HubSpot's Inbound Marketing and Web 2.0

1.) Which is the right segment for HubSpot to target? Why?

HubSpot should target Marketer Mary and B2B segments.

MM segments have lower churn rates and they tend to stick longer and use more service of HubSpot.

MM are more interested in analytics and reports that HubSpot provided. They ran more inbound marketing programs than the Owner Ollies and needed more robust and sophisticated tools.

They also spend more money products like HubSpot.

  OO MMChurn rate 4.3 3.2Average customer life 23.25 31.25Acquisition Cost $1,000 $5,000 Monthly rent $250 $500 Fixed amount $500 $500 CLV $5,340 $11,125

Moreover, the customer lifetime value from MM segment is higher than OO segment. B2B customers were less sophisticated and derived greater value from inbound marketing.

Therefore, this segment would be more viable to cater to. MM segment is more resilient to adverse economic conditions than the OO segment players. MM segment constitutes majority of the newer customers. MM segment has very good growth potential and HubSpot could reap significant benefits from

this segment.

2.) Which pricing model-Software-as-a-Service (SaaS) or Software-as-a-Product (SaaP) is more suitable for HubSpot?

HubSpot should continue with its SaaS pricing model.

This model is low cost and easy to use. It gives competitive edge to HubSpot by enabling flexibility in charging the fees. This pricing scheme is attractive to those unfamiliar with HubSpot's product. This enables them

to test the waters before making the commitment. Going for SaaP, the customers would have to make significant investments in adopting the

technology, training the personnel etc which they, especially small business owners, would not favor. Thus, HubSpot would lose a significant portion of its revenue.

SaaS pricing schemes capture the maximum value from the customer.

However, HubSpot could go in for an annual subscription rate for both OO and MM segments. This way, the customers would be locked-in and churn rates, especially for OO segment would reduce. Also, they could increase the initial amount for both segments in order to recover acquisition costs more quickly.