Year: 2022
Type: book-chapter
Abstract: HubSpot offers subscription-based SaaS solutions for inbound marketing, sales, and customer service.As opposed to outbound marketing, in which marketers try to reach the customers via advertisements or e-mails, inbound marketing creates content, such as blogs or information videos that interested customers would want to see.The solution offered by the company offers tools to create high-quality content, increase exposure to interested customers, and tools to analyse the results.It also offers tools to qualify the leads and close the sale on its platform.After initially contemplating a product-based and SaaS model for different customer segments, the adoption of subscription-based SaaS delivery seemed the right strategy for HubSpot from a long-term value creation perspective.However, soon they found two distinct segments among their subscribers.While the marketers from the big firms continued with their subscription and continued to extract value, small firm owners cancelled the subscription after gaining initial value from the offerings.It was crucial to reduce the churn rate for the subscription-based business model to be viable for the company.To manage the churn rate, HubSpot made a conscious choice of avoiding signing up the customers who would possibly renege.The sales team's incentive was determined based on the retention of the customers.Moreover, the company focussed on continuously improving its onboarding and customer support process, including dedicated help centres, a knowledge base portal, and certification programs.These steps resulted in lower churn rates for the company.HubSpot currently offers all its services on a subscription-based model with a SaaS delivery.Instead of paying upfront to install and use software, HubSpot's customers subscribe to the solutions by paying a monthly/annual fee.HubSpot follows a tiered subscription model.Some basic CRM and marketing functionality are available free of cost, followed by a starter, professional, and enterprise solutions.The subscription tiers are offered in three distinct yet inter-related areas of marketing, sales, and customer service.The subscription tiers differ in terms of the number of users supported and additional features for the subscribers (see Table A for subscription tiers and indicative features for the marketing function).While Table D-A is not exhaustive (e.g., there are more features offered in the professional and enterprise packages), it is clear from the table that the company offers distinct value addition across subscription tiers, especially to those opting for professional or enterprise packages.The success of HubSpot's multi-tier subscription pricing strategy may be gauged from the fact that out of their total revenue of $674.9 million in 2019, around 95% ($646.3 million) was earned as subscription revenue.
Source: De Gruyter eBooks
Language: English
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4311653196