Hootsuite: Monetizing Harvard Case Solution & Analysis

Situation analysis:

As of now, the company has 650,000 users and the management of the company is planning to grow organically but rapidly. Right now, the biggest challenge that a company is facing is to figure out how to develop revenue streams without alienating their customer base. 96% usersof the company are free while only 4% therefore, the company is planning to convert most of its free users into paid users without loosing them. Moreover, more than two dozen dashboards are competing for attention in the marketplace. The company has grown its user base by carefully  managing communications and relationships, reaching out to key users and cultivating communities.

Current customer segmentation:

Currently, the company has segmented its users on the two factors that are activity level and language. The company has successfully able to manage a good relationshipwith its prosumers. In addition to this, the vice president of the business development said that the company wants to monetize three to five percent of their accounts. Moreover, approximately 20 % of the users account for 80 % of the volume of traffic. These 20% are comprised of prosumers and agencies & consultants.

Figure 1: Current customer segment

Potential customer groups:

As mentioned above, the current customer segmentation of the company is based on activity level and language. However, the management of the company categorized its potential customer groups in four categories that are free users, Low capacity, high Capacity and Enterprise.

Figure 2: Potential segments

Product life-cycle curve:

The term product life-cycle is based on the overall life of a product. The idea behind the product life cycle is that a product went through various stages. All the products that came on the market have a life cycle. The stages in the product life-cycle curve include development, introduction, growth, maturation, saturation and then finally decline. Generally, as product becomes older, it becomes less popular among customers. As far as Hootsuite is concerned, the company is in the growth stage of its PLC curve because there is a high growth in social media. In addition to this, companies are investing a lot in social media and seen it as a powerful tool. Moreover, social media dashboards have become a major source for companies like Hootsuite as a source for its return on investment.

Figure 3: Product Life Cycle Curve

Market Measurement:

Market Share:

Figure 4: Market share

Decision Criteria:

The best alternative will be evaluated on four factors that are Power analytics, increase users, costs, benefits and resources. Every factor will be weighted according to its importance in choosing an alternative. The basic objective of Hootsuite is to achieve market growth and to generate positive cash flows and revenues without alienating its existing customer base because the company would not be able to survive without it. Now the question comes whether the chosen alternative will help in the company’s growth, revenue generation along with positive cash flows and process efficiency or not.

The tabular representation below has shown the alternatives and the decision criteria on the scale of 1 to 5 as 1 being poor and 5 being excellent.

• Powerful analytics = 30%
• Increase users = 30%
• Cost  = 20%
• Benefits = 10%
• Resources = 10%

Available Options:

Alternative # 1:

One alternative that a company can go forward to monetize its customer base is make a revised pricing plan along with supplementary ad-supported level. In this way, the company would be able to balance its free and paid users.

Alternative # 2:

Another alternative that a company can implement is going for international expansion as there is a leverage momentum in Japan to increase growth in Asia.

Alternative # 3:

The third option for the company to implement is maintaining a status quo by making no changes in the pricing plan. However, the company can focus on enterprise adoption and growth of enterprise area.

Revised pricing plans:

The revised pricing plan will be based on four types of offers for the customers that are as follows:

• Basic (free)
• Prosumer ($6.99 monthly)
• Pro-Plus ($ 29.99 monthly)
• Enterprise

Basic:

In the basic pricing plan, there will be one user who can use the company services for free but, with certain limitations. The individual will have a limited access that is, he can use up to five social profiles. In addition to this, there will be limited access to analytics. The individual will have not more than two RSS per atom feeds along with advertisements...............................................

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