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Use the attached Buyer Journey GuideActions a reference to build a customer journey for Marketing Marys and Owner Ollies to Hubspot platform refer to HBR case study).In the journey address three stages – awareness, consideration, and decision. For each of the stages outline – customer thoughts, customer actions, and customer touchpoints.Use powerpoint or PDF to build a visual customer journey
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For the exclusive use of D. DIXON, 2019.
9-509-049
REV: JANUARY 24, 2011
THOMAS STEENBURGH
JILL AVERY
NASEEM DAHOD
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?
________________________________________________________________________________________________________________
Professor Thomas Steenburgh and Professor Jill Avery (Simmons School of Management) and Naseem Dahod (MBA 2009) prepared this case.
HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or
illustrations of effective or ineffective management.
Copyright © 2009, 2010, 2011 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be
digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
This document is authorized for use only by DAINE DIXON in Digital Advertising Planning, Spring 2019 taught by Manveer Mann, Montclair State University from Jan 2019 to Jul 2019.
For the exclusive use of D. DIXON, 2019.
509-049
HubSpot: Inbound Marketing and Web 2.0
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.
2
This document is authorized for use only by DAINE DIXON in Digital Advertising Planning, Spring 2019 taught by Manveer Mann, Montclair State University from Jan 2019 to Jul 2019.
For the exclusive use of D. DIXON, 2019.
HubSpot: Inbound Marketing and Web 2.0
509-049
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
3
This document is authorized for use only by DAINE DIXON in Digital Advertising Planning, Spring 2019 taught by Manveer Mann, Montclair State University from Jan 2019 to Jul 2019.
For the exclusive use of D. DIXON, 2019.
509-049
HubSpot: Inbound Marketing and Web 2.0
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 pre-Internet
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 user-friendly
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:
4
This document is authorized for use only by DAINE DIXON in Digital Advertising Planning, Spring 2019 taught by Manveer Mann, Montclair State University from Jan 2019 to Jul 2019.
For the exclusive use of D. DIXON, 2019.
HubSpot: Inbound Marketing and Web 2.0
509-049
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 …
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