Appshop Case
MKDM ASSIGNMENT – 2 (HUBSPOT CASE)
Advantages in serving Owner Ollies: * Owner Ollies were relatively easier to sell comapared to Marketer Marys * Cost of acquisition is less ($ 1,000). * Derived greater value from Hubspot. * 1.67 million potential customers (Pg-11, Table-C, considering small and very small businesses). * With usage of CMS, tend to stay longer.
Disadvantages in serving Owner Ollies: * Higher churn rate compared to Market Marys.
Advantages in serving Market Marys: * Market Marys had more money to spend on product like Hubspot. * They stayed longer than Owner Ollies (lower churn rates) * They were familiar with the idea of inbound marketing, so less training time to be spent with them.
Disadvantages in serving Market Marys: * Harder to reach and longer selling cycles. * Cost of acquisition is more ($ 5,000).
Life time value calculation of present Hubspot customers Assume interest rate to be 5% annual | Customer type | Monthly Churn rate | Margin per month | Consulting fee paid at joining | Acquisition cost | Percentage of total customers | Life time value (including consulting fee) | Owner Ollies | 4.3% | $ 250 | $ 500 | $ 1000 | 73% | $ 4800 | Market Marys | 3.2% | $ 500 | $ 500 | $ 5000 | 27% | $ 13,325 | Total Life Time Value of present Hubspot customers = 1000 X (0.73X4800 + 0.27X13325) = 1000 X ( 3869 + 3597.75) = $ 7,466,750 |
In Hubspot customers, 73% were Owner Ollies and 27% were Marketer Marys. This data clearly represents Owner Ollies were more readily converted from leads to customers than Marketer Marys.
Taknig this into account, LTV of Owner Ollies = 0.73X5300 = $ 3,869
LTV of Marketer Marys = 0.27 X 13325 = $ 3,598
Clearly, Owner Ollies are more profitable investment. Hence Hubspot should narrow their target by focussing exclusively on Owner Ollies. This way Hubspot would
Advantages in serving Owner Ollies: * Owner Ollies were relatively easier to sell comapared to Marketer Marys * Cost of acquisition is less ($ 1,000). * Derived greater value from Hubspot. * 1.67 million potential customers (Pg-11, Table-C, considering small and very small businesses). * With usage of CMS, tend to stay longer.
Disadvantages in serving Owner Ollies: * Higher churn rate compared to Market Marys.
Advantages in serving Market Marys: * Market Marys had more money to spend on product like Hubspot. * They stayed longer than Owner Ollies (lower churn rates) * They were familiar with the idea of inbound marketing, so less training time to be spent with them.
Disadvantages in serving Market Marys: * Harder to reach and longer selling cycles. * Cost of acquisition is more ($ 5,000).
Life time value calculation of present Hubspot customers Assume interest rate to be 5% annual | Customer type | Monthly Churn rate | Margin per month | Consulting fee paid at joining | Acquisition cost | Percentage of total customers | Life time value (including consulting fee) | Owner Ollies | 4.3% | $ 250 | $ 500 | $ 1000 | 73% | $ 4800 | Market Marys | 3.2% | $ 500 | $ 500 | $ 5000 | 27% | $ 13,325 | Total Life Time Value of present Hubspot customers = 1000 X (0.73X4800 + 0.27X13325) = 1000 X ( 3869 + 3597.75) = $ 7,466,750 |
In Hubspot customers, 73% were Owner Ollies and 27% were Marketer Marys. This data clearly represents Owner Ollies were more readily converted from leads to customers than Marketer Marys.
Taknig this into account, LTV of Owner Ollies = 0.73X5300 = $ 3,869
LTV of Marketer Marys = 0.27 X 13325 = $ 3,598
Clearly, Owner Ollies are more profitable investment. Hence Hubspot should narrow their target by focussing exclusively on Owner Ollies. This way Hubspot would