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Hubspot Case Analysis
- 1. Beth Malley, Scott McSweeney, Jeremy Grant, Yang Cao, Olayemi Adejumo
- 2. HubSpot’s Current Position Leader in Web 2.0 and Inbound Marketing Unique product At a crossroads 1,000 customers Goal: accelerate growth rate and increase profitability Segmenting customers Adjust pricing model Supplement inbound marketing?
- 3. Profits vs. Growth Profit Owner Ollie Marketer Mary Growth January 2008 December % 2008 Increase Cost $1,000 $5,000 Leads 1,370 3,000 218.98% Current Revenue $250/ month $500/ month Opportunities 74 300 405.41% BreakEven 4 months 10 months New Customers 35 115 328.57% Churn Rate 4.3% 3.2% Expected 23.26 Lifetime months 31.25 months Lifetime Profit $10,625 $4,814
- 4. Segmentation Strategy Further segment Owner Ollie Offer two packages Appeal to Marketer Mary Lower churn rate More time and money, less sensitive to price Constitute majority of new customers Greater utilization of analytics More resilient to adverse economic conditions
- 5. Owners’ Package Incentivize use of CMS Reduces churn rate $250/month with use of CMS $315/month without CMS Annual Contracts Encourage owners to use HubSpot Reduces churn rate Guarantees profitability for at least 1 year Generate content demonstrating added benefits with continued use
- 6. Marketer Mary’s Package Raise price to increase profits Annual contract Focus on analytics, less on websites Develop more robust tools Become a marketing analytics leader Inbound marketing geared toward Mary Generating data demonstrating success of Hubspot and inbound marketing
- 7. New Pricing Structure CMS Owner Ollie Non-CMS Owner Marketer Mary Ollie Cost to Acquire $1,000 $1,000 $5,000 Current Price/ Month $250 $250 $500 Current BreakEven 4 months 4 months 10 months New Price/Month $250 $315 $625 New Break-Even 4 months 3.17 months 8 months Churn Rate 2.1% 5.5% 3.2% Expected Lifetime 47.62 months 18.18 months 31.25 months Current Lifetime Profit $10,905 $3,545 $10,625 New Lifetime Profit $10,905 $4,727 $14,531
- 8. = $69/Month* = $2000/Month Maximum = 10 Users = $125/Month* * = Per User
- 9. Inbound vs. Outbound Marketing Don’t use outbound marketing Hurts brand image 5-7 times more expensive Already turning away 50% of leads Demonstrate to potential customers how inbound marketing works for HubSpot HubSpot employees’ passion for inbound marketing
- 10. Solution Address both Marketer Mary and Owner Ollie segments Capture greater value from Mary going forward Implement annual contracts Adjust pricing No outbound marketing
Editor's Notes
- Already have good growth, how much more can they ask for?
- Positioning by competitor: competition has higher prices and annual contracts already