IIM C - Executive Programme On Digital & Social Media Marketing Strategy (EPDSMMS) - Case study on HubSpot

1. Inbound marketing
and web 2.0 case study

4. Current Scenario
1. Leader in Web 2.0 and Inbound Marketing
2. Unique product
3. 1,000 customers milestone (within 4
years)
4. Goal is to accelerate growth rate and
increase profitability

5. Let’s understand HubSpot’s Customers

6. Small Business Owners
Owner Ollies
Marketing Professionals
working in large firms
Marketer Mary

7. Owner Ollies
• 73%
• 1-25 members
• Absence of marketing professionals
• Objective – Generate more leads
• Churn rate – 4.3%
Marketer Mary
• 27%
• 26 – 100 members
• Marketing professionals
• Objective – Analytics and reports
• Churn rate – 3.2%

8. 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

9. Let’s understand HubSpot’s Pricing

10. Current Pricing
1. Software-as-a-service (SaaS) monthly pricing model
2. Owner Ollies - $500 consulting fee at start-up and
$250/month ongoing fee
3. Marketer Mary - $500 consulting fee at start-up and
$500/month ongoing fee
4. To move to CMS and extra of $500 is demanded

11. Let’s understand HubSpot’s Market

13. Realizing the company’s potential for success, venture capital
firms backed HubSpot with $17 million in funding.
Venture partners saw great market opportunity in roughly
$2.2 million small and medium-sized businesses across the
US.
Market Potential: Small- and Medium-Sized Businessesa
Category Number of Employees Number of Businesses
Large 100 to 499 86,538
Medium 20 to 99 526,355
Small 10 to 19 632,682
Very Small 5 to 9 1,043,448
Total - 2,289,023

14. Mike Volpe
(Vice President – Sales)
“If we couldn’t make inbound
marketing work for our own
company, then we shouldn’t be
selling software that helps other
companies do it”

15. Let’s understand Problem Statement

16. What
customers
should be
targeted?
What
should be
the pricing
strategy?
Should we
look at
outbound
marketing?

17. Proposed Plan

18. What customers should be
targeted?
- Marketer Mary
- CMS based customers

19. CUSTOMER LIFETIME VALUE
OO MM
Churn rate 4.3 3.2
Average customer life 23.36 31.25
Acquisition Cost $1,000 $5,000
Initial amount $500 $500
Monthly Profit $250 $500
Customer Life Time Value
(CLTV) 5,340 11,125
Average Customer Life=1/Churn Rate
CLTV=Initial value + (Average customer life*Monthly Profit)-Acquisition Rate

20. CMS Non-CMS
Churn rate 2.1 5.5
Average customer life 47.6 18.18
Acquisition Cost $1000 $1000
Initial amount $500 $500
Transfer charge $500 $500
Monthly Profit $250 $250
Customer Life Time Value
(CLTV) 11,900 4,545
CUSTOMER LIFETIME VALUE AFTER CMS
Average Customer Life=1/Churn Rate
CLTV=Initial value + (Average customer life*Monthly Profit)-Acquisition Rate

21. What should be the pricing
strategy?

22. OO MM
Current Pricing
Initial payment –
Consulting fee
$500 $500
Monthly cost $250 $500
Movement to CMS $500
Proposed Pricing
Initial payment –
Consulting fee
$650 $500
Monthly cost $250 $500
For OO,
Quarterly Package -
$600
Yearly Package -
$2,500

23. Should we look at outbound
marketing?

24. Should we
look at
outbound
marketing?
Recommended Solution
1. Need not go into expensive and / or aggressive
outbound methods like offline marketing
2. Outbound techniques might be partially applied
- Online advertisements
- Logo on the client site
3. Outbound techniques might be later used in
following scenarios
- For feedback mechanism

25. THANK YOU