HubSpot is a leader in inbound marketing but seeks to accelerate growth and increase profits. It currently has 1,000 customers but high customer acquisition costs. The document proposes segmenting customers into Owners and Marketers and adjusting pricing plans. For Owners, it suggests incentivizing use of CMS and annual contracts. For Marketers, it recommends focusing on analytics, raising prices, and demonstrating inbound marketing success. New pricing forecasts increased lifetime profits per customer for both segments.

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
