Thursday, December 02, 2010

HubSpot Expands Its Services But Stays Focused on Small Business

Summary: HubSpot has continued to grow its customer base and expand its product. It's looking more like a conventional small-business marketing automation system every day.

You have to admire a company that defines a clear strategy and methodically executes it. HubSpot has always aimed to provide small businesses with one easy-to-use system for all their marketing needs. The company began with search engine optimization to attract traffic, and added landing pages, blogging, Web hosting, lead scoring, and integration. Since my July 2009 review, HubSpot has further extended the system to include social media monitoring and sharing, limited list segmentation and simple drip marketing campaigns. It is now working on more robust outbound email, support for mobile Web pages, and APIs for outside developers to create add-on applications.

The extension into email is a particularly significant step for HubSpot, placing it in more direct competition with other small business marketing systems like Infusionsoft, OfficeAutoPilot and Genoo. Of course, this competition was always implicit – few small businesses would have purchased HubSpot plus one of those products. But HubSpot’s “inbound marketing” message was different enough that most buyers would have decided based on their marketing priorities (Web site or email?). As both sets of systems expand their scope, their features will overlap more and marketers will compare them directly.

Choices will be based on individual features and supporting services. In terms of features, HubSpot still offers unmatched search engine optimization and only Genoo shares its ability to host a complete Web site (as opposed to just landing pages and microsites). On the other hand, HubSpot’s lead scoring, email and nurture campaigns are quite limited compared with its competitors. Web analytics, social media and CRM integration seem roughly equivalent.

One distinct disadvantage is that most small business marketing automation systems offer their own low-cost alternative to, while HubSpot does not. HubSpot’s Kirsten Knipp told me the company has no plans to add this, relying instead on easy integration with systems like SugarCRM and Zoho. But I wouldn’t be surprised if they changed their minds.

In general, though, HubSpot’s growth strategy seems to rely more on expanding services than features. This makes sense: like everyone else, they've recognized that most small businesses (and many not-so-small businesses) don’t know how to make good use of a marketing automation program. This makes support essential for both selling and retaining them as customers.

One aspect of service is consulting support. HubSpot offers three pricing tiers that add service as well as features at the levels increase. The highest tier, still a relatively modest $18,000 per year, includes a weekly telephone consultation.

The company has also set up new programs to help recruit and train marketing experts who can resell the product and/or use it to support their own clients. These programs include sales training, product training, and certification. They should both expand HubSpot’s sales and provide experts to help buyers that HubSpot sells directly.

So far, HubSpot’s strategy has been working quite nicely. The company has been growing at a steady pace, reaching 3,500 customers in October with 98% monthly retention. A couple hundred of these are at the highest pricing tier, with the others split about evenly between the $3,000 and $9,000 levels. This is still fewer clients than Infusionsoft, which had more than 6,000 clients as of late September. But it's probably more than any other marketing automation vendor and impressive by any standard.


JustinCambria said...

Disclaimer: I work for PullnotPush, a HubSpot VAR & certified partner.

Appreciate your analysis, David. Solid post. I wonder about the confusion with Infusionsoft, though? Isn't infusionsoft basically an email marketing platform? HubSpot is really about lead gen through the web: blogging, SEO, landing pages, social media & analytics, and tying those together. I do think that a typical small biz would usually buy one or the other is a fair point.

Your commentary about user difficulty on these systems is spot on: in spite of HubSpot's fabulous consulting and terrific support, sometimes it is daunting for the average 'non-tech' biz owner to master all of the tools, because if you aren't familiar with using softwares of this nature, it can be a big time investment. It's great that HubSpot is so focused on making their customers successful & redoubling efforts to ensure it.

Kir said...

Thanks for the comprehensive update David!
We are excited to keep giving Small and Medium Businesses more comprehensive coverage for all their marketing needs ...
I think you are right to point out the additional areas that we are now competing in - but also think that so far, there really isn't a player who is as robust at helping folks get found so they can have more contacts to email and nurture - it continues to be fascinating to watch.
And if our CRM plans change, you'll be among the first to know:-)
Looking forward to your next review.

David Raab said...

Hi Justin,

Infusionsoft does more than email, although I certainly agree it doesn't have the Web marketing features of HubSpot. In particular, it has multi-step automated processes, CRM and order processing capabilities. See their own site or my February 2009 review at .