Section A, Second Year Department Of Management Studies Pondicherry University

Anusha.G

Section A, Second Year Department Of Management Studies Pondicherry University

Saranya.B

Type Industry

: Private : Internet Marketing Web Analytics Online Marketing Founded : June 2006 Headquarters: Cambridge, Massachusetts Key people : Brian Halligan and Dharmesh Shah, CEO & Founder

3 skills for inbound marketing

Compelling content Content distribution Engage Community

Benefits of Inbound Marketing

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

What Hubspot provides?

Content Management System
Keyword Grader Templates

Exposure Optimization
SEO tools Link Grader

Lead Tracking and Intelligence

Marketing Intelligence analytics Sales Funnel

SALES FUNNEL

Filling the customer funnel

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

COMPETITORS AREA & MARKETPLACE

Targeting Segments
Owners Ollie-68% 1-25 Employees Objective: Generate More leads (SEO)

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

B2B vs B2C
Complex Business Model due to longer decision cycle Interested only in basic template Sophisticated Web 2.0 users

Highly performing websites

Selective Sales Force

Business 2 Business
Derive greater value from the lead qualification

Business 2 Customer
Have web 2.0 consultants

High social media presence

Hubspot Problem Statement

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

B2B
Marketer Mary

B2C
Owners Ollies

Problem 1: Which customers to serve

Owner Ollies
Pros Cons

Marketer Mary
Pros Lower Churn rate High Revenue per customers Longer relationship Cons Harder to reach Longer Selling Cycle CMS usage is less than 2%

Easier to Reach

High churn ratemainly concerned about SEO

Revenue generated is less

Low cost of acquisition - $1000

Basic and simple solutions

Shorter Selling Cycle

Unstable business model

Usage of more inbound tools of hubspot

Acquisition cost is high - $5000

CUSTOMER LIFETIME VALUE

Churn rate Average customer life Acquisition Cost Initial amount Monthly Profit Customer Life Time Value (CLTV) OO 4.3 23.36 $1000 $500 $250 5340 MM 3.2 31.25 $5000 $500 $500 11125

Inference: Towards Marketer Mary

New Customer Acquisition

Business Type Sub-types B2B>25 New Owner Ollies B2B<25 B2C>25 B2C<25 B2B>25 Marketer Mary B2B<25 B2C>25 B2C<25 Total B2B Percentage of Customers (February 2008) 6% 56% 6% 32% 41% 26% 18% 16% 65%

Total B2C

35%

CHURN RATE
BUSINESS TYPE AVERAGE CHURN RATE (Cancellations per month) in % 4.3 3.2 3.3 6.0 2.1 5.5 4.1 Higher Churn Rate Towards CMS Owner Ollies Marketer Marys Total B2B Total B2C CMS Non-CMS Total

In 2009, 13% of Owner Ollies went for CMS and Owner Ollies form 73% of the Customers as of December 2008 B2B segment is found to have the least churn rate Only, 2% of Marketer Mary chose CMS

CLTV After Moving to CMS

Churn rate Average customer life Acquisition Cost Initial amount Transfer charge Monthly Profit Customer Life Time Value (CLTV) CMS 2.1 47.6 $1000 $500 $500 $250 11900 Non-CMS 5.5 18.18 $1000 $500 $500 $250 4545

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

Recommendations on Target Segments

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 B2B SEGMENT

MARKETER MARY B2B greater value Long Term Relationship B2B least churn rate 68% of the current customer
Have lesser churn rates Increased lifetime value Wide range of Hubspot products.

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

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

Pricing Options for Consideration

Software as a Service (SAAS)-renewal model Charging upfront for the software locking in the customers

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.

Recommendations Based on the suggested segments

Target Segments Marketing Mary B2B Owner Ollie Pricing Model
Initial payment MM - $500 OO - $750 For OO- CMS Monthly- $250 Every 3 months Package- $750 - $600 Yearly package can be offered for $3000 - $2500

SaaS

SaaS Option between Monthly and Yearly Pricing Model

Based on the following Inference

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 HubSpots customers discontinue at 18 months stage.
Pricing change-discounts Find reason high churn rate

Problem 3: IM vs OM

Missing Anything?
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?

Implications
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

Suggestions
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

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