HubSpot's Inbound Marketing and Web 2.

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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 MM
Churn rate 4.3 3.2
Average customer life 23.25 31.25
Acquisition 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.