Hubspot Case

HubSpot Case

By December 2008, Hubspot was a highly growing start-up in the inbound marketing sector; it had a very competitive product and ~1,000 customers. The goal of Halligan and Shah, founders of HubSpot, was both to accelerate the Hubspot’s growth rate and increase its overall profitability in the following months. However, in order to do so, the company faced various issues that needed to be addressed.

■ Develop clear customer segmentation. HubSpot did not segment the market based on real customer needs, it “divided” the market using mainly demographic variables (# employees) and customer profile into Owner Ollies and Marketing Marys.

■ Target specific most promising/high-value customer segments considering attractiveness and company strengths. HubSpot did not target a specific type of customer; instead it was investing its resources in capturing customers of the two profiles determined, not considering which customers were more valuable for the company (CLV).

■ Develop a customized value proposition for the selected segments that accelerates growth and maximizes CLV. Hubspot started to differentiate Owner Ollies and Marketing Mary’s value proposition through price and features (4Ps) however more customization was required.

After thorough analysis if the company’s current situation (3C’s), possible for customer segmentations, targeting and positioning strategies and assessment of CLV, I believe HubSpot has an opportunity to both accelerate its growth rate to achieve its growth targets (see exhibit 2) and increase its overall profitability by segmenting the market using a needs based segmentation approach, considering customer nature of transactions (B2B vs B2C) and customers’ profile towards the product (Owner Ollie” vs “Marketing Mary”) and targeting the following customer segments with a differentiated value proposition.

1. B2B – Marketing Mary sub segment because it has the highest customer Lifetime Value CLV – $226k see analysis in...