rules of marketing in hubspot company

1) According to HubSpot, the rules of marketing have changed in the sense of the way that businesses approach or reach out to their customers. HubSpot believes in tapping into technology and Internet for marketing businesses and products by using Web 2. 0 tools and methods such as blogging software, social media and search engine optimization. The CEO of HubSpot, Brian Halligan, believes that the traditional “outward” methods of marketing are seen by potential customers as an interruption in their lives (For example, advertisements on TV while watching your favorite show) and society is getting better at blocking out such interruptions.

Therefore, the impact of such marketing is obviously reducing. On the other hand, “inbound marketing” is on the rise. Google has become such an important part of our lives today and people like to read blogs and reviews online before purchasing products or services. Hence, businesses should direct their attention to social media, blogging and search engine optimization. David Meerman Scott (2010) recommends that marketers “earn their way in” (via publishing helpful information on a blog etc. in contrast to outbound marketing where they “buy, beg, or bug their way in” (via paid advertisements, issuing press releases, or paying commissioned sales people, respectively). Yes, I agree that the rules of marketing have changed and that these days the internet and social media plays a very important role in helping us chose the products and services that we consume. Almost everyone before purchasing a product or service looks it up on Google, which is a strong example of how important inbound marketing is for a firm.

Inbound Marketing techniques are also much cheaper and more easily accessible to small companies and therefore are becoming more and more popular. However, at the same time, we cannot underestimate the importance of outbound marketing. For industries like food and beverage or automobile industries outward marketing is in fact very important as it helps them reach a wide spectrum of consumers. Moreover, some products cannot possibly target the required market through inbound marketing. For example, if a firm sells children’s toys it would probably make more sense to advertise through TV advertisements, billboards etc. s obviously most children would not be looking for toys on the Internet. While I agree that the rules of marketing have changed, I would still say that there are some industries like the ones mentioned above that would probably gain more from Outward Marketing and also, most industries should probably strike a balance between Inward and Outward Marketing to achieve maximum benefit. 2) It is very important for HubSpot to focus on a target market. The needs of its different customers are different and it cannot possibly cater to all these needs effectively.

The company is just 6 years old and for now it should narrow its scope even at the cost of reducing some customers. This would help HubSpot in cutting costs and meeting the needs of their customers more efficiently. The possible segments that HubSpot could target are: a) Small Business owners These customers constitute 73% of HubSpot’s customer portfolio. These are small businesses, which do not have a professional marketing staff and do most of their marketing themselves. They have limited resources and time and are looking for quick ways to generate leads. ) Marketing Professionals These customers make up 27% of HubSpot’s customer portfolio. They consist of marketing teams who already have consultants who design their websites and programs and they are more interested in the analytics and reports that HubSpot provides them with. They run lots of inbound marketing programs and therefore need sophisticated tools to design and measure their results. The Small Business Owners constitute 73 percent of HubSpot’s customers and are therefore obviously quite valuable to them.

Moreover, Small businesses are more attracted towards inbound marketing because of the low costs as compared to the marketing professionals who also practice outbound marketing. However, the Small Business Owners have a higher churn rate and derive much of their value from HubSpot in the first few months as a customer and tend to cancel their subscription after that. Therefore, they are not long-term customers for HubSpot. CLV Calculation | OO| MM| B2B| B2C| Churn rate| 4. 3%| 3. 2%| 3. 3%| 6%| Consumer lifetime in months| 23. 26| 31. 25| 30. 3| 16. 67| Acquisition Cost| 1000| 5000| -| -| Monthly profit| $250| $500| | | Customer lifetime value| $4815| $10625| | | After calculating the CLV we can clearly see that the value of the Marketing Professional Customer ($10625) is more than double that of the Small Business Owner customer ($4815) and therefore HubSpot should prioritize their marketing efforts towards the marketing professionals. Even though the acquisition cost of the Marketing Professional customer is pretty high, their churn rate is quite low and their Customer Lifetime Value (CLV) is very high which makes them more valuable in the end.

Also B2B customers derive more value from Inbound marketing as compared to B2C customers. Also, they have a lower churn rate. So, HubSpot should definitely use more resources towards and pay more attention to B2B and MM customers . 3) Yes, according to me HubSpot should continue to practice what they preach and engage in inbound marketing alone. How can they expect their customers to have faith in the techniques of inbound marketing if they themselves are skeptical about it?

If they start to use outbound marketing to attract customers, it will be a big blow to their brand image and loyalty. Moreover, as mentioned in the case, the cost of outbound marketing is six to seven times larger as compared to inbound marketing and therefore will put a huge financial strain on the HubSpot. HubSpot should target its segmented customers using the methods of inbound marketing that they preach, like blogging and social media. However, outbound marketing can help HubSpot get more potential revenue and increase its market share.

Outbound marketing will obviously help the company to grow faster and so if HubSpot does decide to target the segment through outbound marketing, it has to do so carefully so as to not destroy the brand image that it has built. It cannot talk about outbound marketing as an interruption or as an ineffective form of marketing. It will then have to show marketing as a good balance between inbound and outbound marketing . Therefore. HubSpot should encourage inbound marketing as a supplement to outbound marketing rather than a replacement of outbound marketing.

Even if HubSpot does decide to do outbound marketing, it should not go all out in big billboard advertisements or TV commercials. Instead, it should advertise through popular websites and internet advertisements which are cheaper.

References:

1) HubSpot: Inbound Marketing and Web 2. 0, Harvard Business School, 9-509-049, by Thomas Steenburgh, Jill Avery and Naseem Dahod. 2) David Meerman Scott. (2010). The New Rules of Marketing and PR: How to Use Social Media, Blogs, News Releases, Online Video, and Viral Marketing to Reach Buyers Directly. (2 ed. ). Hoboken, N. J. : John Wiley & Sons Inc 3) http://www. youtube. com/watch? v=4R49OWIMvbY

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