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[solved] HubSpot: Inbound Marketing and Web 2.0 None of [the old rules of marketing] are true anymore. The Web has transformed the rules, and you must...


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HubSpot: Inbound Marketing and Web 2.0 None of [the old rules of marketing] are true anymore. The Web has transformed the rules,

 

and you must

 

transform your marketing to make the most of the Web-enabled marketplace of ideas.

 

? David Meerman Scott, author of The New Rules of Marketing and PR

 

Business was good at HubSpot. Founders Brian Halligan and Dharmesh Shah were thrilled

 

with

 

the progress their young company had made in the two years since they began their journey

 

to

 

convince corporate America that the rules of marketing had changed. To be successful in the

 

marketplace, HubSpot needed to be much more than just a software company. Its founders

 

had to

 

become evangelists, preaching a new way of doing business that would fundamentally

 

change how

 

marketers reached their customers. To their great pleasure, Halligan and Shah were finding a

 

willing

 

audience for their ideas. HubSpot was now considered a thought leader in the Web 2.0

 

space, coining

 

the term ?inbound marketing? to describe marketing strategies and practices that pulled

 

prospective

 

customers toward a business and its products, through the use of Web 2.0 tools and

 

applications like

 

blogging, search engine optimization, and social media.

 

Halligan and Shah realized that their business was at a crucial juncture. They had just

 

reached the

 

noteworthy milestone of 1,000 customers, attaining this level of critical mass by practicing

 

what they

 

preached. HubSpot had built its business by turning its back on traditional marketing

 

methods and

 

was solely using innovative inbound techniques to acquire customers. Looking ahead, the

 

founders

 

wanted to accelerate their growth rate and increase profitability. Ironically, they were

 

grappling with

 

many of the same issues that their customers faced when implementing inbound marketing

 

practices.

 

Halligan and Shah realized that they would need to work through these issues in order to

 

achieve

 

their goals for the company. First, they would need to decide which customers to serve,

 

pulling the

 

best opportunities from the diverse pool of customers who were contacting them. Second,

 

they would

 

need to make some decisions about their current pricing model to entice new customers to

 

the

 

company and to maximize the profitability of existing customers. Third, they would need to

 

assess

 

whether they could achieve enough scale through inbound marketing efforts, or whether

 

they

 

needed to supplement their inbound programs with traditional, interruptive outbound

 

programs.

 

This was more than a test of HubSpot as a company; it was a test of the inbound marketing

 

business

 

philosophy. If HubSpot couldn?t scale its own business using inbound marketing, then how

 

could it

 

convince its customers that inbound marketing would work for them? This document is authorized for use only by Audra Pinero (ampinero71@gmail.com). Copying or posting is an infringement of copyright. Please contact

 

customerservice@harvardbusiness.org

 

or 800-988-0886 for additional copies. 509-049 HubSpot: Inbound Marketing and Web 2.0 2 Founding HubSpot

 

The two HubSpot founders met at the Massachusetts Institute of Technology (MIT). As early

 

and

 

eager students of Web 2.0, Halligan and Shah recognized the transformative power the

 

Internet

 

possessed for changing the way small businesses operated. After graduation, Halligan joined

 

Longworth Venture Partners, a venture capital firm with an expertise in technology. As he

 

worked

 

with start-up companies, he recognized an issue with which they all struggled?how to

 

harness the

 

Internet to build a business. Halligan, like many of his clients, came from a traditional sales

 

and

 

marketing background, working for the high-tech companies Groove Networks and

 

Parametric

 

Technology Corporation. However, at Longworth, he began to realize that the traditional

 

marketing

 

and sales methods he had previously employed were losing their effectiveness in the new

 

Web 2.0

 

world. Shah also grew up in the technology sector, holding a number of management and

 

development positions in technology companies. Prior to forming HubSpot, Shah was

 

founder and

 

chief executive officer (CEO) of Pyramid Digital Solutions, an enterprise software company

 

and the

 

winner of three Inc. 500 awards, which was acquired by SunGard Data Systems. Shah also

 

authored

 

OnStartups.com, a top-ranking blog and online community for entrepreneurs.

 

Halligan and Shah founded HubSpot in 2006. With Halligan?s marketing, sales, and venture

 

capital expertise and Shah?s technological knowledge and experience as a successful

 

entrepreneur,

 

the two were a winning combination. Halligan became the CEO and served as HubSpot?s

 

evangelizing front man. Shah became the chief software architect and focused on product

 

development. On the strength of their business plan, Halligan and Shah attracted premier

 

financial

 

partners. After initially self-funding the business, Halligan and Shah raised $5 million from

 

General

 

Catalyst, a Cambridge-based venture capital firm, in 2007. Less than a year later, the team

 

raised an

 

additional $12 million from Matrix Partners, a venture capital firm with offices in Boston and

 

Silicon

 

Valley. For a young start-up, HubSpot had a solid financial foundation.

 

Halligan and Shah strove to create a distinct culture at HubSpot. They headquartered the

 

company near MIT in Cambridge, Massachusetts, a hotbed of activity for high-tech start-ups,

 

and

 

they staffed up with young, eager MIT graduates who were immersed in Web 2.0 culture.

 

The

 

HubSpot office buzzed with energy. The sleek, minimalist architecture contrasted with the

 

animated

 

and passionate young team, who craved a fast pace. The team battled over business with

 

the same

 

gusto that they battled over the last slice of pizza. Inbound Marketing HubSpot built software products that helped companies execute inbound marketing

 

programs to

 

supplement or replace their traditional outbound programs. In the current environment,

 

outbound

 

marketing?s effectiveness was diminishing as consumers, feeling bombarded by the daily

 

deluge of

 

commercial messages, began tuning out. Increasingly, direct mail, trade shows, and

 

telemarketing

 

were yielding less new business. In contrast, companies were finding that search engines,

 

blogs, and

 

social media were generating new business at higher rates. These communication programs

 

were

 

more consistent with the inbound marketing approach. As HubSpot explained on its

 

corporate blog:

 

Outbound marketing is about pulling people away from their dinner, or family, or TV and

 

interrupting their lives. Do you really think you are important or interesting enough for them

 

to want to talk to you instead of doing whatever they were doing when you interrupted

 

them?

 

They have not invited you into their home, and they certainly do not happen to enjoy being

 

interrupted. Instead of spending your whole day interrupting people and hoping they pay

 

attention, try setting up a blog and writing interesting content, so that people want to hear

 

what you have to say and come find you when they?re interested in your products.

 

This document is authorized for use only by Audra Pinero (ampinero71@gmail.com). Copying or posting is an infringement of copyright. Please contact

 

customerservice@harvardbusiness.org

 

or 800-988-0886 for additional copies. HubSpot: Inbound Marketing and Web 2.0 509-049 3 Inbound marketing is a collection of marketing strategies and techniques focused on pulling

 

relevant prospects and customers toward a business and its products. Inbound marketers

 

offered

 

useful information, tools, and resources designed to attract prospective customers to the

 

company

 

during the time when prospects were actively engaged in a search for a particular product or

 

service.

 

The informative content that the inbound marketer produced was used to entice prospects

 

to interact

 

with the company and begin a relationship with it. As HubSpot?s vice president of marketing

 

Mike

 

Volpe explained, ?Instead of interrupting people that don?t care, why not help those who

 

want what

 

you?re offering to find you? We have found that building interesting tools is a more effective

 

marketing tool than doing advertising. Things like this get people curious and draw them in.?

 

This

 

new approach to marketing complemented the way consumers were actually making

 

purchasing

 

decisions: by using Internet search, online blogs, and social networking sites like Facebook

 

and

 

Twitter to learn about products and services before they bought them. HubSpot preached

 

this new

 

way of marketing:

 

Instead of interrupting people with television ads, inbound marketers create videos that

 

potential customers want to see. Instead of buying display ads in print publications, they

 

create their own blog that people subscribe to and look forward to reading. Instead of cold

 

calling, they create useful content and tools so that people call them looking for more

 

information. Instead of driving their message into a crowd over and over again like a

 

sledgehammer, they attract highly qualified customers to their business like a magnet. To be maximized, inbound marketing required three distinct skills. The first was the ability to

 

write compelling content that would attract customers to the business. According to

 

HubSpot, this

 

content had to be useful to customers and not just a promotional message:

 

Whole Foods publishes recipes, profiles of their vendors, forums and a lot more. Across all

 

of these mediums they use the right tone. Their content is useful first, and promotional

 

second,

 

not the other way around. This means that their customers find them when they want to

 

know

 

how to make oatmeal cookies, when they want to learn more about where their apples come

 

from or when they want to watch a cooking show.

 

The second skill was the ability to distribute that content so that it was easily found by

 

prospective

 

customers using search engines, which required a sophisticated understanding of search

 

engine

 

optimization. The third was the ability to attract and engage a community of followers who

 

interacted with the content, added their thoughts to it in an ongoing dialogue, and

 

disseminated it to

 

others. Firms that nurtured an active audience gained credibility in the marketplace,

 

because it was

 

the support of an audience that conferred expertise in a particular area.

 

In contrast to traditional outbound marketing, in which a business?s message was pushed to

 

a

 

mass audience that contained many who were not in the market for the product, inbound

 

marketing

 

was designed to create content that pulled in only those customers who were interested in

 

the

 

product. This created marketing efficiencies. According to Mark Roberge, vice president of

 

sales for

 

HubSpot, inbound marketing blended marketing and sales: ?One of our salespeople calls it

 

?smarketing??we really blend it together so much more.? Volpe explained this concept

 

further in an

 

interview with RainToday.com: ?Our salespeople hear things like ?Oh, HubSpot. I?ve been

 

meaning

 

to talk to you guys,? or ?Oh, I just watched your webinar yesterday. I had a couple of

 

questions.? So

 

it?s the opposite of a cold call. It?s like getting a call from one of your friends because we?ve

 

already

 

built a relationship. We really don?t do any cold calling.?

 

Volpe estimated that a lead generated using inbound marketing cost five to seven times less

 

than

 

a lead generated by outbound marketing. Businesses had increased the portion of their

 

marketing

 

budgets dedicated to inbound marketing, particularly in business-to-business (B2B)

 

industries, where

 

This document is authorized for use only by Audra Pinero (ampinero71@gmail.com). Copying or posting is an infringement of copyright. Please contact

 

customerservice@harvardbusiness.org

 

or 800-988-0886 for additional copies. 509-049 HubSpot: Inbound Marketing and Web 2.0 4 37% of the marketing budget was spent on inbound marketing and 30% was spent on

 

outbound

 

marketing. Given its lower costs and increased efficiencies, inbound marketing allowed small

 

businesses to compete with larger firms in a way that had never been possible in the preInternet world dominated by mass media. Small businesses had realized that inbound marketing

 

helped level

 

the playing field and were more aggressively allocating their budgets to inbound marketing

 

techniques. The HubSpot Product Embodying the philosophy of Web 2.0, the HubSpot Web-based software product was a

 

complete

 

inbound marketing system, designed to help businesses attract prospects, qualify their

 

potential, and

 

convert them into paying customers. The goal was to enable a firm to generate more

 

qualified leads,

 

to generate those leads more efficiently, and to convert them into sales. HubSpot?s userfriendly

 

product allowed even those who were not familiar with Web 2.0 to build and manage a

 

thriving

 

inbound marketing program. The software included templates to design content for

 

websites, blogs,

 

and social networking sites; tools to help customers optimize their exposure on the Internet;

 

tools to

 

help customers solicit and engage the right customers; and tools to analyze their results. Content Design

 

HubSpot offered its customers a content management system (CMS), software that made

 

creating

 

and editing online content easy. Further, HubSpot?s CMS allowed small businesses to add

 

interactivity, the hallmark of Web 2.0, to their old ?brochureware? websites. Predesigned

 

templates

 

helped customers create their corporate websites, providing guidelines for creating Web

 

pages, blogs,

 

online forms, and landing pages. The templates were designed to be turnkey so that

 

customers

 

without HTML programming knowledge could easily publish content online and have that

 

content

 

be search-engine-friendly. HubSpot?s Keyword Grader scanned the Internet and returned an

 

analysis

 

of the keywords relevant to the company?s business that were driving online search results.

 

Including

 

these keywords in their content, companies could improve their organic search results,

 

making it

 

more likely that potential customers would find their content. Steve Douglas, president and

 

creative

 

director for The Logo Factory, explained how search engine optimization (SEO) worked for

 

customers:

 

I had been doing SEO all wrong when I came to HubSpot, trying to optimize my site for the

 

wrong keywords. With HubSpot, I?m now able to see the words people are actually using to

 

find my products and services. I?m able to see which words have the greatest search volume

 

in

 

search engines, helping me choose the right words to optimize my site. HubSpot has helped

 

me be a lot smarter about how I optimize my site and track my progress. (HubSpot,

 

Customer

 

Quotes, 2009) Exposure Optimization

 

The HubSpot product contained a series of tools designed to help customers make their

 

published content more visible on the Internet. These included SEO tools that graded the firm?s

 

content based

 

on its likelihood to be included early in the search results that were returned when a

 

potential

 

customer searched through Google, Yahoo, or other search engines. The SEO tools graded

 

the

 

company?s website, its key landing pages, and its blogs, and made suggestions for

 

improving them to

 

increase exposure. HubSpot?s Link Grader analyzed the links a firm had on its website to see

 

which

 

ones were generating the most inbound traffic. The Link Grader also analyzed links to

 

competitors?

 

websites to see which ones were driving customers to them instead of to the firm. HubSpot

 

customer

 

Noel Huelsenbeck, president of the telecom expense management software firm Vocio,

 

gushed:

 

This document is authorized for use only by Audra Pinero (ampinero71@gmail.com). Copying or posting is an infringement of copyright. Please contact

 

customerservice@harvardbusiness.org

 

or 800-988-0886 for additional copies. HubSpot: Inbound Marketing and Web 2.0 509-049 5 I love the HubSpot software. With just a little page optimization I?ve already gotten great

 

results and my traffic and keyword rankings continue to improve steadily. I?m about to sign a

 

deal from a company that typed in one of our top keywords for which we are now the #1

 

organic result, thanks to HubSpot! That one deal will pay for all the money spent with

 

HubSpot three times over. On top of that, the support is incredible. The HubSpot team had

 

dedicated their time, even at off hours, to get my site up and optimized. The application is

 

great, but it?s the people that make this company stellar. (HubSpot, Customer Quotes, 2009) Lead Tracking and Intelligence The HubSpot software had marketing intelligence analytics for tracking the interactions

 

customers

 

had with the firm?s content. This enabled firms to analyze which of their inbound marketing

 

programs were working to generate qualified leads, by telling them where potential

 

customers were

 

coming from and how they were engaging with the company. Firms could generate an

 

interaction

 

profile for each customer by tracking the pages they viewed and the types of forms they

 

completed.

 

Firms could use this information to qualify prospective customers according to their

 

potential. For

 

example, HubSpot itself used the lead tracking software to construct its sales funnel (see

 

Exhibit 1).

 

Information about each customer allowed HubSpot to qualify some of its visitors as

 

?prospects,? then

 

?leads,? and then ?opportunities? based on the behaviors they exhibited while on the site.

 

Team Jodi, a real estate firm, had seen a significant increase in business, claimed owner Jodi

 

Bakst:

 

The traffic to my site increased by 97% in November, by an additional 62% in December, by

 

an additional 31% in January and we?re on track for another big increase in February. In real

 

estate, the absolute number of leads is way down. But what I?m looking at is the percentage

 

of

 

good leads. The percentage of good leads is actually going up right now and I attribute it to

 

all

 

of the hard work I am doing, 90% of which I learned from HubSpot. (HubSpot, Customer

 

Quotes, 2009) HubSpot used a software-as-a-service (SaaS) pricing strategy for its product. Rather than

 

paying a

 

large up-front fee, customers paid a smaller monthly fee (between $250 and $500), much

 

like a gym

 

membership. HubSpot?s low cost and ease of use for Web 2.0 novices were its competitive

 

advantages. Volpe explained the difference between HubSpot and one of its competitors,

 

Eloqua:

 

Eloqua is really expensive and complicated. It is awesome for larger enterprises. Everyone

 

we talk to that uses Eloqua says, ?If you can get it to work, it?s super powerful, but you have

 

to

 

give up your firstborn child to pay for it and you need to hire a full-time employee to run it

 

because they have all these scripting languages and all this really, really difficult stuff.?

 

HubSpot?s customers were required to purchase a $500 onboarding package, which bought

 

them

 

four hours of HubSpot consulting. During this time, consultants helped customers through a

 

process

 

designed to kickstart their inbound marketing program: (1) setting up the software, (2) using

 

the SEO

 

features to get found, (3) converting prospects to leads to customers, (4) analyzing their

 

results, and

 

(5) institutionalizing the process so that it could be repeated. Once the original consulting

 

hours were

 

depleted, customers were on their own, unless they purchased additional consulting time at

 

a cost of

 

$500 for four hours. Customers were also given access to Success.HubSpot, which provided

 

Internet

 

marketing training and resources. Halligan described the HubSpot product as much more

 

than a

 

piece of software; it was a system of tools and training (see Exhibit 2):

 

HubSpot is a complete inbound marketing system that will help you get found by more

 

prospects and convert more of them into paying customers. We use the word ?system?

 

intentionally. HubSpot is more than software. We have a complete inbound marketing

 

This document is authorized for use only by Audra Pinero (ampinero71@gmail.com). Copying or posting is an infringement of copyright. Please contact

 

customerservice@harvardbusiness.org

 

or 800-988-0886 for additional copies. 509-049 HubSpot: Inbound Marketing and Web 2.0 6 methodology comprised of best practice guides, training materials, software tools, a

 

community and support. Plus, HubSpot is hosted on demand software, meaning that you

 

don?t need any IT staff to get started. We don?t just give you a new marketing tool. We teach

 

you to be an expert in how to use it.

 

HubSpot?s products had garnered acclaim that drove buzz for the company. In 2008,

 

HubSpot

 

received the W3 Silver Winner Award in branding and marketing and the MITX Impact Award

 

for

 

innovative business strategy. HubSpot?s Website Grader was an official honoree for the ?Best

 

Websites in IT Hardware/Software? category in the 12th Annual Webby Awards. In February

 

2009,

 

HubSpot was named in the top 10 of PromotionWorld?s ?Best SEO Companies? ranking. HubSpot?s Marketplace Halligan and Shah envisioned that HubSpot would become the market leader of the industry

 

space carved out by software companies and consulting firms focused on helping businesses

 

fill and

 

manage their customer funnel. The term ?customer funnel? metaphorically described the

 

critical processes firms undertook to attract prospective customers to their business; qualify those

 

prospects

 

to determine which ones had the highest probability of converting to paying customers; and,

 

finally,

 

close the sale. The customer funnel was divided into three main activity areas. Most of

 

HubSpot?s

 

competitors chose to play in only one of those areas, although some offered integrated

 

services that

 

spanned all three (see Exhibits 3 and 4). Creating Traffic

 

The goal in the top part of the customer funnel was to attract large numbers of prospective

 

customers. Firms used marketing programs to capture attention and interest to feed

 

prospects into

 

the funnel. Firms offered information, contests/sweepstakes, or free consulting on their

 

websites to

 

entice prospective customers. To receive the information or to participate in a contest,

 

prospects filled

 

out an online form that asked them for their contact information and other valuable

 

information, such

 

as budget available for the purchase and estimated purchase timing. HubSpot?s competitors

 

in this

 

area included consultants who built online advertising, websites, blogs, and a social media

 

presence

 

for companies, as well as software companies with SEO products that helped companies

 

maximize

 

their likelihood of getting found by consumers using search engines. Analyzing and Qualifying Leads

 

The goal in the middle of the customer funnel was to assess the potential of different

 

prospective

 

customers brought in by the lead-generation programs. Selling a customer required an

 

investment of

 

human and financial resources, and firms wanted to ensure that they were targeting these

 

resources

 

to prospects who were most likely to convert to customers. Many prospects brought in

 

through lead

 

generation had a low probability of becoming customers, and firms could save substantial

 

money if

 

they could identify those customers early and weed them out. The lead-qualification process

 

focused

 

on finding customers with potential to pass along to the sales force. HubSpot?s competitors

 

in this

 

area included consultants and software companies with proprietary methods for rating and

 

ranking

 

prospects based on historical analysis of the company?s current customers and conversion

 

rates. Closing the Sale

 

The goal in the bottom of the customer funnel was to convert prospects into customers. One

 

player, Salesforce.com, dominated this segment, providing easy-to-use customizable

 

software that

 

This document is authorized for use only by Audra Pinero (ampinero71@gmail.com). Copying or posting is an infringement of copyright. Please contact

 

customerservice@harvardbusiness.org

 

or 800-988-0886 for additional copies. HubSpot: Inbound Marketing and Web 2.0 509-049 7 helped firms create a database of their prospects and track their conversion progress in real

 

time. Salesforce.com?s software had become the industry standard for managing and tracking

 

sales efforts.

 

Halligan and Shah hoped that HubSpot could dominate the lead-generation and analysis/

 

qualification stages of the customer funnel, just as Salesforce.com dominated the stage

 

devoted to

 

closing the sale. They claimed, ?HubSpot could be to marketing what Salesforce.com is to

 

sales.? Filling HubSpot?s Customer Funnel By 2009, HubSpot had 1,000 very diverse customers. Practicing what it preached, HubSpot

 

had

 

attracted these customers through inbound marketing. HubSpot used several different

 

tactics to drive

 

prospects into the funnel. First, the company had a robust website that attracted more than

 

300,000

 

unique visitors in 2008. The website featured white papers, webinars, podcasts, and a blog

 

that

 

provided information about Web 2.0 and inbound marketing strategies. HubSpot created and

 

managed an 8,000-member LinkedIn group called Pro-Marketers, dedicated to marketing

 

professionals who were interested in learning about Web 2.0 and inbound marketing.

 

Employees

 

came together every Friday to host thei...

 


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