surviving the future: disruptive innovation in the age of inbound

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Surviving the FutureDisruptive Innovation in the Age of INBOUND

Sam Mallikarjunan

Head of Marketing & Growth, HubSpot Labs

Sam @Mallikarjunan

Head of Marketing & Growth

@HubSpot Labs

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But first, let me take a selfie.

Everyone smile and wave!

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(Don’t lie)

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A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network.

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Disruptor Disruptee

Personal computers Mainframe and mini computers

Mini mills Integrated steel mills

Cellular phones Fixed line telephony

Community colleges Four-year colleges

Discount retailers Full-service department stores

Retail medical clinics Traditional doctor’s offices

Some examples of disruptive innovation include:

Examples of Disruptive Innovations

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Not a disruptive innovation

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A disruptive innovation

Go try Uber. Use code 9Yf3E to get $30 to use

(and I’ll donate $30 to charity: water)

We live in the one of the most interesting periods in the history of commerce.

“May you live in interesting times.”

We are in a mass extinction of businesses.

We live in an era of big bang disruptive innovation.

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Traditional Adoption

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Big Bang Disruption

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The Kodak Moment Went Bankrupt

Kodak Went Bankrupt

Incumbents no longer have such daunting advantages.

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Spent 188M in 6 months launching their site (2000)

Technological Barriers to Entry Have Lowered

Lower technological barriers to entry gave birth to

“We don’t make money when we sell things. We make money when we help customers make purchase decisions.” – Jeff Bezos

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Where to go to find products.

Where to go to find information.

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“Inbound marketing is a business model innovation that capitalizes on the fact that it’s more economically efficient to create an experience customers love than it is to interrupt someone else’s.

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Inbound marketing leads is more efficient per dollar.

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…because inbound marketing creates

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Inbound marketing is inherently customer centric

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Customer centricity creates competitive leverage

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Inbound marketers understand customersNarrative Buyer Personas

Uses psychographic dimensions to create experiences that attract and influence

Algorithmic Buyer Personas

Uses automated numeric correlations to predict behavioral responses

What kinds of customers do you want?

Service Demanders

Revenue Reversers

Promotion Maximizers

Spending Limiters*

What kinds of customers don’t you want?

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“I spend $W to acquire customer of persona X from

source Y, and they spend an average of $Z with me

over their lifetime.”

Customer Centric Economics Model

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Customer centricity creates

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Time to Payback

Diamonds may be forever, but the way they’re sold isn’t.

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“Our customers want to try the jewelry on before they buy it.”

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Imagine a world where eCommerce delivers in 30 minutes or less.

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Imagine a world where every home has a 3D Printer.

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Not possible now doesn’t mean

Anytime you can say “I’m safe because my customer needs…” you’ve identified a job-to-be-done.

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Inbound marketing works best when your customer needs education, help making decisions, or to feel that they’re part of a community.

No one wants a ¼ inch drill bit.

They want a ¼ inch hole.

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The company that bestsolves for the customer

wins.

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Disruptors are coming for you.

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Access to capital is no longer the innovation barrier it once was.

Innovation is inefficient.This (sometimes)

gives fast followers an advantage.

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Your extendable core is the job you do

for customers that a competitor

couldn’t replicate without adopting the

same cost-structure.

An Extendable Core Insulates You From Disruption

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Inbound marketing creates an extendable core that insulates you from disruption.

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Revenue: $148,919.75/minuteNet Loss: $126M (2014Q2)Valuation: 112X Earnings

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60% of ecommerce marketers don’t know their abandoned cart rate

That’s not even disruption. That’s just bad fundamentals.

You can’t improve what you can’t measure.

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Inbound marketing is highly measurable.

More Measurable = More Leverage

C = # of new customers, D = # of downloads, V = Average LTV

Yes. I downloaded their eBook.Yes. They helped me make a decision.Yes. I bought from them.

And yes. She said yes.

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Inbound has created the ability to better compete in buying phases previously

inaccessible to businesses.

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Buy and read “The Innovator’s Dilemma”

Buy and read “The Lean Startup”

Take your best customer out to dinner (or hire

them)

Measure everything

Model your business’s leverage

Your Homework

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THANK YOU!Download these slides + free

bonus content & Ask Me Anythingat www.inbound.org/sam

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* Special Bonus Content

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“I’m spending a bunch of money on

marketing, and I’m making more money

than I’m spending back.”

The Old Economics Model

Expense Yearly Amount

PPC $500,000

SEO Firm $60,000

Content Writing $120,000

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“I’m spending $X money on marketing, and

I’m making $Y in sales per channel.”

The New(er) Economics Model

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Starbucks has an AOV of ~$6*

Real world Example:How Much Would You Spend? *

*Source: KissMetrics

Knowledge is power - and the balance of power between companies and between consumers has shifted dramatically.

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Customer Centric Companies See Higher ROICompanies that saw ROI by company focus

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Customer LTV Is A Profitable FocusCompanies that saw ROI by LTV focus rating

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OH NO! He’s gonna make us do math!Don’t worry about the actual

formulas and numbers, these slides will be available at

www.bit.ly/RapNetSam

Yep. I’m not here because I was the cool kid in class.

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Inbound marketing channels cost less than any outbound marketing channel

Source: State of Inbound Marketing, HubSpot, 2012

Marketing $$$ Sales Revenue

We naturally operate using ratios

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Ratios help us determine leverage

Marketing $$$ Customer Revenue

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Solve For The Customer

Solve for LTV

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Word of Mouth?There’s a math for that.

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So easy, pretty, and simple to understand, ain’t it?

The Conventional LinearBuying Process

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A Grand Unified Theory of eCommerce

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A Grand Unified Theory of eCommerce

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A Grand Unified Theory of eCommerce

Price competition isn’t working anymore – there’s always someone willing to make less money than me.

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More marketers are adopting pre-transactional conversions

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Instead of interruptingexperiences people love…

Inbound Marketing is…

Inbound marketing focuses on creating

them.

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A Grand Unified Theory of eCommerce

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The marketing activities and tools to this point add up to the Cost Of Customer

Acquisition

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Now the focus shifts to increasing the customer’s

Life Time Value

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A Grand Unified Theory of eCommerce

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A Grand Unified Theory of eCommerce

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A Grand Unified Theory of eCommerce

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Everyone goes through this process