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Pam Baker HubSpot Excels By Packaging Marketing Simplicity in a Suite

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 By Pam Baker

The Swiss Army Knife of Inbound Marketing Applications

HubSpot has created quite a stir. The upstart start-up appeared on the scene in 2006 as the all-in-one Swiss-army knife of marketing tools for small and mid-sized businesses (SMB). Now it's a "red-hot little company" says Gerald Murray, research manager, CMO advisory at IDC.

So hot that it just raised $32 million in venture capital from industry giants Salesforce.com, Google and Sequoia. This was the fourth round. Three previous investment rounds garnered $33 million from the likes of General Catalyst, Matrix, and Scale.

But it's not marketing sizzle that gives Hubspot its heat. "It's not a trendy new thing although it is new and trendy," says Murray. What he means by that is that HubSpot is not a shiny piece of glitz that the techno-savvy hurry to use for the sake of its newness. Instead, the company offers real meat to profit-starved companies.

Specifically, the marketing software platform bundles functions any small and midsize business (SMB) must do to compete and survive. In other words, it's the bundling that's new and trendy. Now an SMB doesn't have to hire separate firms or staff or buy separate tools or platforms to handle the website, email marketing, lead management, social media, search engine optimization (SEO), and analytics. One platform means one person or a small team can accomplish all that at once.

Is it a cure-all? No, it isn't. But no tool or platform, online or off, is or ever will be a cure-all. And one fact will forever remain true: a tool is only as good as the talent that wields it.

What HubSpot does is to help bridge the gap between a smaller company's business acumen and its ability to gain market visibility. When both acumen and visibility exist, the company prospers by gaining market share. Conversely, if one or the other is missing, the company falters or fails. HubSpot focuses on building online market visibility for SMBs, particularly those that lack technical or new marketing ability or lack resources in marketing or sales.

"They really 'get' SMB," says Ray Wang, principal analyst and CEO of Constellation Research. "They have a solid product that addresses multi-channel commerce including social media."

How it Works

Think of HubSpot as online marketing with a kick and a twist. "HubSpot is basically one big mash-up application that pulls information in from your website, Google, Twitter, Facebook, LinkedIn, your CRM system, etc." proclaims the company's website.

It uniquely caters to inbound marketing, the idea of attracting customers to you rather than going out and finding them. "At the heart of HubSpot's success is this fundamental change in marketing," says Murray. The days of cold-calling prospects, blindly sending email blasts from purchased lists, and paying premium ad dollars for poorly defined chucks of broad demographics as primary marketing tactics are long gone.

"The key is not to sell your products, but to attract your customers using things they actually care about," explains Mike Volpe, CMO at HubSpot.

Today, a company must attract qualified customers long before those customers enter buying mode. "It's about getting a 'share of mind' from a real presence online and becoming an attractive resource outside your company walls," explains Murray.

But this is no feel-good, soft approach to marketing. It's about mastering serendipity, about being before the right prospect at exactly the right time.

"Marketing has changed, and nearly every other marketing software system is either an incomplete point solution, or was built for how you should do marketing in the 1990's by using a lot of cold calling and spammy outbound marketing," said Volpe.

"HubSpot is the only all-in-one solution that enables marketers to embrace inbound marketing and generate more leads at a lower cost," he added.

Any SMB can measure where it stands in terms of online presence prior to buying anything from HubSpot. Free online tools such as HubSpot's WebGrader and TwitterGrader can make that assessment quick and easy. You can find the complete suite of free Grader tools here. Once you know where your company stands, it's easier to know what you need to do and which tools you need to get the job done. It's darn convenient that the tools are bundled in HubSpot, but you're free to proceed on your journey without interacting with HubSpot at all, if you wish.

What it Costs and What You Get for the Money

As a software-as-a-service (SaaS) marketing solution, HubSpot is relatively easy to use and affordable for most companies. The price ranges from $3000 for the small package to $12,000 for the medium package and $18,000 for the large package per year. HubSpot Small requires use of the HubSpot CMS which means there is an additional cost. The HubSpot CMS is designed for simple, template-driven web sites with a small number of existing pages (10 to 25 on average). A HubSpot Inbound Marketing Specialist can evaluate if your site is a fit. For customers using the HubSpot CMS, migration from an existing site to the HubSpot CMS is provided at $10 per page, with a $250 migration minimum.

No doubt, some small business owners will gulp at HubSpot's cost but they shouldn't as it typically comes well under the costs an average SMB will shell out over the year to various sources (or in payroll) to achieve the same ends.

The small package is basic but nonetheless a strong solution for many SMBs that have no formal CRM program, few technical resources and/or few dedicated marketing resources. It's a website management system with strong SEO, social media integrations, registration forms, a blog, and analytics. While it's a workhorse in attracting online business, those with more tech-savviness or a strong need for control over details may be happier with the medium or large packages.

The medium and large packages offer CRM integration with Salesforce.com and SugarCRM via a free downloadable integration pack. The HubSpot API includes a Leads API that provides developer access to data from the HubSpot Leads application and can be used for a variety of integrations, most commonly bidirectional CRM integrations for closed-loop-marketing with third-party CRM platforms beyond Salesforce.com and SugarCRM.

All three packages offer varying degrees of training, community support and consulting. HubSpot has also recently extended its lead management systems in each package.

"We always had lead management and landing pages for lead acquisition as part of our system, but recently we added more functionality for marketers in the 'middle of the funnel,'" says Volpe. The company's vision is to be the all-in-one marketing system, and things like email marketing, lead scoring and nurture campaigns are important pieces of functionality within an overall marketing platform.

"You're not going to get into complex lead management with HubSpot, but that's perfect for SMBs – simple processes and activities," says Murray. "It's difficult for SMBs to find leads in the first place. They know what to do once they have the leads."

What's Coming Next

HubSpot is a private company with an annual revenue run rate of over $25 million and plenty of investment cash at its disposal. It has 200 employees and over 4000 customers. By comparison, its closest competitors have 900 customers.

The company is highly aggressive but not in a predatory vein. In short, HubSpot is positioning to own the market in its space and has admitted to as much on its own website calling it a "go big or go home world we live in." The goal is simple: to own its market space exactly as Google, Amazon and Zappos have done in theirs.

The company's sweet spot is squarely in the SMB market. "HubSpot isn't built for the global giants on purpose," says IDC's Murray. "They are very good at not getting distracted by the big guys and the allure of the big deals." That focus is a smart play considering that the big deals aren't so big anymore and large enterprises are slow to adopt new ideas and new technologies.

Bottom line, HubSpot will likely continue to rack up a high volume in sales in the SMB market to the envy and chagrin of many of its would-be competitors both large and small. It is also likely that the company will look at acquisitions for complementary strengths, considering officials have said as much. Expect HubSpot to continue to add new feature sets and capabilities from its own R&D efforts and from future mashups.

Unless something drastic happens, HubSpot will indeed own its space. "It's crazy, they're so good at marketing," says Murray. "But they're not letting success go to their head and they're staying on target." End

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The key is not to sell your products, but to attract your customers using things they actually care about. It's about getting a 'share of mind' from a real presence online and becoming an attractive resource outside your company walls."

~ Mike Volpe, HubSpot CMO

 

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