Congratulations to HubSpot — yesterday they filed a $100 million IPO. Over the past 8 years the people at HubSpot have grown a company known for its terrific product and culture. That’s a real accomplishment.
At the same time, HubSpot faces the challenge of all marketing technology companies: the low adoption rates for their products.
HubSpot created the term “inbound marketing”. In my interview with HubSpot CMO Mike Volpe he says,
People were tuning out traditional marketing and consuming digital content that was valuable, helpful, and non-intrusive. [HubSpot co-founders] Brian Halligan and Dharmesh Shah developed inbound marketing to help businesses transform their marketing efforts to mirror this shift in behavior. At its core, inbound marketing is about getting found online through engaging content and delighting customers with a personalized, and ultimately more human experience. HubSpot was founded in 2006 to provide marketers with all the tools they need to do just that.
In their S-1 filing HubSpot defines its market as companies with 10 to 2,000 employees; as of January 31 they had 11,634 customers. They say that there are approximately 1.6 million businesses that size in the U.S. and Canada and 1.3 million in Europe, and that in a survey by Mintigo of 186,000 U.S. companies only 3% had implemented a marketing automation program (MAP). Sirius Decisions puts that number a bit higher: they claim that 16% of North American B2B companies have a MAP.
The problem, though, as with all marketing technology, is that no MAP is what Geoffrey Moore in Crossing the Chasm would call a “whole product”. And when combining other programs with a marketing automation system, many companies end up with sub-par results.
This spring I released a study of 196 New England B2B companies. These are companies in the middle of HubSpot’s target market: ones with $10 million to $100 million-plus in annual revenue. In my sample, 29% of companies are using a marketing automation program. By far the most popular program is HubSpot, which is used by 22 of the 196 companies. (Marketo is used by 12 and Pardot by 9. A few companies are using other systems, such as Eloqua and Silverpop.)
But only 10 of those 22 New England companies using HubSpot have an active content marketing program going (defined, for the purposes of my study, as the creation of at least six pieces of content – of any length and quality – per month). And only four of those 22 companies were also implementing even rudimentary SEO practices on their website and sharing that content via social channels, and one of those was HubSpot itself.
Remember that these are mid-market companies with 100-plus employees and the budget for staff or freelancers to generate content. Imagine how low the numbers for content creation would be if I had been studying companies with just 10 or 20 employees.
This highlights one of the fundamental challenges of marketing technology companies: none of them is an island. Just as a successful marketing automation implementation requires content, SEO, email, social media and other skills, too, a successful outbound program requires expertise in search marketing, remarketing, conversion optimization, content creation and other skills.
Data-driven marketing and sales technologies can generate huge returns for companies that implement them right. But since these programs are so complex they often are either not fully implemented or underperform, which many customers will blame on the software rather than on their implementation of it. Marketers are suffering from what I call Innovation Overload, and the number one term they use to describe themselves is “overwhelmed”.
Today over 1,000 companies are offering some type of marketing or sales technology. What the market needs now is more experienced professionals and high quality professional service firms that can make the implementation of these technologies successful in the large number of potential customer companies that have so far kept these technologies at arm’s length.
Did you find this post useful? You’ll find dozens of actionable strategies and tactics in my interviews with 10 sales and marketing leaders, including the CMO of HubSpot, Mike Volpe.