HubSpot: Lower Churn through Greater CHI, Teaching Note

Teaching note for case 110052. HubSpot, a web marketing startup selling inbound marketing software to small- and medium-sized businesses, is under pressure from its venture capital partners to rapidly acquire new customers and to maintain a low level of customer churn. The B2B SaaS company is in the midst of pursuing a Series C round of funding. To do so requires them to bring their business metrics into line with VC expectations and peer companies' performance. In the case, students use big data about their customers' demographics and usage behaviors to explore the drivers of customer churn and uncover opportunities to increase customer retention via the customer selection, selling, and training processes. Students assess an algorithm that yields a metric, CHI (Customer Happiness Index), that HubSpot uses to predict which of its customers will churn and suggest alternatives to improve the firm's predictions. Students develop action plans to reduce churn post-hoc and then reengineer the company's marketing, selling, and customer relationship management processes to preempt churn proactively through market segmentation and targeting, product design, and customer interactions. Decisions are critical at this stage of HubSpot's development, as its continued growth hangs in the balance.