2011 May 01

Tips on Selecting a New Marketing Automation System
David M. Raab
Information Management
May / June 2011

One way you know that a technology is poised for takeoff is when your boss tells you buy it but can’t explain why. Marketing automation systems have now reached that stage in their lifecycle. This is great news for vendors and consultants but poses a challenge to workers assigned to select a system. With limited guidance from above, viagra sale they must make a choice that can bring great benefit to their organization or bring great harm. And there are no do-overs.

One key to successful selection is understanding the systems themselves. Marketing automation systems can be broadly defined as tools to help marketers do their jobs. A more concrete description might be systems to manage non-operational contacts with customers and prospects. This distinguishes marketing automation from customer relationship management (CRM), which is primarily concerned with operational contacts.

Still more specifically, marketing automation systems typically provide: marketing planning and budgeting; a database with customer and prospects profiles, promotions sent, and responses; campaign management including media buying, list selection, and message delivery; and reporting including campaign measurement, customer analysis, and revenue projections. Systems for business marketers add features to support sales people, including lead scoring and integration with sales automation or CRM systems,

Systems that meet the general definition of marketing automation have been available for at least two decades. The current set of products can be divided into four categories based on their target users:

– micro-business: these are very small businesses, typically under 20 employees and $5 million revenue. Marketing automation at these firms is driven by the fact that all marketing is done by one person, whether it’s the owner, sales director, or a full-time marketer. That person will not want to switch among separate systems to do different tasks, so systems for this market strive to include the broadest possible functionality. This also reduces the number of systems the company needs and the amount of cross-system integration, which are both important because small firms have very limited technology staffs and budgets. In fact, micro-business marketing automation products from companies including Infusionsoft and OfficeAutoPilot even provide built-in CRM. These vendors provide intensive user support, including both technical assistance and marketing advice. This also addresses the reality of their clients’ limited internal resources, helping to ensure their clients actually benefit from the product (and renew their subscriptions).

– small to mid-size business: this covers the broad swath of the companies from $5 million to $500 million in revenue. Although the group could certainly be subdivided, companies of all sizes within this range have remarkably similar needs and purchase pretty much the same systems: Pardot, Genius, Marketo, Manticore, Eloqua, and a dozen or so smaller competitors. These companies have small marketing departments that are separate from sales and run a broad range of programs. Thus, key features of these products include support for multiple channels (email, Webinar, landing pages, search marketing, social media, trade shows), Web behavior tracking (at the visitor level, which differs from conventional, page-oriented Web analytics), and sales integration (lead scoring and sales automation synchronization). Vendors serving this category have applied a spectrum of business strategies, ranging from self-service sales and deployment (keeping down costs and speeding up implementation) to extensive personal selling and support (requiring higher fees but offering assistance throughout the process) to reliance on third-party agencies and consultants (to provide marketing advice and change management). Although the self-service vendors tend to have smaller clients and the high-touch vendors sell to larger companies, the majority compete vigorously and successfully across the size spectrum.

– enterprise business marketers: this covers firms larger than $500 million revenue that sell to other businesses. These companies use all the techniques of their smaller brethren, but apply them across multiple product lines in multiple countries. This adds a layer of complexity that requires more formal planning and budgeting as well as precise control over the rights assigned to each user. These systems are still closely tied to sales automation data, but they also support custom data tables originating within the marketing system itself or tied to other sources. This segment is served by vendors from the upper end of the mid-size market (Eloqua, Marketo) and others from consumer marketing (Aprimo, Neolane, Unica). Buyers in this segment have complex deployment needs that almost always require assistance from third-party consultants, system integrators, or marketing services agencies.

– enterprise consumer marketers: this the core market for the previous generation of marketing automation systems, from Unica, Aprimo, Alterian, Teradata, and SAS. Clients are concentrated in the traditional database marketing industries of financial services, retail, travel, and communications. They demand sophisticated segmentation and marketing administration (planning, budgeting, project management, content management). (If you’re playing buzzword bingo, the combination of marketing execution and marketing administration is what’s now called “Integrated Marketing Management”). These systems run on the company’s primary marketing database. This is nearly always a custom data model that’s much more complicated than the designs baked into business marketing systems and much less reliant on sales automation data. Even more than enterprise business systems, the consumer products rely on third party integrators, consultants, or marketing services agencies to help with database development and system deployment.

Most people tasked with selecting a marketing automation system will know which of these categories best describes their company. And it’s true that the features of vendors serving each category can seem indistinguishable to a non-expert. But that doesn’t mean any vendor in your category will serve your firm equally well. You’ll eventually need to understand how they do differ. But first you have to figure out what you need – otherwise, you could get distracted by differences that don’t matter in your situation.

In other words, understanding your needs is the second key to successful selection.

As with any selection project, the place to start is by defining your business goals and then developing a list of capabilities needed to meet those goals. For marketing automation, those goals will probably be defined in terms of the types of marketing programs you want to do. These might be based on program objective (acquisition, nurturing, or retention), on channel (email, search marketing, TV, social media, etc.), or on marketing operations (lower execution cost, higher staff productivity, better visibility). Or some combination of the three.

Once you identify the programs that marketing automation is expected to support, you can define your requirements by listing the tasks for step of each program, and specifying the system features, business processes and staff skills necessary to execute them.

It’s important to include process and staff skills in this analysis, because often those will be larger obstacles than system capabilities. After identifying your process and staffing needs, you can compare them to existing resources to identify gaps. This will indicate the scope of change needed deploy marketing automation and clarify the timeframe and external assistance you might need for success. These should be captured in your project plan. If substantial external assistance looks important, potential vendors’ ability to provide it will weigh heavily in your vendor evaluation. In fact, those abilities may be more important than feature differences.

Your list of marketing programs is also used to estimate the value expected from marketing automation. Doing this properly requires a financial model that lets you calculate the profit impact of changes in the number of new customers (acquisition programs), customer value (nurture programs), customer longevity (retention programs), and marketing costs. Although you won’t have exact information, enough benchmark data is available build realistic expectations.

But let’s face it: that list of target programs often won’t exist. And even if it did, it won’t cover the full range of uses the system will see over its lifetime. Marketing today is simply too dynamic to predict tomorrow’s programs with any certainty. You certainly don’t want to get stuck with a system that won’t grow with you.

This ambiguity adds other considerations to your vendor selection. These include:

– scope of features and ease of learning, to make it easy to do things you don’t currently anticipate
– marketing services and technical support, to help you move quickly when you take a new direction
– technical flexibility, to incorporate new data sources and to integrate with external systems
– vendor resources, to ensure the system will grow as the industry evolves

Evaluating vendors along those lines is harder than checking for features. But it’s not impossible either. Talk to references, look at the product roadmap, interview the professional services staff and partners, review training materials and documentation, see what management presents as thought leadership, query your own social networks, and get your in-house technical and marketing specialists involved.

Of course, the effort you put into your selection will depend in part on the size of your investment. It’s hard to justify spending $50,000 in time or consulting fees on a system that costs $30,000 per year. But bear in mind that the real stakes are much higher than software fee. They include the time that all your users will spend with the system, the marketing expenses that they’ll manage through it, and the revenue that those expenses will generate. These can be changed substantially by making a wise or poor choice. So take your time and research carefully. A new marketing automation system is a tremendous opportunity. It would be a pity to waste it.

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David M. Raab is a consultant specializing in marketing technology and analytics and author of the B2B Marketing Automation Vendor Selection Tool (www.raabguide.com). He can be reached at draab@raabassociates.com.

2011 Mar 01

Acquisitions Reshape the Marketing Automation Landscape
David M. Raab
Information Management
March / April 2011

Unlike their hyperactive younger brothers in business-to-business marketing automation, sale the business-to- consumer marketing automation vendors have been a quiet group in recent years. Most of the companies spawned during First Internet Bubble of the late 1990’s had vanished altogether or been assimilated into enterprise software suites. The handful of remaining independents – primarily Unica, thumb Aprimo, and Alterian – made few changes to their core products, expanding instead through acquisitions and limited organic growth.

This all changed in late 2010 when IBM acquired Unica for $450 million and Teradata purchased Aprimo for $525 million. The prices were eye-popping: four to six times revenue and 50 or more times earnings. Either the buyers were insane, saw values that others had missed, or hungered to join the Second Internet Bubble. Or perhaps a bit of all three.

For sake of argument and charity, let’s focus on possibility number two. What value do consumer marketing automation systems bring to IBM and Teradata? And what do the acquisitions mean about the future of marketing technology in general?

There are two fundamental scenarios that justify the Unica and Aprimo transactions.

– Fragmented marketing systems will to be replaced by integrated marketing suites. This is the vision that Unica, Aprimo and Alterian were already chasing in recent years. So were the two other big players in the market, Teradata and SAS. It’s why they have all steadily expanded their products’ scope. The argument for consolidation is primarily that marketing itself has become more integrated, as interactions across all channels are increasingly coordinated to provide a unified customer experience. Oddly enough, this coordination doesn’t necessarily require you to link actual customer identities across those channels: so long as you can target messages by segment, people will be treated consistently across all channels. (Of course, this assumes that the segment messages themselves are coordinated across channels.)

Cross-channel coordination is still more dream than reality at most companies. But IBM in particular seems willing to invest in the missionary work needed to make marketers more aware that it’s proven and practical. This won’t be easy: until now, most big marketing automation systems were sold to database marketing specialists within marketing. Features with marketing-wide application, such as centralized planning and budgeting, shared content libraries, and cross-channel performance measurement, have gained little traction although interest has picked up a bit in the last year or two.

The fundamental problem is that database marketing remains peripheral to many marketing departments. Attention and budgets are still dominated by mass media advertising, which is created, purchased and measured outside of the marketing automation system. Even the Internet hasn’t necessarily changed things. Much Web advertising is purchased like traditional media, based on audience reach and frequency and with just minimum attention paid to building database-marketing-style relationships. Until relationships replace mass media as the focus of the Chief Marketing Officer’s attention, demand for integrated marketing suites will remain limited.

On the other hand, imagine a world where that demand does exist. Marketing automation systems will be the center of large integration projects, generating revenues for hardware, software and services that dwarf the revenue from the marketing automation software itself. Corporate IT departments will be deeply involved in the purchase, implementation and operation of the marketing automation systems. Big projects run by their friends in IT? You can see why IBM and Teradata would be very, very interested.

– Marketing becomes a branch of analytics. There’s a plausible argument that all types of marketing, including mass media, will soon be devoted to targeting messages at individuals. This includes the anonymous, segment-based “individuals” described earlier. In this world, marketing victory goes to the best data and the best analytical tools. Marketing automation systems provide those tools. Or, more precisely, marketing automation systems orchestrate database, analytical, and customer-facing systems to select and deliver appropriate messages across all channels. In this scenario, marketing automation systems drive related systems, both in terms of encouraging their development (bigger data warehouses) and pulling through related products (systems in same software suite as the marketing system).

These scenarios overlap substantially, but the second doesn’t rely on marketers moving their entire organization onto a single integrated platform. Indeed, functions that don’t relate to managing specific interactions could remain completely separate, such as planning and media buying. Even cross-channel integration is less central to the scenario, since analytics can be applied effectively to one channel alone.

Precisely because the second scenario doesn’t require so much change, it seems more plausible than the previous one. Major departments within marketing, such as a Web group, can buy and run analytical systems without support from a visionary CMO. The might even be able to use them through outsourcers or Software as a Service vendors, further reducing the need to involve corporate IT. This scenario ultimately yields more total business for the vendors, even if the individual projects are smaller.

Of course, we still don’t know whether either approach will really create enough business to justify the acquisition prices. But unless you’re a stakeholder at IBM, Teradata, or a competitor, why would you care? Here are a few implications:

– if the major vendors do focus on integrated marketing suites, they’ll educate IT and senior management about the value and methods of marketing integration. This will be good for marketers who want to do such projects, although they may be less pleased about losing some of their autonomy.

– a focus on integrated suites could also lead major vendors to ignore marketers who don’t want to or can’t afford to buy them. This is mostly a good thing: it will open opportunities for other marketing automation vendors, resulting in greater innovation across the industry and, eventually, more products for marketers to choose from.

– if the major vendors focus on analytics, they’ll chase a broader range of clients and explore options such as cloud-based solutions more aggressively. This will make it easier for marketers to find customer targeting solutions but creates a tougher environment for competitors. It does leave a relatively open field for other types of marketing systems, such as planning, media buying, project management, and content libraries.

– smaller competitors will emerge to serve clients who are too small to interest an IBM or Teradata or who simply want something those vendors don’t offer. Even though Unica and Aprimo may themselves fall into the black holes of their new corporate parents, a spray of small new stars will emerge to meet marketers’ needs. With the original marketing automation vendors now almost completely gone, the ground is now clear for a new crop.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.

2011 Jan 01

Why Marketing and IT Don’t Get Along
David M. Raab
Information Management
January / February 2011

It doesn’t rank with Good vs. Evil or even Dogs vs. Cats, look but the relationship between marketing and IT has its own history of conflict. The dynamic is simple: marketers feel neglected by corporate IT, look so they hire outside vendors to run their systems. This makes it still harder for corporate IT to help marketers, who then rely on IT even less.

Such mutual isolation is increasingly untenable. As all parts of the customer experience are increasingly driven by technology, marketing systems must integrate more closely with the rest of the corporate infrastructure to be effective.

The CMO Council explored this issue in parallel surveys of marketing and IT leaders, published as The CMO-CIO Alignment Imperative: Driving Revenue Through Customer Relevance. The broad findings are no surprise – CMOs and CIOs know they need to work together but don’t do it very well. But it’s worth digging into the details to understand the dynamics of this dysfunctional relationship, in the hope of helping them to improve it. (Survey results are reproduced here with permission, although the interpretations are my own.)

First things first: Yes, both groups agree they must cooperate. They even cite the same reasons: need for customer insight, the central role of technology in the customer experience, and digitally-driven marketing.

They also agree that current capabilities are inadequate. In the critical realm of analytics, nearly three-quarters of each group felt that neither their online or offline functions were well integrated, while just six to eight percent felt integration across all functions was complete.

The agreement extends one step further, to a recognition that marketing projects often run into problems. But we already see some divergence: 64% of CMOs reported problems compared with just 48% of CIOs, suggesting the CIOs aren’t fully aware of CMO unhappiness with IT services.* And when asked about the causes of problems, each group placed the blame squarely on the other: Marketing cited lack of IT priority, resources and expertise, while CIOs complained that marketing had by-passed and isolated IT.

In this case, at least, it seems IT has a point. Just 25% of CMOs said they consulted with enterprise IT or other back office groups when selecting marketing systems. The good news is that 56% of CIOs said they consulted with marketing – although this still means the other 44% did not.

Why would marketing and IT not consult each other about marketing systems? Apparently one reason is that they don’t believe their counterpart understands what’s needed. Only 76% of CIOs believe their CMO understands marketing requirements, while just 54% of CMOs think their CIO does. That’s a pretty deep level of mutual mistrust.

This brings us closer to the crux of the matter: Who’s in charge here? By now you won’t be surprised to find that just half of CIOs (51%) think their CMO is playing a major role in their digital marketing strategies, while a mere 19% of CMOs think their CIO is significantly engaged.

There’s a similar misalignment in what CMOs and CIOs think the CIO should be doing. CMOs see CIOs as plumbers whose job is to install systems and keep the data flowing. CIOs set themselves a loftier agenda that includes furthering the use of social media, mobile and other new technologies.

If there’s any good news here, it’s that both CMOs and CIOs are eager to help their companies improve their marketing technologies – indeed, they agree success is vital. But a deep chasm of distrust and misunderstanding prevents them from working together effectively. Both groups must recognize the depth of this problem and work to overcome it. They can’t succeed on their own.

* An alternative explanation is that CMOs have more problems on projects where IT isn’t involved. But another question that directly asked how well marketing and IT worked together also found that IT felt the two groups had cooperated better than marketing did.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.