Return on Investment from Inbound Marketing through Implementing HubSpot Software August 2011 Prepared By: Kendra Desrosiers M.B.A. Class of 2013 Sloan School of Management Massachusetts Institute of Technology Mathew Paisner M.B.A. Class of 2012 F.W. Olin Graduate School of Business Babson College 1
Table of Contents Executive Summary... 3 Key Findings from User Data Analysis... 4 Gains in Volume of Traffic... 4 Gains in Volume of Leads... 6 Summary of User Data Analysis... 8 Key Findings from User Survey... 8 Traffic: 88 percent Increased Traffic... 9 Leads: 83 percent Increased Leads... 12 Sales: Majority Report Revenue Increase... 14 Resource Allocation... 16 Satisfaction with the Software... 18 Summary of User Survey Results... 19 Appendix A: Additional Survey Results by Company Size... 21 Appendix B: Additional Survey Results by Company Type... 22 Appendix C: Additional Survey Results by Leads... 23 Appendix D: Methodologies... 24 Web Analytics... 24 User Survey... 24 Appendix D: Author Disclosure... 26 2
Executive Summary This study examines the effectiveness of conducting inbound marketing through the use of HubSpot s all-in-one inbound marketing software. Findings were based on two data sources: 1) User website data: Data collected from customer accounts by HubSpot. 2) Survey of customers: Questions were sent to current HubSpot users who use the product s lead tracking tool. Analyses of data from both sources indicated substantial returns from implementing the software and using inbound marketing techniques. 1 Metrics observed include volume of sales, volume of leads, and website traffic. Some key findings from this study are listed below. User Website Data Analysis In terms of traffic, after 12 months of active use: Customers starting with 1 to 199 monthly website visitors experienced 7.8 times more traffic. Those starting with 200-499 visitors per month observed an average 17 percent increase in monthly traffic. Overall, users experienced an average 13 percent increase in visitors month-to-month. In terms of leads, after 12 months of active use: Traffic: Customers starting with 1 to 5 leads per month captured 41.1 times more leads. Those starting with 6-20 leads per month observed a 30 percent increase in leads month-tomonth. Overall, users experienced an average 32 percent increase in leads month-to-month. Customer Survey Results 88 percent of respondents reported increased traffic to their website since using HubSpot. Of those who saw an increase, 25 percent reported traffic more than doubled and 72 percent saw the increase in 4 months or less. Leads: 83 percent of respondents reported an increase in leads. Of those who saw an increase, 67 percent saw their leads increase in 4 months or less. Among those who had not captured leads prior to HubSpot, users on average had 33 leads per month after 5 to 7 months of use. This number increased to 103 leads per month among customers who used the product for at least 11 months. 2 1 Inbound marketing techniques are those that enable you to attract people to your business and convert them into customers. E.g. Search Engine Optimization (SEO), blogging, social media, lead capture and nurturing techniques. Outbound marketing techniques are those used to push a marketing message out. E.g. cold calling, trade shows, print ads, TV ads, and mass mailings. 3
Sales: 64 percent of respondents said sales increased while 9 percent noted a decrease and 27 percent did not know. Of those who observed an increase, 58 percent saw the increase within 5 to 7 months of use. Product Satisfaction: 85 percent indicated that they would recommend HubSpot, while 13 percent said they did not know and 2 percent said they would not. Key Findings from User Data Analysis The following findings were determined using website data of HubSpot users. The metrics analyzed below provide a measure of the effectiveness of implementing inbound marketing through the software. The metrics studied were: Website Visitors per Month Leads per Month In order to ensure accuracy, the initial two months of software subscription were excluded from the analysis. 3 Therefore the analyses begin at month three to represent the first normal month of use. Any instances where website tracking was not properly implemented have been excluded from these analyses. In addition, all outlying data points were also excluded in order to maintain representative values. 4 Gains in Volume of Traffic In order to accurately determine lift for visitors, historical data was divided into segments based on initial volume of traffic. The data shows that for all of the segments users who had 1 2000+ visitors in month three on average, users experienced consistent increases in traffic from month-to-month, for at least the first 10 months of active use. Table 1 provides the average monthly website visitor change observed, up to 12 months of active use. 2 Based on survey data from 2010 HubSpot ROI Report as this data was not available in the 2011 survey. 3 This two month period allows for users to have fully rolled out their inbound marketing strategy, e.g. starting their company blog. 4 These analyses did not exclude users who use the software infrequently. Both frequent and infrequent users are represented, including those who cancelled their subscription. The only users excluded were those who did not have the proper traffic tracking mechanisms in place. 4
Table 1.1 Average % Change of Visitors (Month to Month) by Starting Volume of Traffic Month Monthly Customer Group 3 to 4 4 to 5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 10 10 to 11 11 to 12 12 to 13 13 to 14 14 to 15 Average 1 to 199 starting visitors 71% 43% 32% 17% 21% 0% 34% 12% 14% 19% -3% -12% 21% 200 to 499 starting visitors 41% 27% 15% 10% 19% 9% 31% 26% 24% 7% 5% -9% 17% 500 to 1,999 starting visitors 18% 22% 11% 13% 9% 21% 8% 13% 24% 10% 7% -11% 12% 2,000+ starting visitors 3% 8% 4% 6% 15% 9% 4% 14% 27% 5% -1% -3% 8% Table 1.2 Cumulative Increase in Visitors by Starting Volume of Traffic 1 to 199 starting visitors After 12 months of active use experienced 7.8x more traffic. 200 to 499 starting visitors After 12 months of active use experienced 6.1x more traffic. 500 to 1,999 starting visitors After 12 months of active use experienced 3.8x more traffic. 2,000+ starting visitors After 12 months of active use experienced 2.4x more traffic. Table 2 provides an illustration of this progress using example values. In the third segment, this example site starts with 800 visitors. After 12 months of active usage, the data shows that based on average monthly percent changes, this site would have 3,003 visitors. While actual results may vary, the table illustrates increases in traffic if a customer were to consistently perform according to the monthly averages. Table 2 Illustration: Number of Visitors Each Month (Based on Overall Average % Change) 1 to 199 starting visitors 100 171 245 324 379 457 455 608 682 774 920 890 782 200 to 499 starting visitors 400 563 717 822 901 1,076 1,173 1,535 1,933 2,397 2,566 2,688 2,440 500 to 1,999 starting visitors 800 944 1,156 1,283 1,447 1,577 1,900 2,060 2,323 2,880 3,154 3,382 3,003 2,000+ starting visitors 4,000 4,120 4,453 4,652 4,931 5,694 6,213 6,474 7,359 9,312 9,764 9,709 9,445 Changes in traffic volume were also calculated for the dataset overall and by business type, i.e. if the business sells to businesses (B2B) or consumers (B2C). 5
Table 3.1 Average % Change of Visitors (Month to Month) Month Monthly 3 to 4 4 to 5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 10 10 to 11 11 to 12 12 to 13 13 to 14 14 to 15 Average Overall 22% 17% 17% 14% 14% 10% 11% 12% 12% 10% 7% 10% 13% B2B Companies 21% 15% 21% 16% 15% 10% 10% 13% 12% 11% 5% 11% 13% B2C Companies 22% 21% 9% 12% 11% 9% 13% 9% 13% 8% 10% 6% 12% Table 3.2 Cumulative Increase in Visitors by Starting Volume of Traffic All Companies After 12 months of active use experienced 4.3x more traffic. B2B Companies After 12 months of active use experienced 4.5x more traffic. B2C Companies After 12 months of active use experienced 3.8x more traffic. Gains in Volume of Leads The effectiveness of implementing inbound marketing through HubSpot was also measured in terms of leads, i.e. website visitors whose information and activities are captured by the software s lead tracking tool. Table 4.1 provides the average monthly percent changes of leads for the first 12 months of active use, where customers are grouped according to their initial monthly lead volume. The observed trend indicates that month-to-month, users starting with less than 20 leads per month experienced consistent increases for the first 12 months of active use and all segments starting leads 1-50+ experienced consistent increases for the first seven months of active use. Table 4.1 Average % Change of Leads (Month to Month) by Starting Number of Leads Month Monthly Customer Group 3 to 4 4 to 5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 10 10 to 11 11 to 12 12 to 13 13 to 14 14 to 15 Average 1 to 5 starting leads 74% 44% 46% 33% 25% 39% 40% 34% 51% 21% 27% 11% 37% 6 to 20 starting leads 22% 33% 37% 27% 26% 39% 29% 41% 38% 37% 14% 20% 30% 21 to 50 starting leads 16% 44% 22% 21% 12% 21% 6% 26% 63% -4% 16% 4% 21% More than 50 starting leads 3% 1% 17% 25% 13% 12% 19% -7% 32% 16% -1% 40% 14% Table 4.2 Cumulative Increase in Leads by Starting Number of Leads 1 to 5 starting leads After 12 months of active use experienced 41.1x more leads. 6 to 20 starting leads After 12 months of active use experienced 23.2x more leads. 21 to 50 starting leads After 12 months of active use experienced 8.5x more leads. More than 50 starting leads After 12 months of active use experienced 4.5x more leads. Table 5 provides an illustration of the calculated trends. To illustrate the trend of the first customer group (those starting with 1 to 5 leads) suppose a user has 2 leads. Based on the average month-tomonth percent change, this example customer would have 82 leads in the 12 th month of active use. While actual results may vary, the table illustrates increases in leads if a customer were to consistently perform according to the monthly averages. 6
Table 5 Illustration: Number of Leads each month (Based on Overall Average % Change) Month 3 4 5 6 7 8 9 10 11 12 13 14 15 1 to 5 starting leads 2 3 5 7 10 12 17 24 32 48 58 74 82 6 to 20 starting leads 10 12 16 22 28 36 49 64 90 124 170 194 232 21 to 50 starting leads 30 35 50 61 74 83 101 107 134 218 210 244 254 More than 50 starting leads 300 308 312 365 455 513 573 682 635 836 973 966 1,357 Average changes in lead volume were also calculated for the dataset overall and by business type, i.e. if the business sells to businesses (B2B) or consumers (B2C). B2C users saw a 16.8x increase based on the average month-to-month increases; while B2B users observed an increase of 33.7x. Table 6.1 Average % Change of Leads (Month to Month) Month Monthly 3 to 4 4 to 5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 10 10 to 11 11 to 12 12 to 13 13 to 14 14 to 15 Average Overall 44% 32% 41% 28% 32% 38% 31% 19% 32% 26% 29% 27% 32% B2B Companies 50% 35% 43% 36% 37% 35% 32% 24% 33% 26% 30% 31% 34% B2C Companies 38% 32% 32% 16% 19% 34% 24% 27% 24% 28% 31% 17% 27% Table 6.2 Cumulative Increase in Leads by Starting Number of Leads All Companies After 12 months of active use experienced 26.4x more leads. B2B Companies After 12 months of active use experienced 33.7x more leads. B2C Companies After 12 months of active use experienced 16.8x more leads. 7
Summary of User Data Analysis The average percent changes presented above indicate that HubSpot customers experienced substantial increases in traffic and leads relative to their initial volumes. In terms of traffic, after 12 months of active use: Customers starting with 1 to 199 monthly website visitors experienced 4.6 times more traffic. Those starting with 200-499 visitors per month observed an average 17 percent increase in monthly traffic. Overall, users experienced an average 13 percent increase in visitors month-to-month. In terms of leads, after 12 months of active use: Customers starting with 1 to 5 leads per month captured 41.1 times more leads. Those starting with 6-20 leads per month observed a 30 percent increase in leads month-tomonth. Overall, users experienced an average 32 percent increase in leads month-to-month. Key Findings from User Survey The following section provides the results of a survey of HubSpot customers who use the lead tracking tool and were HubSpot customers for at least one month. The survey received 214 respondents. The survey primarily inquired about changes in traffic, leads, and sales: 1. How did traffic/leads/sales change? 2. If you saw an increase, what factors led to the increase? 3. If you saw an increase, how soon after implementing HubSpot did you see the increase? In addition to these questions, the survey inquired about customer satisfaction with the product and customer perception of changes in ROI metrics (i.e. market share and revenue) after using HubSpot. Respondents had been using HubSpot for various amounts of time and were a mix of Business-to- Business (B2B) and Business-to-Consumer (B2C) organizations distributed as indicated in the chart below. Both populations experienced increases in traffic, leads and sales; a breakdown by segment can be found in Appendix B. Additionally, a breakdown of survey respondents by number of employees dedicated to marketing can be found in Appendix A. 8
5 Traffic: 88 percent Increased Traffic 88 percent of respondents reported increased traffic to their website since using HubSpot, while 3 percent said it decreased and the remaining 9 percent said they did not know. Of those who saw an increase: 25 percent reported that traffic more than doubled. 72 percent saw the increase in four months or less. SEO and blogging were the most frequently cited factors: 79 percent reported that SEO was a factor and 77 percent reported blogging was a factor. The graphs below provide a summary of the results of the traffic-related questions. 5 For additional demographic data, please see Appendix C 9
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In comparison to the HubSpot 2010 ROI Report, customer perception of blogging as a factor that led to increased traffic rose by 10%. Several commented that in addition to the increase in traffic, their marketing goals have changed now that they have more information about their visitors: We have been able to better track and analyze data. HubSpot has allowed us to track things that have never before been tracked in our organization. We will be able to develop trend analysis and better reach our target because of it. My goals have changed in that I now focus on generating traffic to my site and improving performance metrics such as: organic search volume, conversion rates, and thinking about building a truly useful, resource rich web site. Heavy focus on content creation, designing and revising calls to action, regular evaluation of analytic data. One remarked that although the growth has not been rapid, it has been consistent and resulted in higher quality leads: Although our traffic has not necessary increased by a large margin, our organic search results are steadily increasing, and our leads are more qualified. 11
Another remarked that the software has helped them identify where to focus their efforts in order to see results: Since using HubSpot, we are now more easily able to track marketing metrics surrounding the site and social media. We have established goals based on pageviews and subscriptions and analyze which pages and keywords are receiving the most traffic to create or reuse similar content elsewhere on the site. Leads: 83 percent Increased Leads The survey respondents provided the percent change in leads that users observed since implementing HubSpot s inbound marketing software. 83 percent of respondents reported increased leads, while 3 percent indicated that leads decreased; 15 percent did not know. Of those who saw an increase in leads: 32 percent saw their leads increase by 50 percent or more. 67 percent saw an increase in 4 months or less; 17 percent saw the increase within 1 month. SEO was the most frequently cited factor. 75 percent said SEO was a factor. The graphs below provide a summary of the results of the lead-related questions. 12
Several respondents commented on how HubSpot has changed the way they generate leads: The number of leads that I have generated using HubSpot has been enormous. My goal is centered around sales conversion now because of my ability to generate blog articles, landing pages, and lots of leads. 13
We have increased our leads from about 10-12 per day to 30-35 per day. We have also been able to keep the targeted focus of our emails and still automate the process through lead nurturing campaigns. Others remarked on the overall increase in leads and improved efficiency of the lead generation process: 100 percent increase in traffic and leads. We have proven it. We were getting maybe one phone-in lead per month. Since using inbound marketing, we generate over 30 leads per month. One respondent commented on the improved quality of leads they were receiving: We received our first lead from out-of-the-state this week and it will pay our way for a few months if we close the deal. This is very exciting for a small company! They found us on a Google search. Sales: Majority Report Revenue Increase The survey asked respondents to indicate how sales and market share changed since using HubSpot. While many respondents didn t know how overall market share fared, 64 percent said sales increased while only 9 percent noted a decrease and 27 percent did not know. Among respondents who reported increased sales: 18 percent said sales increased by at least 25 percent. 58 percent saw the increase in 5 to 7 months. 55 percent said SEO was a factor and 53 percent cited blogging as a factor. The graphs below provide a summary of the results of the questions pertaining to changes in sales. 14
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Some respondents commented on how HubSpot has positively impacted their sales: Hubspot has increased my sales like crazy. I'm very satisfied! I have shown my management how important internet marketing is for us, as it can generate new business that was previously 'invisible' for us. Resource Allocation Respondents were asked to indicate if they thought that devoting more resources to inbound marketing would help them better reach their goals; 87 percent answered yes. When asked to compare time allocated to inbound and outbound marketing before and after HubSpot, 79 percent of respondents indicated an increase in time spent on inbound marketing. 29 percent of respondents indicated that time spent on outbound marketing had decreased. 16
Some respondents commented on how their focus shifted to inbound techniques and how inbound has changed their organization: I no longer think of outbound methods of marketing. We are strictly using inbound and local networking. We are also focusing more nationally and creating services to appeal to a larger audience. The CMS allows us to do that easily. Some respondents indicated that inbound marketing was a completely new concept to their organization, but have been able to make the changes needed within their organization: I have completely revamped my marketing activities. I started to blog, I have added CTAs and landing pages. I have incorporated Facebook and Twitter. (Basically, I wasn't doing ANY marketing before!) HubSpot's easy-to-use reporting tools make it a no brainer to track the results and to manage relevant metrics. We were only tracking site traffic prior to using HubSpot. 17
Satisfaction with the Product Respondents were asked to indicate if they would recommend HubSpot to a friend or colleague. 85 percent indicated that they would recommend HubSpot, while 13 percent said they did not know and 2 percent said they would not. 77 percent of respondents said that HubSpot has helped them better meet their marketing goals, 20 percent were undecided and 3 percent said HubSpot did not help them better meet their marketing goals. One respondent commented on how results are closely tied with the level of effort: It takes time initially, but then the value of that content continues to bring in visitors. We went from three to almost 500 hits a month (just from organic traffic) in just four months. Social media saw similar growth. In June, I took on new responsibilities in my job and slacked off on Linkedin activity and we saw a drop to only 23 from social media. That there is proof that the more you put in, the more you get out. One respondent commented on how the product and educational resources improved their online presence and the results of their marketing efforts with a limited marketing budget: 18
I am a true believer in HubSpot. I've found your educational content just as valuable as the tool itself. With a very small marketing budget in a national, sales-driven organization, HubSpot has enabled me to dramatically increase our lead pool, branding awareness and online presence. By learning how to do inbound marketing activities cheaply and effectively, HubSpot gave me a fighting chance against our big name brand competitors. We couldn't have gotten here without HubSpot, period. Others commented more generally on how HubSpot has been a valuable software and educational resource: The biggest asset for us had been the service. Simply offering great hardware/software is one thing, but our reps at HubSpot have helped tremendously, as have Content Camp webinars. Hubspot allows me to have control and update content on the site any time I want. We now rank first for many keywords in our industry. We averaged about 20 hits a day prior to HubSpot we now average around 50 hits a day. We had no way of tracking the effectiveness of our website prior to joining HubSpot. My company outsourced the website to some third party who charged for updates and only updated the site a few times a month and they had bad attitudes, miscommunication, etc. Now all of that is gone. We pay almost double for HubSpot than what we paid for our 3rd party services, but it is worth it. We have seen almost 50 leads since starting with HubSpot in March 2011. I enjoy working with the HubSpot software. Summary of User Survey Results Key findings from the survey included the following: Traffic: 88 percent of respondents reported increased traffic to their website since using HubSpot while 3 percent said it decreased and the remaining 9 percent said they did not know. Of those who saw an increase, 25 percent reported traffic more than doubled. Leads: 83 percent of respondents reported an increase in leads, while 3 percent indicated that leads decreased; 15 percent did not know. Of those who saw an increase, 27 percent saw their leads almost or more than double. 19
Sales: 64 percent of respondents said sales increased while 9 percent noted a decrease and 27 percent did not know. 18 percent said sales increase by at least 25 percent. Product Satisfaction: 85 percent indicated that they would recommend HubSpot, while 13 percent said they did not know and 2 percent said they would not. 77 percent of respondents said that HubSpot has helped them better meet their marketing goals, 20 percent were undecided and 3 percent said HubSpot did not help them better meet their marketing goals. 20
Appendix A: Additional Survey Results by Company Size Company Size % of Respondents With An Increase In Traffic Leads Sales % Of Respondents Who Would Recommend HubSpot To A Friend or Colleague* 1-5 Employees 79% 63% 33% 70% 6-10 Employees 63% 75% 33% 62% 11-25 Employees 77% 65% 32% 55% 26-50 Employees 67% 52% 65% 71% 51+ Employees 82% 69% 38% 87% Average 74% 65% 40% 69% *Percentages denominator includes those respondents who answered Don t Know. % of Respondents with an Increase in # of Employees Dedicated To Marketing Traffic Leads Sales 0 74% 69% 38% 1 68% 62% 29% 2 90% 79% 47% 3 68% 37% 38% 4 100% 100% 43% 5 100% 100% 61% 6-10 65% 75% 15% 11-25 100% 65% 100% 25+ 30% 50% 50% Average 77% 71% 47% *Percentages denominator includes those respondents who answered Don t Know. 21
Appendix B: Additional Survey Results by Company Type Traffic: Change In Traffic Since Implementing HubSpot Increased By: B2B B2C Overall 1-25% 26% 18% 23% 25-50% 16% 13% 15% 50-75% 5% 8% 7% 75-100% (almost doubled) 9% 12% 10% More than 100% (more than doubled) 25% 22% 24% Not sure, but it definitely Increased 7% 13% 10% It Decreased 3% 2% 3% Don't know 9% 12% 10% Leads: Change In Leads Since Implementing HubSpot Increased By: B2B B2C Overall 1-25% 24% 27% 25% 25-50% 12% 15% 13% 50-75% 4% 5% 4% 75-100% (almost doubled) 9% 7% 8% More than 100% (more than doubled) 20% 17% 18% Not sure, but it definitely Increased 13% 13% 13% It Decreased 3% 2% 2% Don't know 15% 15% 15% 22
Sales: Change In Sales Since Implementing HubSpot Increased By: B2B B2C Overall 1-25% 34% 30% 32% 25-50% 10% 5% 8% 50-75% 2% 5% 3% 75-100% (almost doubled) 4% 0% 2% More than 100% (more than doubled) 4% 3% 4% Not sure, but it definitely Increased 9% 20% 14% It Decreased 10% 7% 8% Don't know 27% 30% 28% Appendix C: Additional Survey Results by Leads 23
6 Appendix D: Methodologies Web Analytics Data used for the analysis of website visitors and leads were selected according to (1) accuracy and (2) appropriateness. In order to ensure accurate, representative results, outlying data points were excluded from every analysis. Outlying data points included both extreme increases and extreme decreases in traffic or leads. Appropriate users were selected according to the following criteria: Visitors: Users lacking proper tracking mechanisms were excluded. All other users, including those who churned, were included in the analysis. Leads: Users who implemented the Lead Tracker tool were used for this analysis. User Survey The user survey was composed by the authors of this report and sent to a subset of HubSpot customers. The subset consisted of companies that have been HubSpot users for at least 1 month and who used HubSpot s Lead Tracking Tool. Approximately 700 companies were contacted resulting in a total of 214 respondents. The invitation to participate in the survey included an offer for a $10 Amazon gift card once the user s response was submitted. 6 Chart uses survey data from 2010 HubSpot ROI Report as this data was not available in the 2011 survey 24
Respondents varied in company size and had used the software for various amounts of time. They were distributed as follows: 25
Appendix D: Author Disclosure Mathew Paisner is a graduate degree candidate in the 2012 MBA class at the Babson F.W. Olin Graduate School of Business. Kendra Desrosiers is a graduate degree candidate in the 2013 MBA class at the Sloan School of Management at M.I.T. Both Paisner and Desrosiers have experience in market research and statistical analysis. Mathew Paisner & Kendra Desrosiers 26