By Sramana Mitra and guest author Sudhindra Chada
Sramana: Now I understand what you are trying to sell and what segment you are going after. Let’s drill into how you structure your sales process to cater to this. I guess you have three segments, right? For your three different price points? So, in whatever way comfortable for you, help me to understand how you set up the sales 2.0 process.
Mark: Sure, compared to a lot of other business we have talked to, I think we are one of the few companies that started with the sales 2.0 from the beginning.
Sramana: When was that?
Mark: In 2006.
Sramana: In 2006, okay. So, you have been running your process for four years; that is great. Tell us more about what that process is and how you have designed it and rolled it out.
Mark: It went from 2006–2007; I tell you what we did when. The first thing we did was, when we started the company, before we even launched the product or had a formal sales process or any employees, we started a blog. We didn’t know what we were going do from a product stand point. We just knew that this behavioral shift and shift in marketing and sales was happening. So, we started writing about that. That was probably halfway through 2006. And it went really well. I don’t remember the exact figures; it could have been after six or seven months we had a thousand e-mail subscribers, but it really took off! Blogging wasn’t that popular at that time, and it took off within the marketing community and the small business community as a great place to figure out how to generate leads from websites. The other thing we did at that time was build a product. Not even a product, it was a free application called websitegrader.com. Have you heard of it?
Mark: What websitegrader.com did was, you could go to the site and enter your URL, and 90 seconds later it would spit back a four-page report on how to fix your website to get more people to visit it. So it was commoditizing what SEO consultants were doing. But we got wind that some SEO consultants were signing up clients and just running our website grader report, printing it out, re-branding it, and charging thousands of dollars for the report. At the time, there were consultants generating similar information and charging thousands of dollars [for it]. Obviously that thing took off like wildfire. It was in the Wall Street Journal in a short time, and hundreds of thousands of people ran their websites through it. Today we’ve had 2.5 million companies run their website through the website grader.
Sramana: What do you charge for that?
Mark: It’s free.
Sramana: It’s free, okay.
Mark: That, combined with the blog, created an enormous number of people finding [through] us that they were very qualified for our service. That is what we call inbound leads and inbound marketing. Once we have that, it is the function of our marketing department [to go after them], our marketing department is much smaller than any other marketing department out there. I think generic marketing departments, they have to do lead jam, they have to do brand awareness, and they are measured on reach using e-mail database size. Our marketing department is measured on the number of leads and the quality of those leads they produce every month. That is their primary objective, and I built my sales team around that. My sales team does not cold call. We have 3,400 customers, and we got all of them from leads that found us. We don’t go to trade shows, we don’t send direct mail campaigns, we don’t go to events, and we don’t cold call. We call the leads that the market provides us every single month.
Sramana: One point I just want to make while I am listening to you is, come to think of it, I have seen your website grader. What you have done is basically a freemium strategy of sorts; you have offered something free, which people in your target audience have downloaded free and started using, and you got their contact information.
Mark: Yes, we rarely hear it discussed as a freemium model, but I think it would be more in line with a different kind of model. It was free, and we were converting 1% of users to a $50 a month product.
Sramana: Why? Where does that assumption come from? A $1,000 product is still a freemium model.
Mark: Yes, but it is also that our product is not that aligned with the website grader service. It is not as though the website grader is a free version of our product. We see it more as like an e-book or a white paper blog. We see it more as a marketing application than a freemium model.
Sramana: Yes, but basically you are using something to collect the contact information of these somewhat qualified leads.
Mark: Yes, and I think the important transformation here is we are aggressive, and this is a case in point about giving away valuable information and education to our target prospects free. They are more than happy to give us their contact information for that. They are psyched, and when we call them, lots of times they are psyched to hear from us. I call our leads say, “Hi, this is Mark from HubSpot,” and the person on line will say, “Oh my God! Guys, it’s HubSpot; they are calling us!”
Sramana: That’s cute! That’s very cute.
Mark: It happens all the time; it is crazy!