Tuesday, August 16, 2011

Can CRM Add-Ons Replace Marketing Automation?

I’ve long believed that B2B marketing automation is just a passing phase: that, ultimately, B2B marketing automation systems will be absorbed into CRM systems instead of operating independently. It’s a view I discuss sparingly in public, since so many of my friends in the marketing automation industry have a vested interest to the contrary. But there are also a few vendors who have bet in favor of merged systems, so it wouldn’t be fair to ignore their view entirely.

Vendors have made the bet by building marketing automation add-ons to a CRM system instead of building a stand-alone marketing automation product.* I wrote in February about ClickDimensions, which adds advanced email campaigns and Web tracking to Microsoft Dynamics CRM. Of course, the jackpot here is Salesforce.com. At least two vendors have tried to hit it: Predictive Response and BizConnector, whose product is Lead Follow-Up.

Of the two, BizConnector’s Lead Follow-Up is more tightly focused, offering primarily a rules engine that allows lead nurturing and other workflows. It also provides real-time alerts and landing pages. Predictive Response has a broader range, with more advanced email features, including split tests, content templates, and branching campaigns, as well as Web visitor tracking, lead scoring, dashboards, and some data cleansing on form entries. Neither matches the scope of even a mid-tier marketing automation product, but many of the “missing” features would be available in other Salesforce add-ons. So the real question is whether the core campaign management features are adequate substitutes for a marketing automation product.

That question has no simple answer. Lead Follow-Up would probably suffice for small organizations, although it’s targeted more at individual salespeople than marketing departments. Predictive Response (which I have not examined in depth) might serve small and mid-tier marketing groups but probably not large enterprises.

Beyond these particular products lies the larger question of whether their CRM-based approach makes more sense than the separate-but-synchronized platforms offered by most marketing automation vendors. Each method has advantages:

- separate systems can present specialized marketing functions without getting in the way of sales activities.

- separate systems can use database designs optimized to process the entire database at once, instead of the one-record-at-a-time transactional processing needed for sales and service interactions.

- separate systems give each department complete control over its own system, something both groups often prefer.

On the other hand….

- unified systems avoid the need for data synchronization, which reduces complexity, eases cross-department coordination, and eliminates most risk of inconsistency.

- unified systems simplify deployment and support, especially from the perspective of the IT group (although this should be a minor factor in Software-as-a-Service systems, since most work is handled by the vendor).

- unified systems should save money, although it's not clear they do in practice.

The main technical issue here is whether marketing and CRM systems need different database structures. But even if that’s true, one vendor can provide and synchronize both structures at least as easily as separate vendors. Similarly, if separate user interfaces are really necessary, one system can offer both. So the technical differences are largely irrelevant.

Instead, the argument for separate systems really comes down the political desire of each department to have its own system, and a somewhat related expectation that a vendor focused exclusively on marketing automation will build a better system than a small division within a CRM company.

I actually accept those arguments. Vendors serving either marketing or sales will probably do a better job than vendors trying to serve both. But I don’t think this will matter in the long run. As marketing automation requirements become better understood, the CRM-based products will come closer to meeting marketers’ needs. As the functional gap narrows between the two sets of products, the convenience and cost advantages of a unified system will swing the balance in their direction. This will be reinforced by the business need for tighter coordination between sales and marketing, as well as the larger role played by corporate IT groups in selecting customer-related systems. Only marketing departments with very sophisticated needs will be able to justify buying a specialized marketing automation product.

In short, the merger between B2B marketing automation and CRM seems inevitable. In the B2B world, where sales is generally the dominant department, this means that CRM will encompass marketing automation rather than vice versa. The mechanics of the process are less predictable: CRM vendors might expand their features incrementally, acquire add-on systems, or buy a marketing automation product and integrate it. Different vendors may take different paths and move at different rates. But however they get there, I think the destination is clear.

* For very small companies, vendors including Infusionsoft and OfficeAutoPilot have made the bet by offering their own CRM / marketing automation combination.


PeterJ said...

It is more likely they will merge into something new...
We are in the midst of the cloud revolution. Those of us brought up in a different era are worried about our songs not being a physical presence on our machine, but being in the cloud. Five years ago it was that CDs were physical and we didn't like them just being inside a machine. Mindsets move on.

We have the same with data. In the old world it was something paper - held in our rolodex. That seems ludicrous now. Then it was in our CRM. Big lists of everyone we'd ever met, mostly incomplete, often duplicated and totally out of date. A dumb tool too - you only got out the names you put in.

Wouldn't it have been more useful if your CRM said - you have three top companies in the oil and gas industry - here's the rest of the top ten. If it said - you need CEO, CFO and COO to sell your product but 30% of your data only has two of those and 50% only has one - so here's the rest.

And wouldn't it be useful if it was just something your systems looked up as they needed to - accessing always on, up to date information. Much richer data too - not just name rank and phone number but their whole digital footprint. And with real connections - which company is owned by whom, what goes on in this location of this company and who works with who across the globe.

That is 21st century data.

Alex said...

Excellent article David. From memory it is only Siebel and SAP CRM systems that have been able to marry the sophisticated segmentation and marketing automation capabilities with their end-to-end CRM system. And as you mentioned, that is due to them being able to extract data from their transactional data model into a more-summarized one, which is vital if campaign management is to work properly.