HubSpot Case Study

Allie Gluck

October 25, 2011

BMGT450-0201

Professor Fiddler

1. The rules of marketing are changing as the Internet propels our society into a new era. The

traditional media channels have become inundated with marketing messages, and technological

advancements have created new marketing techniques that cannot be ignored, such as social

media, blogging and search engine optimization. Marketers feel pressure to tear away from

outbound marketing and focus in on newer inbound marketing tactics. However, in reality these

methodologies are not competitive, but rather complementary. Inbound marketing cannot be “the

answer,” as marketers still rely on outbound for critical functions that inbound cannot provide.

The two techniques serve different purposes. Inbound pulls and outbound pushes.

According to “Is Oubound Marketing Dead?,” inbound is more a day in and day out

consistent technique, while outbound can be used for a one-time bump.i This temporary increase

is important while introducing new products or promotional offers, during slower periods, and

for products with a seasonal lifecycle. Outbound is also useful for time-sensitive messages, when

targeting a certain group, or when the audience does not frequently use the web.“Marketing

Insights” makes the point that outbound is more effective for marketing to an individual who

already has an existing relationship with the company, as it is more direct.ii Outbound helps to

increase awareness and actually create demand for your product; but is slowly waning in usage.

On the other end of the spectrum, inbound is becoming increasingly important for its

unique functions. As discussed in “The Zero Moment of Truth,” the number of consumers who

research online pre-purchase is substantially rising.iii Inbound helps to attract interested

consumers, and since they have sought you out, they are automatically qualified targets. Inbound

is more effective in building lasting relationships with consumers, and is often less expensive.

“Time: The Hidden Cost of Oubound Marketing” demonstrates that inbound is quicker and also

enables an easier and more accurate measurement of success.iv Inbound marketing messages can

be tweaked almost instantly and updated everyday, while outbound is cemented in its final stage.

Inbound is increasingly becoming more important and is already vital for most companies today,

however, we cannot completely write off outbound marketing just yet. A mix of inbound and

outbound, maximizing the strengths of each, would optimize the effects of the marketing

program.

2. HubSpot’s challenges stem from the fact that they have high demand from so many customers

with such a wide variety of needs, which is a natural result of employing inbound marketing. The

nature of the business is extremely complex when facing the challenges of market segmentation,

the inability to fulfill demand, uncertainty with how to select which customers to serve, and

problems pricing the product to align with value received. To lessen the complexity while still in

the start-up phase, HubSpot should focus exclusively on Marketing Marys. Turning away

customers at this stage is acceptable because the company cannot handle demand as it is, but it is

important to select the base of consumers that will be most profitable. Marys are less risky,

remain loyal for longer, and have the highest customer lifetime value (see table).v They cost

more to attain, but by investing in them over other customer bases, HubSpot will see the greatest

return. By targeting just one group, HubSpot lessens the monetary and time costs of dealing with

multiple products and competing demands, and can focus their efforts on creating efficiencies

within processes to be able to keep up with growing demand for their product. While targeting

solely Marys, the company should begin building a solid foundation and developing multiple

products at different price points for all potential customers. HubSpot should only begin

widening their customer set once they have developed the ability to handle the variety and sheer

multitude of those customers.

3. Halligan and Shah are making the right business decision to continue solely using inbound

marketing. For any other company, a mix of both techniques is ideal, but because HubSpot sells

inbound as its product, it is necessary for them to rely on inbound alone. How could a potential

customer trust HubSpot’s claim that its business should and even needs to utilize inbound, if

HubSpot were distributing that message in an outbound format? That would greatly lessen

HubSpot’s integrity as percieved by the consumer, and could have a negative effect on sales. The

company needs to prove to their customers that inbound works by using only inbound to attract

their customers.

Granted, using outbound techniques would help develop leads at the top of the funnel,

and by not using outbound, HubSpot is missing out on these potential customers. However, the

company is in no state to handle any more customers as it is. Also, it is noted that using inbound

alone produces the challenges of market segmentation, selecting customers, and pricing; but by

focusing on one customer set at first as aforementioned, HubSpot should be able to develop a

strong foundation to eventually solve these problems and widen the customer base. In the end,

CMO Mike Volpe said it best, “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.”vi

Churn Rate Lifetime Mo. Profit Lifetime Profit Acquisition Cost Customer Lifetime Value

Ollies 4.30 23.26 250.00 5813.95 1000.00 4813.95

Marys 3.20 31.25 500.00 15625.00 5000.00 10625.00

B2B 3.30 30.30 375.00 11363.64 3000.00 8363.64

B2C 6.00 16.67 375.00 6250.00 3000.00 3250.00

Endnotes

i Morettini, Phil. "Is Outbound Marketing Dead?" PJM Consulting. Web. 25 Oct. 2011. <http://www.pjmconsult.com/index.php/2011/05/is-outbound-marketing-dead.html>.

ii Dodd, G. David. "Is Inbound Marketing All You Need?" Marketing Insights. 2010. Web. 25 Oct. 2011. <http://www.scribd.com/doc/44494981/Is-Inbound-Marketing-All-You-Need>.

iii Lecinksi, Jim. Zero Moment of Truth. Google. Web.

iv Green, Anthony. "The Hidden Time Costs of Outbound Marketing.” Take Care of Biz - The Business Blog for Businesspeople. 27 Jan. 2011. Web. 27 Oct. 2011. <http://takecareof.biz/outbound-marketings-hidden-costs/>.

v Steenburgh, Thomas, Jill Avery, and Naseem Dahod. "HubSpot: Inbound Marketing and Web 2.0." Harvard Business School (2009). Print.

vi Steenburgh, Thomas, Jill Avery, and Naseem Dahod. "HubSpot: Inbound Marketing and Web 2.0." Harvard Business School (2009). Print.