dahod. "HubSpot: Inbound Marketing and Web 2.0." Harvard Business School (2009). Print.