Inbound Marketing and Web 2.0.

Individual Case Analysis: Inbound Marketing and Web 2.0

Market Segmentation

Owner Ollie Vs. Market Mary

Owner Ollies are small business owners with 1 – 25 employees and they make up for 73% of the current HubSpot’s customer portfolio. Their main objective is to generate more leads for their businesses. They don’t have marketing staff or much knowledgeable about the Web 2.0 technology. As a result, their product requirements are quick and simple solutions that help them generate leads. On a similar note, Ollies have scarce time and resources, which results termination of their subscription quicker (churn rate – 4.3%). However, churn rates decreased by half to 2.1% for Ollies that hosted their websites on HubSpot content management system (CMS). This decrease in churn rate will increase customer lifetime value from 5,314 to 11,405 (Exhibit 2.1), which is ~115% increase without increasing current prices. Hence, for Owner Ollies price should be at its current state with potential strategic direction of possibly decreasing it in near future. In terms of promotion, HubSpot should provide promotional price discounts to incentivize more Ollies to move their websites to CMS and potentially decrease overall churn rate. Hence our product development effort should be focused on comprehensive digital marketing solution hosted in the CMS with potentially decreased price.

Marketer Marys are marketing professionals working in companies with 26 – 100 employees, and they make up the rest 27% of the current customer portfolio. They are mainly looking for a product that provides analytical analysis, assess results and produce compelling reports. Moreover, they have money to spend in their budgets and web consultants to design websites and programs. So, the product requirement is more analytically sophisticated with ability to produce highly quality reports. Like Ollies, the churn rate decreased as they move to CMS (from 3.2% to 2.1%). Moreover, customer lifetime value increased by ~73% (from 11,125 to 19,309 – Exhibit 2.2), which is smaller relative to Ollies’ but substantial. However, share of Marketer Marys that hosted their websites in the CMS is only 2%. Due to this trend, internal web development capacity and dedicated staff, this share isn’t expected to grow. So, it is better to not invest resources in moving them to CMS. On another note, selling cycle is longer due to extended payment approval processes. Assuming those longer approval processes will persist during monthly payments, HubSpot can design a convenient quarterly, semi-annually or annual discounted subscription pricing models to decrease frequent approval delays. HubSpot can utilize its current inbound marketing channels with increased effort to reach out more Marketer Marys. Promotion strategy for this product line should focus on developing good analytical outputs and reports using outputs from different inbounding marketing channels. As an example, HubSpot can blog their reports and analytical findings using their tools, which will create more demand from Marketer Marys. Hence, the product development effort should focus on digital solution for analytics and report development tools that will help Marketer Marys run and manage various inbound marketing programs effectively.