It’s Not What You Sell - It’s How You Sell: HubSpot CEO Advises Students at ‘Conversation with Digital Leaders’ series
Brian Halligan, co-founder and CEO of marketing software company HubSpot, spoke at Trinity Business School this month as part of the ‘Conversation with Digital Leaders’ series organised by the Trinity Centre for Digital Business. Focusing on the transformative journey of major digital companies or start-ups, the series is designed to give an insight into leadership and development in the digital world.
In one of the first events to take place in the new state-of-the-art Trinity Business School building, Halligan sat down for a conversation with Dr. Laurent Muzellec, founder of the Trinity Centre for Digital Business and Director of the MSc in Digital Marketing Strategy.
The Birth of Inbound Marketing
Halligan’s entrepreneurial journey began as a business student. While studying an MBA at MIT Sloan, he met his co-founder and “start-up guru” Dharmesh Shah, an entrepreneur who shared his passion for small businesses and the power of technology. Seeing a shift in the way people shop and buy, they realised that traditional sales and marketing methods were broken and fresh techniques were needed.
“Marketers all had the same playbook – they would buy contact lists and spam people or hire telesales reps and cold call people who weren’t interested in their business or product. Marketing was broken and people had become immune to traditional marketing techniques. Human behaviour had started to change, in an age where we were increasingly living with these new tools like Google and social media. So we thought to ourselves, “How can we use this knowledge and this new technology to change how we market to people?” We decided to call the old school marketing ‘outbound’ – interrupting your way into people’s lives, and we named the new school marketing ‘inbound’.”
The pair founded HubSpot to create a new standard of how companies treated and interacted with their customers. “We created a single, all-in-one tool that integrated email, social media, website design, starting with marketing and then over time moving into sales.” Their revolutionary marketing strategy offered an easier and more successful way for companies to attract visitors, leads and customers and led to the co-founders becoming thought leaders in their industry. Within three years they had written their own how-to guide on inbound marketing.
From Start-Up to Scale-Up
Halligan notes that HubSpot spent their first six or seven years in “start-up” mode, where they would go through a product/market fit and work on their customer economics. They then entered the “scale-up” mode, which he argues is now even more difficult than starting a company. Back in 2006 most of HubSpot’s first employees were fellow business school graduates. According to Halligan, “In order to get from start-up to scale-up, it is key to get the culture right in order to hire great people and keep them.”
But it’s not just about the people; Halligan described another obstacle that had hindered HubSpot’s ability to scale up. They spent years trying to choose between two target markets – which they gave the personas ‘Owner Ollie’ - a small business owner with less than 10 employees and no full time marketing experience and ‘Mary Marketer’, a marketing manager who worked in a company between 10 and 1000 employees.
“By trying to serve multiple personas, we were serving none of them. It was only when we decided that Mary Marketer was our sole target market persona that we began to rapidly grow the number of customers we acquired without the return falling apart.” Decisions like this have seen HubSpot grow to number one in the marketing automation market.
The Secret to Providing Great Customer Experience
The conversation concluded with an insight into how HubSpot has sustained a recurring revenue model that keeps its customers happy. Halligan said: “The key to the recurring revenue model is keeping customer acquisition rates low, customer retention rates high, upselling to happy customers and calculating lifetime value. To overcome high churn rates we prioritised our buyer personas and targeted accordingly.”
He continued, “The competitive advantage today is convenience. It’s creating a frictionless, subscription-based, delightful end-to-end opportunity for your consumers.” Listing a number of companies he uses everyday – such as Spotify and Uber, Halligan highlighted that many of them are start-ups. “All of these new companies, they sell the same product as the predecessor companies they disrupted, but they do it with a better customer experience, a disrupted customer experience. That’s what HubSpot are trying to do, and help others do too.”
Reflecting on the event and his brief return to business school, Halligan said: “Not that long ago, in 2006, when my co-founder Dharmesh and I were both business students, we often heard a supposed truism that to be a breakthrough company your product had to be ten times better than the competition. The one piece of advice I hope Trinity's students take with them is that having a great product is necessary but not sufficient, and that to have a breakthrough company, your customer experience has to be ten times better than the competition. It’s not what you sell - it’s how you sell. The competitive advantage today is convenience. It’s creating a frictionless, subscription-based, delightful end-to-end opportunity for your consumers. The brands today that are disrupting the experience and making it an exceptional one are the brands that will find long term success.”
Taking place once per term, the ‘Conversation with Digital Leaders’ series continues in November with a major leader from the sharing economy.
Visit the Trinity Centre for Digital Business for further information.