Lots of Vendors Can Help You Find Leads on the Web

Few people would suggest you learn salesmanship from the play Glengarry Glen Ross,* but its central message rings true: good leads are the lifeblood of a sales organization.** That’s why scanning the Internet to find new  prospects is such an exciting opportunity. At least a dozen firms are now following that path.

These firms scan company Web sites, social media, news sites, directories, and other sources to identify companies, extract attributes like revenue, growth rates, and technologies used, and flag events that might indicate a sales opportunity, such as opening a new office, launching a new product, or hiring new management. Of course, there are plenty of important differences which impact which might make sense for you.  Some of the more important ones include:

• Specific data sources, scanning techniques, and analytical methods. Evaluating these in the abstract is interesting, but what works well for one purpose in one industry might work poorly for something else. So buyers really need to run their own tests to see what works for them.

• Types of predictive models available.  Some vendors only rank leads while others build multiple models for different purposes.

• Use of the client's internal data for model scoring, and whether this extends to sources beyond CRM.

• Whether the vendor sells prospect lists or only enhance names provided by the client.

• Whether the vendor provides lists of individuals as well as companies.  Since Web scanning is usually at the company level, the individual names usually come from other sources.

• Coverage outside the United States

• Information returned beyond names and lead scores, such as recommended treatments and social profiles.

• Whether the company maintains a permanent database on all businesses or only scans when clients request information about specified businesses or segments.  The permanent database costs more to maintain but stores history and trend information that is otherwise unavailable.

Here are brief profiles of the vendors I’ve identified in or near this space. There are probably others.  I’ve grouped them based on how much information I have available.  This correlates to some degree with market presence.

Vendors I’ve Reviewed

• Mintigo both returns new prospects and applies scores to prospect lists provided by the client. It is currently stressing uses of predictive modeling beyond traditional lead scoring and making it easier for clients to set up new models on their own. I last reviewed them in June 2013.

• Lattice Engines runs different types of models against names provided by the client. It provides recommendations for customer treatments in addition to scores. I wrote about them in April 2013.

• Infer runs multiple models against leads provided by the client. It originally returned only lead scores, although they are now adding multiple applications that create different scores for different purposes. I wrote about them in August 2013.

• Fliptop returns scores and some summary data on names provided by the client. It stresses quick model building. I reviewed them in June 2014.

• LeadSpace scans for data on demand, rather than maintaining its own master database.  It can find new prospects in specified segments and enhance names provided by the client.  It returns individual names as well as companies. I wrote about them in June 2013.

Vendors I’ve Spoken with But Not Reviewed

• Growth Intelligence is a relatively recent UK-based startup that provides lists of companies and associated contacts that are likely to become customers.  It draws from Web information, government lists, and similarity to the client’s current customer base.

• Kemvi is just emerging from stealth and plans to launch formally late this year or early 2015. It expects to focus on finding trigger events and advising salespeople about the best ways to approach each prospect.

• 6Sense finds new prospects using behavioral data gathered from a network of "several thousand" Web publishers rather scanning public sources like others in this list. So it doesn’t quite belong here, but it’s interesting nevertheless.

• Radius finds small business prospects that resemble current customers and deploys them to Salesforce.com, along with key profile information and lead scores.


Vendors I’ve Only Seen on the Web

• Avention (formerly OneSource, now part of D&B Hoovers) scans an eclectic collection of data sources to find prospect companies based on attributes and signals. It can rank companies with scoring but the scoring formulas are built manually.

• Gagein sends alerts on trigger events in media, social or public Web sites. It can track companies named by the client or build prospects lists for client-specified segments. It’s primarily a sales tool, with other features such as social selling and apparently without any predictive modeling.

• RealSociable is another sales-oriented product that tracks social media for trigger events related to target accounts. It appears to let users decide which events are important without using predictive models.  But it seems to have some clever technology to extract the trigger events from unstructured social streams. That (presumed) semantic filtering is the only reason to include it on this list -- otherwise, the limit to social sources and lack of predictive models would rule it out.

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*and the one person who admitted to it now makes his living as an arts critic.

** Also, coffee really is for closers.

Vendemore Moves B2B Display Ad Targeting Towards the Bottom of the Funnel

My post last month on DemandBase and Bizo’s products to target Web display ads at individual businesses resulted in a call from Vendemore, a Stockholm, Sweden-based firm that has been providing similar services for seven and a half years. Like the other firms, Vendemore uses IP address to identify the company of Web site visitors, spots visitors of interest to its clients, and sends targeted ads to those visitors. This can happen via real time bidding for ads on external Web sites or on the client’s own home page. Vendemore can also use cookies to identify site visitors for retargeting on other Web sites within an ad network.

Users can assign spending limits, frequency caps, and ad contents to individual businesses or to lists of businesses. API integration with CRM and marketing automation systems also lets those systems assign businesses to the target lists. This allows marketers to send different contents to companies as the marketing automation system tracks them through different stages of the buying process. Vendemore has also developed standard formats for channels including YouTube, Twitter, Facebook, blogs, and surveys, making it easy to convert existing content into advertisements. It provides more global coverage than U.S.-centric DemandBase and Bizo.

It's tempting to position Vendemore and similar firms at the top of the marketing funnel, as a way to connect with new prospects that have not yet identified themselves to a company. This would offer a simple narrative about expanding B2B marketing automation beyond its home base in the middle of the funnel, where it nurtures known leads. But that’s not quite right. Vendemore CEO Christopher Engman says the system is used primarily to reach people at firms which have already begun a buying process. He said the other most common applications are to encourage cross selling within existing client accounts and to reach potential users at firms that have authorized corporate purchases of a product but left the actual buying decisions to individual divisions or departments. In each case, the systems reaches people at target firms who can't be identified by the sales force or marketing automation.  In two of those three cases, the result is actually to move further down the funnel, to existing customers, rather than higher up.

Looking even further down the funnel, today also brought an announcement by retention specialist Optimove of its new ability send retention messages via paid online advertising, in the form of Facebook Custom Audiences. I’ve recently had some other conversations as well about using marketing automation to support retention campaigns.

So we are indeed seeing an expansion of marketing automation along two dimensions: beyond email to media such as paid advertising and Web personalization, and down the funnel towards customer growth and retention. The move down-funnel makes particular sense because it leverages the known individuals present in the marketing automation database.

I still do expect to see marketing automation systems move up-funnel towards acquisition.  This will use paid advertising and social media, supported by unified databases built with Customer Data Platforms. But apparently it will happen later than I had expected.  After all, it's easier to add value when selling to existing customers, there are fewer synergies between acquisition and marketing automation (i.e., no known individuals to leverage), and marketing automation is run by different people than paid advertising and social media. If you’re sniffing around for the Next Big Thing, this suggests you might turn your nose in a slightly different direction.

Marketing Automation 2014 Industry Overview: What the Surveys Tell Us

The Interwebs have delivered an unusually rich trove of data about the marketing automation industry in the past few weeks. Other than Raab Associates’ own VEST report, we’ve seen surveys of active buyers from Software Advice, usage figures based on direct observation from Mintigo  and Venture Beat (using Datanyze), and another broad-based survey from Pepper Global and Holger Shulze. Taken together, these provide a clearer picture than usual of the state of marketing automation. Here’s how I see things.

Strong Growth Continues

As I reported last week, I expect industry revenue to grow 60% in 2014, accelerating from the already-impressive 50% per year we saw in 2012 and 2013.



The main basis for my prediction is high growth that vendors reported in 2013, and in particular a trend towards higher revenue per client among the vendors who share that information with me.


These include:

• HubSpot (50% revenue growth on 25% client growth)
• Act-On (115% revenue growth on 59% client growth)
• SalesFUSION (100% revenue growth on 47% client growth)
• Marketo (64% revenue growth on 30% client growth)

Lots of Opportunity Remains

My VEST data suggests that maybe 3% of micro-businesses (under $5 million revenue) now use a marketing automation system, and under 10% of larger firms do.

This varies hugely from the usual survey results, which often show something like 50% penetration.  The reason is selection bias: most surveys are answered by people who are actively engaged in marketing automation.  They are vastly more likely than average to have a system in place.


The Mintigo results confirm this.  Mintigo’s technology scans the Internet for things like job listings and Javascript tags and infers from those which products are used at every company it finds. There’s still a bit of selection bias – it won’t work if a company isn’t on the Internet – but the impact is obviously much less. Mintigo’s conclusion across 186,500 B2B companies was that just three percent were using the most common marketing automation systems: Oracle Eloqua, Marketo, HubSpot, and Salesforce.com Pardot. Penetration reached eight percent among larger firms and varied substantially by industry.

Mintigo sagely warns that industry penetration rates are not the same as share of marketing automation customers, since some industries are bigger than others. Software Advice does show the number of prospective buyers by industry: not surprisingly, tech is still the most common industry among new buyers.  But more interesting is that 77% come from somewhere else. I don’t have any historical data available but strongly suspect it would confirm that the industry is increasingly selling outside its original base of tech clients.

Users Want Core Marketing Automation Features

Both Software Advice and Pepper Global asked what features marketing automation buyers want. This is a pretty common question so the answers were not very surprising.  In fact, what was most impressive was the relative consistency of the rankings, with ead nurturing, analytics, and lead scoring at the top in both surveys, email and campaign management in the middle, and list segmentation is at the bottom.

Those top three are the key improvements that marketing automation provides over simple email or CRM systems, so this prioritization makes sense. It was intriguing to see inbound marketing and social media marketing ranked so low on the Software Advice data – I read this to mean that marketers already get them from systems outside of marketing automation and don't see much need for a change.  Similarly, the Pepper Global data’s low ratings for lead activity tracking, lead capture, and Website visitor tracking reflect that marketers have systems in place for those.

Features Don't Drive Decisions ...or Create Success

Pepper Global also asked some interesting questions about evaluation criteria and obstacles. Again, there were no particular surprises in the answers – marketers care more about cost, integration, and ease of use than vendor or technical details. (I guess meeting functional requirements is assumed.) Similarly, it’s no surprise to see the biggest obstacles are budget, employee skills, data quality and content.  The two sets of answers do correlate (budget relates to cost; employee skills relates to ease of use), which is reassuring.

But take a closer look.  Did you notice how few of these obstacles can actually be addressed by marketing automation functions?  The real issues are budgetary (budgets and content), organizational (skills, data quality, sales feedback, sales integration, and performance standards), and technical (data collection and compatibility). This has practical implications for how marketing automation vendors should position themselves, invest in product development, and supplement their products with services.



Pepper Global also makes some intriguing observations about differences in responses from small businesses vs. mid to large businesses: cost and budget are the biggest issues for small business, while integration and analytics matter more to bigger companies. Sadly, they didn't publish additional details. Still, it’s worth being reminded that these differences exist and should be considered by vendors in their planning and by marketers in their system selection.

The Real Competition Isn't Other Vendors

As the industry penetration figures indicate, the real competition in most marketing automation purchases is a different technology, not another marketing automation vendor. Software Advice drives this point home by showing how prospective buyers are currently managing marketing activities: nearly half are relying on a CRM. A surprisingly small fraction cite email, although presumably they all have email capabilities.  I'd guess this is because they are answering specifically about marketing management.  If I were an email vendor, I'd think about that one.

Given the industry's low over-all penetration rate, it's interesting that nine percent of prospective buyers are looking to replace an existing system.  This suggests they like the idea of marketing automation but aren't happy with their particular product.  Sure enough, just over ten percent of the buyers say they're evaluating a new system for exactly that reason.  But the much more common reasons apply to people with no marketing automation in place: improve lead management, automate processes, and get more/better features than current [non-marketing automation] tools.

Market Share Varies by Sector

Narrowing the focus to existing users, Venture Beat and Pepper Global both have some data, as does the VEST. Remember that these come from different sources:

Venture Beat uses Datanyze to read the actual systems that are embedded in marketers’ web sites.

Pepper Global is based on a survey of the B2B Technology Marketing Community on LinkedIn.

VEST data is self-reported by the vendors.

Mintigo’s technique would also reveal market share but they have diplomatically chosen not to share.


The results are broadly consistent once you take into account that Pepper Global’s sample has many fewer small companies than Venture Beat, and thus understates clients for vendors like HubSpot and Infusionsoft. One extremely important caveat is that these figures are counting clients, not revenue: HubSpot has three times as many clients than Marketo but 10% less 2013 revenue. (The revenue figures aren't on the chart but are public: $77.6 million for HubSpot and $85.1 million for Marketo.)  As the Pepper Global slide suggests, different vendors are strongest in different customer segments.


Lots of Choices

There are plenty of vendors beyond the handful of industry leaders. The Venture Beat slide lists some; we report on a good number of them in the VEST; and I've written about others on this blog. Here’s a list I recently pulled together, along with client self-reported counts. It still leaves many out.

Why would anyone pick a vendor other than the leaders? One answer is, because they don’t know anyone else: some vendors still tell me more than half their deals are uncontested, meaning they are selling against doing nothing or an incumbent CRM or email system. Presumably this will become less common as more marketers realize that marketing automation systems are a category with lots of options.

Another, better answer is that the systems really are different. Sure, all marketing automation products share the same core features: email, landing pages and forms, web behavior tracking, nurture campaigns, lead scoring, CRM integration, and reporting. But there are still significant differentiators.  In fact, I'd argue these are becoming increasingly important as ways for new and smaller companies to find niches where they can compete. Here’s a list of some of the approaches and a sample of vendors who have taken them. (Many vendors would fit into multiple categories; pardon the oversimplification.)
 

Note that just about everyone cites low cost and ease of use, as they should: they're what buyers say are most important.  But this means those claims pretty much cancel each other out, regardless of the underlying system's actual merits. This leaves more concrete differences, some based on features and others based on service or distribution models. Even the surveys showed that features alone will rarely drive a decision, the exceptions are features that are absolute requirements and hard to find, such as integration with a particular CRM system or support for channel partners.  So far, every differentiator on this list can point to at least some measure of success.

So there you have it, folks: my current snapshot of our rapidly changing industry.  Thanks to Mintigo, Software Advice, Venture Beat, Pepper Global, and all the other people who publish such great data.

More New Systems Challenge the Marketing Automation Status Quo

Last week’s post looked at newer marketing automation systems that focused on small businesses. They shared a similar approach of offering limited features in exchange for lower cost: messaging was largely limited to emails (except in Salesformics) and campaign flows were basically linear. The general notion is that small businesses are finding existing marketing automation products too hard to use and would be happy with something simpler, especially if it costs less.

Although this approach is popular, there are others. Here are a few options.

MindFire Studio grew out of MindFire’s original Look Who’s Clicking software, which is used by more than 1,100 printers and other graphics arts vendors to add personalized URLs to print promotions. Studio, released in mid-2012, lets those firms offer full marketing automation capabilities to their clients and is also sold directly to corporate marketers. The system supports email, print, SMS, Twitter, and voice messages, typically delivered via integration with third party systems. It also provides the rest of the standard marketing automation functions, including landing pages and microsites, Web behavior tracking, lead scoring, and integration with Salesforce.com. The  approach is organized around events, such as an email open or click: there are different events for different channels, and each event can be assigned points for lead scoring, goals for behavior tracking, and costs for reporting. Events also act as triggers for actions within workflows, which begin with contact lists and can be filtered based on attributes and behaviors. One quirk is that the system reacts to all event-based triggers, rather than following a single branch within a workflow. This means that filters must be carefully crafted to avoid sending too many messages to the same person.

MindFire provides prebuilt templates for common marketing programs, to further assist clients who need help using the system. It doesn’t currently provide email or landing page builders, since its graphics arts clients typically had such tools already. It will be adding these as it sells more to corporate marketers, who tend to need them. Studio also provides other features suited to agencies or large corporate marketing departments, including multiple subaccounts, digital asset management, collaboration, and detailed user rights management. Pricing is based on the number of contacts and messages sent; it starts at $500 per month for corporate users with up to 10,000 contacts. Agencies can create their own branded version of the system and have full control over what they charge their customers.

SharpSpring also started as a narrow application – in this case, Web visitor identification and analytics – and evolved into a full marketing automation platform selling through agencies. The current system, launched mid-2013, includes the full set of standard features: email including templates that can be locked down in sections to prevent unauthorized changes; landing pages built and managed within the system or from external vendors including formstack, GravityForms, Wufoo, SugarCRM, or Salesforce.com; Web behavior tracking using Javascript tags; lead scoring based on attributes and behaviors; workflow using plain English statements rather than diagrams and supporting basic triggers, filters, actions and multiple steps but no branching; and CRM integration with Salesforce.com today and SugarCRM and ZohoCRM soon. The system also offers its own CRM – a useful option for agencies who might need to provide a low cost system to some clients, while accommodating others that have a system in place.

Other advantages include Google Adword integration; tagging leads by search term and Facebook ad; integration with Webex and GoToWebinar for event management; and a partnership with ZoomInfo to add contact names from companies that visit the client’s Web site. SharpSpring has built an exceptionally simple interface, featuring a single “new” button to add any type of object, screen overlays to illustrate available features and link to instructional videos, and real-time display of emails and forms as they are built. It supports agency clients with multi-account sign-on, precise user rights management, and exceptionally low pricing, beginning at $500 per month for up to five agency clients. Non-agency pricing starts at $200 per month for up to 500 contacts and reaches $800 per month for unlimited contacts.

SimplyCast is yet another multi-channel system, although it was designed that way from its start in 2010 and – quite unusually these days -- uses its own messaging tools rather third party systems. In fact, the vendor says it has sold more than one million separate subscriptions for email, auto-response, fax, SMS, voice broadcast, surveys, Web forms, landing pages, Web tracking, events, Twitter, and Facebook marketing, at prices starting from $3.00 to $9.99 per month. The integrated solution, SimplyCast 360, combines many of these with a unified customer database and workflow engine for $99 per month and up. Simple contact management is built into the system, or users can integrate with Salesforce.com, vTiger, SecondCRM, Wordpress, and Zoho. Clients who don’t want to use SimplyCast tools for a particular function can integrate with external products via APIs. The only standard marketing automation function that’s missing is lead scoring, which is due for release next month. The workflow engine has a graphical interface, multiple steps and query-based branching, although users must manually ensure branch conditions are mutually exclusive to avoid multiple executions. The vendor says that between 3,000 and 5,000 clients use SimplyCast 360. The $99 per month rate includes the base features and up to 500 active contacts; adding 10,000 active contacts would cost $500 per month more.  There are also some other fees related to advanced features and certain message types.  

Inbox25 began as an email system, used primarily as a module for SugarCRM. It launched its full-scale marketing automation system last fall. This provides reasonably powerful versions of the standard marketing automation features: email, landing pages and forms, Web tracking, lead scoring, workflow, and real-time synchronization with SugarCRM. Integration with other CRM systems is due soon. There is some social behavior tracking and detailed reporting on movement through buyer stages, as defined by score ranges. Workflow supports multiple steps linked to conditions defined by email, Web, and social behaviors, lead scores, and various attributes. Steps can execute actions within the system, including sending emails, updating scores and other data, adding to lists, and sending changes to the CRM system. What’s missing is connecting with other execution systems to send messages or import data, although this could be done via APIs or HTTP posts. The workflow doesn’t do true branching, defined as sending contacts down different paths within a single flow. But it does let users specify how contacts move through each flow, with options that include rechecking the original selection condition each time a step is executed, checking only the condition of the current step before it is executed, and checking all conditions up to the current step before it is executed. Inbox25 also recently added a “contact stream” option, similar to Marketo’s engagement engine, that scans a prioritized list of content at regular intervals and sends each contact the highest-priority item they haven’t seen before. Pricing for the marketing automation system starts at $99 per month for up to 250 active contacts. A more robust 12,500 active contacts costs $615 per month.

To summarize a bit: all these new systems stress low cost and ease of use. Some achieve modest improvements in usability by departing from traditional interfaces, but the real gains come from reducing functionality: the simplest systems avoid branching within multi-step sequences and support only email messaging. The other big difference among systems is whether messaging, CRM, and other functions are handled by the vendor’s own tools or by integrating with third party products. Some systems rely exclusively on internal or external tools, while others include their own tools but add APIs that support external integration as an alternative. Finally, there's a flowering of systems designed to let marketing agencies use the product for multiple clients. This type of specialization is both a sign of industry maturity and recognition that many marketing departments, especially at small companies, lack the resources to run advanced marketing automation by themselves.

ReachLocal Provides Turn-Key Lead Management for Small Business

There are about 3 million companies with revenue between $1 million and $5 million in the U.S., according to Manta. This is an enticingly huge market for marketing automation vendors, and one that seems largely untapped. The largest marketing automation vendor in the segment, Infusionsoft, has under 20,000 clients. This is barely scratching the surface.

But this perspective is misleading. Many small businesses do their marketing through CRM, email, and search advertising. Search marketing is particularly important as online searches replace newspapers and telephone directories. Companies that provide small businesses with online directories and ratings, search engine optimization, Web sites, and paid search marketing all have client bases that dwarf the small business marketing automation industry.

Those other vendors could easily see marketing automation as a natural line extension, since it would help their clients make better use of the traffic those vendors generate. Last month ReachLocal – a $450 million public company that purchases online ads for more than 23,000 local businesses -- moved in exactly this direction.

ReachLocal’s new service, called ReachEdge, provides clients with a custom Web site, contact database, automated email streams to leads and customers, and automated alerts to company staff.  All the Web and advertising design is done for the client. There’s no automated lead scoring or branching campaign flows: when a new lead enters the system via a Web form or phone call, the user receives an alert, reviews whatever information was provided on the form or voice mail message, and manually classifies the lead as active, long term, new customer, or existing customer. Each category kicks off its own stream of messages (to the leads) and alerts (to company users), which can be spaced over time. Messages are sent by email; alerts can be sent by text, email, or a mobile app. Users can enter notes, add tags, and record revenue on contact records, providing a very light CRM option, or they can manually export the contact list to an external CRM system. Revenue can be used in campaign Return on Investment reports.

And that’s it, features-wise. If you’re used to looking at all-in-one small business marketing automation systems like Infusionsoft, Ontraport, or Venntive, the list may seem laughably primitive. But it’s a safe bet that many ReachLocal advertising clients have no interest in anything more complicated. The stumbling block facing all of marketing automation – that it takes more training, skills, and effort than most potential users can invest – is higher for very small businesses than anyone else. ReachLocal has reduced its clients' preparation to a minimum, and then left it up to them to pursue each new lead individually.

When a vendor does this much of the work, the key questions are less about the system than quality of the marketing.  ReachLocal said that each Web site is custom designed, based on interviews with each client by U.S.-based industry specialists. I looked at a samples for three different plumbers (here, here, and here) and found they were indeed different and detailed enough to be effective. I’ll assume that advertising and email are similar. ReachLocal’s service includes one hour of customization per month and a completely new Web site every two years. The price is $299 per month, which is comparable to low-end marketing automation systems although higher than simple auto-responders.

Let me be clear: ReachEdge doesn’t provide the process automation or even email segmentation of a conventional marketing automation system, let alone serious CRM, ecommerce, or external integration. So small businesses that want to market aggressively will probably find it insufficient. But small businesses that just want to generate a stream of new leads while they focus their energies elsewhere may well find ReachEdge an appealing alternative.

Marketing Automation User Satisfaction: Clearly, There's Room for Improvement (and maybe a little vodka)

Last week’s post on marketing automation and its discontents prompted several questions about whether the level of dissatisfaction is any higher with marketing automation than other systems. To some extent, this is asking whether the glass is half empty or half full; and, as the illustration suggests, the answer matters less than the fact that there’s room for improvement. But I do have some data to share on the question of relative dissatisfaction.

The first insights come from G2 Crowd, a research firm that ranks software based on user ratings and social data. I have my doubts about comparing software this way* but users certainly know whether or not they're happy.  The folks at G2 were kind enough to reformat some of their data for me.**


According to the G2 figures, marketing automation users are in fact more enthusiastic about their choices than almost anyone else. CRM in particular has a vastly worse rating, but even email, Web analytics, and Web content management show more detractors and fewer promoters. I’m not sure how to interpret this – is the average marketing automation system really easier and better than those other types of software?  Or is something else going on: maybe satisfaction is lowest in the most mature categories, like human resources, enterprise resource management, and accounting, because experienced users are the most demanding?

A second set of insights comes from Ascend2 and Research Partners, which asked its panel which inbound marketing tactics they considered most effective and most difficult to execute. Here we see a very different story: marketing automation and lead nurturing (listed separately) are clear outliers in a bad way: among the less effective tactics and the hardest to execute. In fact, they are the only two tactics where the difficulty score was significantly higher than the effectiveness score (i.e., above the diagonal line in the chart below).***

The Ascend2 study also found that 18% of respondents used marketing automation extensively, while 43% made limited use of it, and 39% didn’t use at all. This is similar to the BtoB study I cited last week, which found that just 26% of marketing automation users had fully adopted their system.  I believe those effectiveness vs. difficulty ratings hint at the reason for those results: most marketers don’t fully deploy marketing automation because they find it too much work compared with the benefit they’d gain. In other words, the hurdle to marketing automation adoption is not laziness, but a rational evaluation of the return from investments in marketing automation vs. other activities.

That rational judgment could still be wrong.  After all, marketers who haven’t fully deployed marketing automation don’t know how effective it really is. Ascend2 addressed this by asking marketers to rate their performance and comparing answers of the 12% self-rated “very successful” with the 20% who rated themselves “not successful”.

Those answers contain some positive news: of the very successful group, 45% were extensive users of marketing automation, compared with just 9% of the not successful.

But even the very successful marketers gave marketing automation only the fifth-highest effectiveness rating, which doesn’t differ much from the sixth-highest rating in the not successful group.

Similarly, the very successful marketers rated marketing automation as sixth most difficult (actually, tied for fifth) while the not successful marketers ranked it as fourth-hardest. In other words, marketing automation is indeed a bit easier than it seems before you start, but even the most experienced and most successful marketing automation users consider it pretty darn hard and just modestly effective.

So what we have here is a mixed message: marketing automation does correlate with success and its users might even be relatively satisfied, but it's still a lot of work for limited results.  You read that as good news or bad, but, either way, it shows the need for more work before marketing automation can reach its full potential.


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* My basic objection is that users have different needs, so a system that satisfies one user may not be good for another.

** G2’s explanation: “The data for this chart comes from the over 7,400 enterprise software surveys users have completed on G2 Crowd as of Friday 10/18/13. For every product review we ask "How likely is it that you would recommend this product to a friend or colleague?" on a 0-10 scale. We segment reviewers that rate a product 9-10 as Promoters, 7-8 as Passives, and 0-6 as Detractors. The product segmentation data is aggregated to determine Net Promoter Score at a category level.”

***It's barely possible that the answers would be different if the Ascend2 study had asked about marketing in general rather than "inbound marketing purposes".  But I doubt it.

Infer Keeps It Simple: B2B Lead Scores and Nothing Else

I’ve nearly finished gathering information from vendors for my new study on Customer Data Platform systems and have started to look for patterns in the results. One thing that has become clear is that the CDP vendors fall into several groups of systems that are similar to each other but quite different from the rest. This makes sense: most of the existing CDP systems were built to solve specific problems , not as general-purpose data platforms. Features will probably converge as vendors extend their products to attract more clients. But right now the groups are quite distinct.

One of these categories is systems for B2B lead scoring. I found three CDPs in this group: Lattice Engines (which I reviewed in April), Mintigo (reviewed in June), and Infer, which I'm reviewing right now.

Like the others, Infer builds a proprietary database of pretty much every company on the Internet by scanning Web sites, blogs, social media, government records, and other sources for company information and relevant events.  It then imports CRM and marketing automation data from its clients' systems, enhances the imported records with information from its big proprietary database, and builds predictive models that score companies and individuals on their likely win rate, conversion rate, deal size, and lifetime revenue.

The models are applied to new records as they enter a client’s system, creating scores that are returned to marketing automation and CRM to use as those systems see fit. The most typical application is deciding which leads should go to sales, be further nurtured by marketing automation,  or discarded entirely. But Infer customers also use the scores to prioritize leads for salespeople within CRM, to measure the quality of leads produced by a marketing program, assess salesperson performance based on the quality of leads they received, and even adjust paid search campaigns based on the quality of leads generated by each source and keyword.

Infer differs from its competitors in many subtle ways: the scope of its data sources, its matching processes to assemble company and individual data, the exact types of scores it produces, its modeling techniques, and reporting.  It also differs in one very obvious way: it returns only scores, while competitors return both scores and enhanced profiles on individual prospects.  Infer gathers the individual detail needed for such profiles, but has decided so far not to make them available. Its reasoning is that scores provide the major value from its system and profiles would detract from them – perhaps because sales people might ignore them scores in favor of profile data. Focusing on scores alone also makes Infer simpler to set up, operate, and understand.

Infer might be right, but it’s hard to imagine they'll will stick with this position once they start selling directly against competitors that offer scores plus profiles.  They will surely lose many deals for that reason alone.  On the other hand, Infer’s initial clients have been companies where free trials versions generate huge lead volumes, including Box, Tableau, NitroPDF, Zendesk, Jive and Yammer. Scores that accurately filter non-productive leads are more important to those companies than individual lead profiles.  Perhaps there are enough such firms for Infer to succeed by selling only to them.

Whether or not Infer expands its outputs, it faces another challenge: convincing buyers that its scores and data are better than its competitors. This might well be true: based on the information I’ve gathered, Infer seems to have a richer set of data sources and more sophisticated identity matching than at least some competitors. But my impressions may be wrong, and most buyers will won’t dig deeply enough to form an opinion.  Instead, their eyes will glaze over when the vendors start to get into the details, and they’ll simply assume that everybody’s data, matching, and modeling are roughly equivalent.

The only real way to measure relative quality is through competitive testing of which scores work better.  Each buyer needs to run her own tests since results may vary from business to business. How many buyers will take the time to do this, and which vendors will agree to cooperate, is a very open question.

That said, I did speak with some current Infer users, who were quite delighted with how easy it had been to deploy the system and with results to date. This is hardly a random sample – these were pioneer users (the system was only launched about a year ago) and hand-picked by the vendor. But their experience does confirm that performance is solid.

Infer pricing is based on the number of records processed and connected systems.  The vendor doesn’t reveal the actual rates but did say it is looking at options to make the system more affordable for smaller clients.

NitroMojo and Marketing Advocate Specialize in Marketing Automation for Channel Partners

As I noted in a post last year, there is a universe of specialized marketing automation systems for companies that sell through channel partners. These products address several interrelated challenges: distributing leads to partners without losing track of performance; distributing partner-customized versions of company-created content; and helping partners run their own marketing campaigns. Here are two more vendors with related offerings:

NitroMojo focuses primarily on lead distribution and tracking. Its particular strength comes from sending follow-up email surveys directly to leads to find out what happened: were they contacted by the channel partner? did they eventually buy? is there someone else at their company to talk to? is there something else they might purchase? This addresses one of the central dilemmas of selling through partners, which is losing contact with the leads and, as a result, not being able to measure effectiveness of corporate lead generation programs. NitroMojo says about 60% of leads reply to the surveys, giving enough information for meaningful analysis of program, partner, and salesperson performance.

The system also provides sales reps and sales managers with basic sales automation, including abilities to enter and rate new leads, review and prioritize existing leads, track call results, send materials from a central library, and schedule future calls. Corporate marketers can build campaigns with multiple events, create landing pages, capture revenues and costs, distribute leads with complex routing rules, score leads on behaviors and salesperson ratings, and measure performance.  Pricing starts around $3,000 per year plus $100 per user per month, which is usually less than the cost of marketing automation and sales automation systems that NitroMojo would replace. The current version of NitroMojo system was introduced about a year ago and had three global clients with more than 150 users when I spoke with the company in April.

Marketing Advocate is designed to help technology resellers who lack in-house marketing skills. It provides a resellers with a vendor-sponsored microsite that gives them access to marketing content, prospect lists, acquisition email campaigns, and automated nurture emails.  Resellers define their target prospects when they set up the system and then purchase suitable lists from suppliers including NetProspex, Jigsaw, and Harte-Hanks. These prospects, and other names uploaded by the reseller, receive standard campaign emails at three week intervals until they respond by visiting a landing page. The system then sends them personalized emails offering contents related to their behaviors. The leads are also scored and, when ready, can be passed to a telephone lead qualification service or directly to the vendor’s sales automation system. The sponsoring vendor doesn’t see the lead names until the reseller enters them into the system.

The point of all this is to minimize the effort that the resellers themselves must put into marketing. Marketing Advocate typically builds 25 to 30 prospecting campaigns tailored to different customer segments, and lets the resellers select the campaign and segments they want to pursue. The company also assembles and selects content to offer in the emails, has negotiated arrangements with the list providers, gives reports that analyze program response quantity and quality, and offers a concierge service to review results with resellers and discuss improvements. The system can also integrate with event management software and Google AdWords. Partner agencies are available for telephone lead qualification, search engine optimization, and paid search.

Marketing Advocate typically costs $500 to $700 per month per reseller, with some portion of the expense usually subsidized by the sponsoring vendor. Marketers pay $1 per name for prospects. The system is used by divisions at several major technology vendors including IBM, Microsoft, and HP.

Moving On: Lessons from the B2B Marketing Trenches

 
I’ve just ended my six month tour as VP Optimization at LeftBrain DGA, and am now returning full time to my usual consulting, writing, and general shenanigans. It was fun to work again as a hands-on marketer. Here are some insights based on the experience.

- lots of content. We all know that content is king, but sometimes forget the king has a voracious appetite. A serious demand generation program might move contacts through half dozen stages with several levels within each stage and several messages within each level. This could easily come to forty or fifty messages, each offering a different downloadable asset.  The numbers go even higher when you start to create separate streams for different personas. Building these materials is major undertaking, first to understand what’s appropriate and then to create it. But deploying the initial content is just the start: you then have to monitor performance, test alternatives, and periodically refresh the whole stream. Finding efficient ways to do this is critical to keeping costs and schedules within reason. (Note that I’m talking here about email programs to nurture known contacts, not acquisition programs to attract new names. That takes another massive content collection.)

- content isn’t everything. It’s an old saw among direct marketers that the list determines most of your response rate and the offer controls for most of the rest.  Actual creative execution (copy, graphics, format, etc.) accounts for maybe 10% of the result. We proved this repeatedly with tests that used the different content at the same stage in the campaign flow: basically, results were similar even with content originally designed for different purposes. Conversely, the same piece of content had hugely different results at different places in the flow. What this meant in both cases was that response was primarily driven by the people at each stage, not by the specifics of the materials presented.

- simplicity helps. That results are primarily driven by audience doesn’t mean that content doesn’t matter. We did a fascinating (to me, at least) analysis of 100 emails, logging specific features such as number of words and readability scores and then comparing these against open, click-through, and form submit rates. A clear pattern emerged: simpler emails (shorter, fewer graphics, easier to read) performed better. In fact, the pattern was so clear that there's a danger of over-reaction: at some point, a message can be too short to be effective (think of the mayor in The Simpsons, who just repeats “Vote for Me”). So the real trick is to find an optimal length, and even then to recognize that some messages truly need to be longer than others.

- simplicity isn’t everything, either. We did a lot of testing – it was my favorite part of my job – but the content tests were often inconclusive: sometimes shorter won, sometimes longer won, most often the difference was too small to matter. Given that we were starting with competently-created materials, that’s not too surprising. On the other hand, we consistently found that forms with fewer questions yielded better results, typically by a ratio of 3:1. This is one example of a non-content item with major impact; another was contact frequency (more is better, but, as with simplicity, only up to a point). There were other aspects of program structure that I would have tested had time and resources permitted; the goal was to focus on variables with the potential for a substantial impact on over-all results. This generally meant moving beyond individual content tests to items with larger and more global impact.

- test themes, not details. Don’t misinterpret that last sentence: I’m not against content tests. What I'm against is tests that only teach one small, random lesson, such as whether subject line A is better than subject line B. The way to build more powerful tests is to build them around a hypothesis and then try several simultaneous changes that support or refute that hypothesis. (I’ve shamelessly stolen this insight from Marketing Experiments, whose methodology I hugely admire and highly recommend.) So, if you think simplicity is an issue, create one test with shorter subject line and less copy and fewer graphics and a simpler call to action, and run that against your control. This is exactly the opposite of conventional testing advice of changing just one thing at a time.  That approach made sense back in the days of direct mail when you were running a handful of versions per year, but isn’t an option in the content-intensive environment of modern online marketing. And even if you had the resources to run a gazillion separate tests, you’d still need to see larger patterns to guide your future content creation.

- multivariate tests work. As if the infinite number of potential tests were not enough of a challenge, most B2B marketers also have relatively small program quantities to work with. We multiplied our test volume by applying multivariate test designs, which let us use the same contacts in several different test cells simultaneously. This probably needs a post of its own, but here's a quick example: Let’s say you need 10,000 names per test cell and have 20,000 names total. Traditionally, you could just run one test comparing two choices. But with a multivariate design, you’d create four cells of 5,000 each. Cells 1 and 2 would get the first version of the first test, while cells 3 and 4 would get the second version. But – and here’s the magic – cells 1 and 3 would also get the first version of the second test, while cells 2 and 4 would get the second version of the second test. Thus, each test gets the required 10,000 names, but you can still see the impact of each test separately. (Here’s a random article that seems to do a good job of explaining this more fully.). We generally limited ourselves to two or three tests at a time. More complicated structures are possible but I was always concerned about keeping execution relatively simple since we were doing all our splitting manually.

- metrics matter. As it happens, most of the programs we executed rely heavily on form submissions to move people to the next stage. This meant that form fills were the key success metric, not opens or click-throughs. Although these generally correlate with each other, the relationship is weaker than you might expect.  Some exceptions were due to obvious factors such as differences in form length, but the reasons for others were unknown.  (I often suspected but could never prove reporting or data capture issues.)  Of course, most email marketers are used to looking at open and click rates, so it took some gentle reminding to keep everyone focused on the form fill statistics. The good news is we prevented some pretty serious mistakes by using the right measure.  Note that form fills are especially important in acquisition programs responders are lost altogether if don't complete a form that let you add them to your database.

- test results need selling. As you’ve probably guessed by now, I spent much of time lovingly crafting our tests and analyzing the results. But others were not so engaged: more than once, I was asked what we found in a test whose results I had published weeks before. This wasn’t a complete surprise, since other people had many other items on their mind. But we did eventually conclude that simply publishing the results was not enough, and started to go through the results in person during weekly and monthly status meetings. We also found that reviewing individual results was not enough; when we found larger patterns worth reporting, we had to present them explicitly as well. Again, there’s no surprise in this, but it does bear directly on expectations that managers will find important data if reporting systems simply make it available. Most will not: the systems have to go beyond reporting to highlight what’s new, what it means, why it matters, and what to do next. Although some parts of that analysis can be automated, most of it still relies on skilled human effort.

- reports need context. Reporting was another of my responsibilities, and we made great strides in delivering clearer and more actionable data to our clients. One of the things I already knew but was reminded really matters was the importance of putting data in context. It wasn’t enough just to show cumulative quantities or conversion statistics; we needed to compare this data with previous results, targets, and other programs to give a sense of what it meant. To take one example, we reported the winner of a series of email package tests, without realizing until late in the analysis that the response rate for the test as a whole was much lower than previous results. This was a more important issue that the tests themselves. We had other instances where entire waves were missing from reports; we only uncovered this because someone noticed they were missing – whereas, a proper comparison against plan would have highlighted it automatically. Again, such comparisons are widely acknowledged as a best practice: my point here is they have immediate practical value, so they shouldn't just be relegated to the list of “nice but not necessary” things that no one ever quite gets around to doing.

- survival is more important than conversion. That phrase has a vaguely religious ring to it, and I suppose it’s also true in a theological sense. But right now I’m talking about reporting of survival rates (how many people who enter a nurture program actually end up as customers) vs. conversion rates (how many people move from one program stage to the next). Marketers tend to focus on conversion rates, and of course it’s true that the survival rate is mathematically the product of the individual conversion rates. But we repeatedly saw changes in program structure or even individual treatments that caused large swings in a single conversion rate, which was often balanced by opposite changes in the following stage. Looking at conversion rates in isolation, it was hard to see those patterns.  This was an even bigger problem when each rates was calculated cumulatively, so the impact of a specific change was masked by being merged into a larger average. More important, even when there was an obviously related change in two successive rates, the net combined impact wasn’t self-evident. This is where survival rates come in, since they directly report the cumulative result of all preceding stages. Of course, conversion rates and survival rates are both useful: I'm arguing you need to report them both, not just conversion rates alone.

- throughput matters. Survival and conversion rates show the shape of the funnel, but not the dimension of time. We did report how long it took contacts to move through our programs – in fact, a sophisticated and detailed approach was in place before I arrived – but the information was largely ignored. That was a pity, because it contained some important insights about contact behaviors, opportunities for improvement, and results of particular tests. A greater focus on comparing expected vs. actual results would have helped, since calculating the expectations would have probably required a closer focus on how long it took leads to move through the funnel.

- acceleration is hard. A greater focus on timing would have also forced a harder look at the fundamental premise of many B2B campaigns, which is that they can speed movement of prospects through the sales funnel. The more I think about this, the more doubts I have: B2B purchases move according to their own internal rhythms, driven by things like budget cycles, contract expirations, and management changes. Nurture programs can educate potential buyers and build a favorable attitude towards the seller, thereby increasing the likelihood of making a sale once the buyer is ready. They can also track, through lead scoring, when a buyer seems ready to act and is thus ripe for contact by sales. That’s all good and valuable and should more than justify the nurture program’s existence. But expectations of acceleration are dangerous because they may not be met, and could unfairly make a successful program look like a failure.

- drip needs attention.  Like that leaky faucet you never quite get around to fixing, drip programs often don't get the attention they deserve.  In practice, the vast majority of people who enter a nurture program will not move quickly to the purchase stage; most will stall somewhere along the way. This is where the drip program must work hard to keep them engaged. Again, every marketer knows this, but it’s easy to focus attention on the fascinating and complicated stage progressions (remember all that content?) and relegate the drip campaigns to a simple newsletter. Big mistake. Put as much effort into segmenting your drip communications and encouraging response as you put into stage conversions. If you want a practical reason for this, look at your mail quantities: chances are, you’re actually sending more drip emails than all your active stages combined.

- proving value is the ultimate challenge. It’s relatively easy to track contacts as they move through the marketing funnel, but it’s much harder to connect them to actual revenue in the sales or accounting systems. I whined about this at length in June, so I won’t repeat the discussion. Suffice it to say that some sort of revenue measurement, however imperfect, is necessary for your testing, reporting, and program execution to be complete.

Whew, it’s good to have all that out of my system. As I said at the beginning, I did enjoy my little visit to the marketing trenches. Now, it’s goodbye to that world and hello to what’s next.

3 Ways to Use Lead Scoring Within Your Marketing Automation Programs

I wrote last week about the difficulty of linking marketing leads to sales results. One reason the topic was on my mind is I’m also thinking a lot these days about lead scoring. The practical use of lead scoring is to decide which leads to pass from marketing automation to sales, or, even more pragmatically, to predict which leads will be accepted by sales.* But the ultimate goal is to identify the leads most likely to generate revenue. Building an accurate scoring model therefore requires an accurate view of how leads and revenue are connected.

For all the reasons I discussed last week, that lead-to-revenue connection is hard to make. This is one reason that most lead scoring projects focus instead on the criteria that salespeople use in judging which leads to accept. The other reason is that salespeople can decide which leads they’ll work on – so giving them what they want, regardless of whether it’s what they really need, is the key to lead scoring being considered a success.

Many companies today have inserted a phone call between marketing automation and the sales department, screening every plausible lead before sending them to actual salespeople. This reduces the need for scoring accuracy because the phone call will clarify whether the lead is sales ready.  Since the cost of a missed opportunity is much higher than the cost of a wasted phone call, scoring in this situation must simply find all leads with a reasonable chance of success.

In short, scoring programs face two scenarios:

- for scores that directly determine which leads are sent to sales, accuracy is needed but data on past results (necessary to build a good model) is scarce

- for scores that determine which leads get a screening call, accuracy isn’t very important.

Perhaps this is why so few companies use lead scoring (just 19% in a recent MarketingSherpa study) and why the scoring models tend to be simplistic. Investment in more sophisticated techniques, such as statistically-based predictive models, is rarely worth the cost.

There is, however, another use for lead scoring: assigning leads to stages as they move through the marketing funnel.**

Conceptually, assigning leads to funnel stages is quite different from calculating their probability of making a purchase. A funnel stage is defined by meeting specific criteria such as BANT (budget, authority, need and timing) and engagement (downloading a paper or providing contact information). This is more like a checklist than a numeric score, although items like the number of specified behaviors may be calculated. Still, it's sometimes convenient to use score ranges as stage definitions.

In this context, scoring can be used in three ways.

- assign points  to directly to stage criteria.  For example, imagine a three-stage funnel of Respondent (replied to an email), Qualified Respondent (meets BANT conditions) and Sales Ready Lead (demonstrates engagement). If the scoring rules give 100 points for a response, 100 points for meeting BANT criteria, and 100 points for demonstrating sufficient engagement, then people with 100 points are Respondents, people with 200 points are Qualified Respondents, and people with 300 points are Sales Ready Leads. This is a common approach, although it’s not much different from applying the same rules to classify leads directly.


- treat the score as a probability estimate of reaching the final goal (sales readiness, sales acceptance, or revenue). Under this approach, a Respondent might be someone with a goal probability of under 10%; a Qualified Respondent might have a goal probability of 10% to 50%, and Sales Ready Lead might have a goal probability above 50%. This method avoids the need to define specific lead stage criteria, replacing them with objective predictive modeling methods that are likely to be more accurate.

- treat the score as a probability estimate of reaching the next stage (Respondent, Qualified Respondent, etc.). This retains the explicit stage criteria, which may help marketers visualize who is in each stage and how best to treat them. The predictive model provides additional segmentation within each stage, so marketers can focus their efforts on the most promising leads. Since linking leads to stage movement is easier than linking them to revenue, these predictive models are easier to build.

Today, most companies probably do a hybrid of the first and second options. That is, they assign points based on specified criteria (first option) but assign stages based on point ranges (second option). This combines the familiarity of criteria-based scoring rules with the convenience of numerical stage definitions, making it the easiest method available. But it is also doubly arbitrary, since neither the point values nor the range boundaries can be measured against an objective standard.

I’d suggest that marketers move towards a purer version of the second method, building statistical models that predict the final goal (revenue if available; sales acceptance or sales-ready lead criteria if not). Stage definitions can be arbitrary ranges but correlated against existing stage criteria. Eventually, marketers may want to move toward the third method, with separate models for each stage. This makes it easier to focus on advancing leads from one stage to the next while retaining the rigor of a statistically based approach.


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* For example, Marketo’s Definitive Guide to Lead Scoring defines lead scoring as “a shared sales and marketing methodology for ranking leads in order to determine their sales-readiness.”

**Eloqua’s Grande Guide to Lead Scoring puts it nicely: lead scoring “helps marketing and sales professionals identify where each prospect is in the buying process.”

The Easiest Way to Get Started with Marketing Automation? Answers in the Pictures.

Here’s more proof that the apocalypse is near: I’ve discovered the “remove background” feature in Powerpoint. This makes it even easier for me to doctor photographs for my presentations. The fabric of reality cannot long survive so much stress.

The immediate subject of my attentions is next Tuesday’s Webinar “Marketing Automation: One Step at a Time”, sponsored by Act-On Software.

The dominant image of this Webinar, and the eponymous white paper (available on the RaabGuide web site), is a high stone wall representing the effort required to deploy a marketing automation system. More specifically, the wall represents the effort of a traditional best-practice approach, which requires reviewing all marketing processes, designing new programs, creating new content, and working out alignment with sales. It’s a high wall indeed, and many companies just can’t climb it.

As I wrote in a post last December, several strategies have emerged to deal with this challenge. Now I’m delighted to be able to illustrate them.

Training: The wall is high but marketers can learn to jump higher. What they need is training in the pole vault.

Ease of use: Let’s lower the wall so marketing automation is easier. Apply a jackhammer to knock it down a few feet.

Incremental deployment: Break the deployment process into small, manageable stages. Let’s add a staircase with someone taking baby steps.

Service: Marketers should let specialists do the heavy lifting. The experts can carry them over the wall with a crane.

You’ll be pleased to know that the focus of the Webinar isn’t my new-found graphic capabilities. It’s how to succeed at incremental deployment, the strategy recommended by Act-On. Without giving too much away, the key is starting with the right tasks so you get some immediate benefit and build a foundation for future growth but don’t take on too much at once. Yes, I have some specific suggestions…but you’ll have to tune in to hear them.

CallidusCloud Buys LeadFormix Marketing Automation for $9 Million Cash

The list of independent marketing automation systems shrank by one yesterday when Leadformix  was purchased by sales enablement vendor CallidusCloud for $9 million.

The price is surprisingly low for an established marketing automation vendor. In my VEST report from last July, LeadFormix reported 210 clients, concentrated among mid-size firms, and 82 employees. This would translate to around $7 million revenue, for a price of just over 1x revenue, compared with 4 to 5x revenue in other recent acquisitions.  I suspect the actual LeadFormix revenue was considerably lower than $7 million, but, even so, the price may give pause to investors in other marketing automation firms who are hoping for a great payout.  But bear in mind that LeadFormix was largely self-financed, so they may have sold at a bargain price because they couldn’t afford to compete with better-funded competitors.

Or maybe these comparisons are irrelevant because LeadFormix was never a standard marketing automation system to begin with. While its feature list covers all the usual marketing automation categories, the company's real focus was always on providing the most useful information to sales people. In particular, LeadFormix infers visitors' “intent” (i.e., interests) and sales stage from the Web contents they choose to view. This is a clever and largely unique approach, although Right-On Interactive does something broadly similar.

LeadFormix combines its behavior analysis with anonymous visitor identification (inferring their company from the IP address), access to external prospect lists and enhancement data, and collaboration with partners and affiliates to share lead access. Indeed, the LeadFormix tag line is “aligning marketing with sales” – something that’s important to all marketing automation vendors, but never their primary benefit statement.

This is why Callidus is a good buyer. Callidus isn’t a sales automation system like Salesforce.com, but it does provide a range of other systems that help sales departments. These include products for hiring, training, collaboration, content distribution, proposals, incentives, quota management, and analysis. LeadFormix will give Callidus another offering for its existing 900+ customers and access to 200 more companies now using LeadFormix.  I don’t know whether Callidus will also try to expand LeadFormix sales among "pure" marketers.  But even if they back away completely from “marketing automation”, the deal makes sense.

A bit of background on Callidus: it’s a public company with about $80 million annual revenue, no profits, and a $200 million market value. It made at least five acquisitions last year, all software-as-a-service companies selling some type of sales enablement. These include:

• Salesforce Assessments (salesperson hiring /assessment) 03/28/11
• Litmos (learning management) 06/10/2011
• iCentera (on-demand portal software for sales enablement) 07/06/2011
• Rapid Intake (collaborative rapid e-learning authoring) 09/08/2011
• Webcom Inc. (product configuration, pricing, quoting, and proposals management) 10/04/2011

In short, LeadFormix fits nicely with Callidus from strategic, financial and operational perspectives.  Because this is such a unique match,  I don’t think the acquisition says much about larger trends in the marketing automation industry.  At most, it could be part of the long-expected shakeout as the industry consolidates around a small number of winners. But, while that consolidation is inevitable, it will take more than one deal to show it has started in earnest.