HubSpot Case

PROBLEM STATEMENT
Having proved successful, HubSpot has now reached crucial juncture, when in order to accelerate the growth rate and to
increase their profitability, they need to decide: 1) which segment of their customers to target; 2) develop new pricing
strategy; 3) determine whether they can still maintain their scale by using only inbound techniques or they will need to
implement outbound techniques as well.
SITUATION ANALYSIS
Customers
HubSpots customer base comprises of Owner Ollie (73%) and Marketer Mary (27%).
Owner Ollie
Pros
Easy to sell to
Acquisition cost of 1000$
Simple sollutions
Fast selling
Cons
Limited resources
High churn rate
High macroeconomic risk
Low revenue per customer
Marketer Mary
Pros
Higher revenue per customer
Lower churn rate
More sophisticated analytics
More resources
Cons
Harder to sell to
Acquisition cost of 5000$
Takes longer to sell to
2% CMS
For better understanding of the values that each of the segment represents, the Customer Lifetime Value (CLV) analysis
is needed.
Acquisition Cost
Initial Fee
Current Revenue (per month)
Churn rate
Average lifetime
(1/Churn rate)
CLV
(Av. Lifetime x Cur. Rev Acquis.
Cost + Initial Fee)
Owner Ollie
1000$
500$
250$
4,3%
23,26
Marketer Mary
5000$
500$
500$
3,2%
31,25
5315$
11125$
Competition
HubSpot is one of the leaders among companies that offer tools to businesses to facilitate customer funnel 3-staged
process, each of which represents 3 different activity areas, of attracting a customer. Most of competitors play in 1 or 2
areas, which is an obvious advantage for HubSpot, that has strong positions in all the 3. Though strong positions, still
there are big competitors in each segment, like, for example, Salesforce.com, that completely dominates one of the
activity areas.
Company
HubSpot provides 3 types of services:
1.
Content design
- Content Mangement Systems
- Prdesigned templates
2.
Exposure Optimization
- SEO tools
- Link Grader
3.
Lead tracking and Intelligence

- Marketing Intelligence Analytics
- Customers Funnel
ALTERNATIVES
Option 1: Change the segment targeted to Market Mary.
Advantages:
- Increased CLV;
- Less number of drop-outs due to lower churn-rate;
- Usage of more HubSpot products due to having greater resources.
Disadvantages:
- Dropping 73% of existing customers;
- More complicated and time-taking selling process.
Option 2: Increase prices by incentivizing customers to use CMS.
Advantages:
- Increase in profitability per customer;
- Potentially higher number of CMS sold;
- Reduces Churn rate;
- Quite low risk of reducing overall profitability due to excess demand now.
Disadvantages:
- Probably reduction in sales;
- Potential reduction in CLV;
- Resistance of customers to such pushing strategy.
Option 3: Targeting more consumers by using outbound techniques.
Advantages:
- Increases number of potential customers, which will in the end increase sales;
- Increase in general awareness.
Disadvantages:
- Inconsistency with companys image;
- Additional resources are needed to be spent on advertising (6-7 times more than now).
RECOMMENDATION
Choose Option 2 and adjust pricing model which will more likely result in a growth of the revenues of the company.
IMPLEMENTATION
1) Still target both of the segments. Even though Market Mary has a greater CLV, still there are doubts if it is a
more profitable one. Moreover, saying no to 73% customers is very risky, plus it hurts the image of the
company.
2) Introduce new pricing. Increase prices per month for both Owner Ollie and Marketer Mary from 250$ to 300$
and from 500$ to 600$ respectively. Meanwhile, leave the same prices for those who have purchased CMS.
Having excess demand will ensure at least maintaining profitability despite increasing prices, whereas such
incentive will result in stronger CMS sales.
3) Introduce semi-annual contracts. This will encourage users to actually use HubSpot (people tend to use what
they have already paid for). This will more likely reduce churn rate. However, due to relatively low prices, the
demand will hardly go down sharply. And, again, due to excess demand, the risk is quite low.
4) Keep using only inbound techniques as introducing outbound ones, despite all the potentially good results, will
definitely harm the brand image of the company.

HubSpot Case

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

HubSpot Case

Uploaded by

Copyright:

Available Formats

PROBLEM STATEMENT

Lead tracking and Intelligence

You might also like