Hubspot adds CRM, but it isn't changing course

Long-term foe of interrupting cold calls, Hubspot adds CRM because it makes sense.

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The fervent followers of Hubspot’s inbound marketing approach shouldn’t assume that the company’s recent announcement of a Customer Relationship Management (CRM) system means the company is building software for sales boiler rooms like the one depicted in Glengarry Glen Ross. Hubspot’s CRM system isn’t like older CRM systems that are designed mainly to help salespeople close a sale, often times with the lack of subtlety of shouting in the calm of a library.

Hubspot CEO and cofounder Brian Halligan has often derided the interruption of the cold call sales approach, promoting instead the kinder and gentler approach of inbound marketing. On the eve of the company’s IPO, at its annual user conference attended by more than 10,000 people, Hubspot announced the addition of a CRM system to its inbound marketing platform.

The term, inbound marketing, coined by Halligan and his cofounder Dharmesh Shah, means the use of the web and social media to reinforce company brands and inform prospective customers with rich content while quantitatively measuring the customer’s progress toward making a purchase. Designed for the digital marketing team, Hubspot has positioned itself as the polar opposite of Salesforce and Oracle’s Sieble CRM, which are built to hammer marketing leads into revenue.

At last year’s conference, Halligan recounted his experience 20 years ago as a salesperson at Parametric Technology that was the inspiration for founding the company and building its marketing platform. At that time, he explained that the salesperson was a gatekeeper powerfully positioned between the customer and the product. Want product details? Call the sales person. Want a quote? Call the sales person. Want a meeting with the CEO? Call the sales person. But according to Halligan, now that the customer can connect with a seller via rich web content, social media, reviews, free downloads, and free trials, the salesperson is no longer a gatekeeper.

Hubspot’s CRM connects the digital history and activity of both the seller and buyer organization for the salesperson who may not have initiated any of it.  When asales person makes or takes a call, it’s not really a cold call because the salesperson has at his or her fingertips the digital history of all the interactions between the two organizations, such as emails, website visits, calls, meetings, and webinars with added analytics measuring the customer’s readiness to buy.

Not many companies are going to tear out Salesforce, SugarCRM, or other CRM tomorrow and replace it with Hubspot’s offering overnight. And one could question Hubspot’s reasoning for entering the extremely saturated CRM market. But it makes sense.

Hubspot addresses the marketing needs of small- and medium-sized businesses (SMB.) It’s not that the company won’t sell its products into the Fortune 1000, it’s just not their focus. For growing small companies, say a 50-person startup with five sales people and four marketing people without a CRM system, Hubspot CRM is great choice because it is integrated with Hubspot’s marketing platform and it is free. The choice might also save the company from hiring a second administrator to customize and integrate a third-party CRM system.

The SMB strategy is not too different than the approach of Braintree Payments, acquired by Ebay for $800 million about a year ago. Braintree focused on simplifying the integration of credit card payments into online and mobile ecommerce for SMBs that didn’t have the resources or experience to meet the stringent security requirements imposed by credit card companies. Most customers were small at the time, such as Uber and Air BnB, but grew into substantial companies. The same approach of growing with smaller companies could work for Hubspot. As a bonus, a Hubspot CRM system will block a CRM competitor such as Salesforce from selling a competing marketing platform.

It doesn’t look like Halligan and Shah have gone over to the dark side of cold calling and interruptions.

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