COMPETITOR’S Filling the AREA & customer funnel MARKETPLACE• 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
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 Interested Sophisticated only in Web 2.0 Complex basic users Business template HighlyModel due to performing longer websitesdecision cycle Business Business 2 2 High social SelectiveSales Force Business Customer media presence Derive greater value Have web 2.0 from the consultants lead qualification
Hubspot – Problem Statement1. Target segments? B2B B2C2. Revised pricing ?3. Are we missing anything? Marketer Owners Ollies Mary
Owner Ollies Marketer Mary Pros Cons Pros Cons Easier to Reach High churn rate- Lower Churn rate Harder to reach mainly concerned about SEO High Revenue per Longer Selling Low cost of Revenue generated customers Cycleacquisition - $1000 is less Longer relationship CMS usage is less Basic and simple Unstable business than 2% solutions model Usage of more Acquisition cost is Shorter Selling inbound tools of high - $5000 Cycle hubspot
CUSTOMER LIFETIME VALUE OO MM Churn rate 4.3 3.2Average customer 23.36 31.25 life Acquisition Cost $1000 $5000 Initial amount $500 $500 Monthly Profit $250 $500Customer Life Time Value (CLTV) 5340 11125 Inference: Towards Marketer Mary
New Customer Acquisition Business Type Sub-types Percentage of Customers (February 2008) B2B>25 6%New Owner Ollies B2B<25 56% B2C>25 6% B2C<25 32% B2B>25 41% B2B<25 26% Marketer Mary B2C>25 18% B2C<25 16% Total B2B 65% Total B2C 35%
CHURN RATE BUSINESS TYPE AVERAGE CHURN RATE (Cancellations per month) in % Higher ChurnOwner Ollies 4.3 Towards CMS RateMarketer Marys 3.2Total B2B 3.3 In 2009, 13% of Owner Ollies went for CMS and Owner Ollies form 73% of theTotal B2C 6.0 Customers as of December 2008CMS 2.1 B2B segment is found to have theNon-CMS 5.5 least churn rateTotal 4.1 Only, 2% of Marketer Mary chose CMS
CLTV After Moving to CMS CMS Non-CMS Churn rate 2.1 5.5Average customer 47.6 18.18 life • CMS- increases CLTV Acquisition Cost $1000 $1000 • Transfer costs- $500 offer for free • Restrict non-CMS Initial amount $500 $500 • Prompt to move CMS Transfer charge $500 $500 Monthly Profit $250 $250Customer Life Time Value (CLTV) 11900 4545
Recommendations on Target Segments OWNER OLLIES B2B SEGMENT• 73 percent of the total MARKETER MARY customers • B2B greater value• 56% -B<25 category • Long Term Relationship • Have lesser churn rates where only basic tools • B2B least churn rate • Increased lifetime value required • 68% of the current • Wide range of Hubspot• Lesser churn rates -CMS customer products.• Acquisition cost is 1/5th of MM
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
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 Pricing ModelSegments Initial payment - MM - $500Marketing SaaS OO - $750 Mary For OO- CMS Monthly- $250 • Every 3 months Package- $750 - $600 B2B SaaS • Yearly package can be offered for $3000 - $2500Owner Ollie 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• HubSpot’s customers discontinue at 18 months stage. • Pricing change-discounts • Find reason – high churn rate
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
• 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.