CMO Council: CMOs and CIOs Are Not Aligned

Summary: a CMO Council survey shows that CMOs and CIOs agree they need to cooperate, but disagree on how well they're doing and what their roles should be. Both sides need to work harder to close an increasingly-unacceptable gap. This affects marketing automation vendors too, since they sell to both sides.

The CMO Council and Accenture Interactive recently released a study Aligning the CMO and CIO to Achieve Agile Intelligent Marketing based on parallel surveys of about 300 members of each group. The free 32-page summary provides a detailed analysis and commentary. Key conclusions are:

"While customers have now broadly and deeply embraced new digital and social media channels of engagement, interaction and transaction, most senior marketers and IT executives admit their companies lack a clear understanding of how customers are using their channels and are not highly prepared to leverage those channels. Meanwhile, the relationship between marketing and IT too often remains dysfunctional, with marketers complaining about insufficient support from enterprise IT departments, and IT complaining about marketing departments that forge forward with technology implementations without IT involvement. While marketing believes customer intelligence is critical to competitive advantage, it is struggling to gain IT support and budget for better integration and mining of disparate customer data that is often isolated and under-utilized across organizational silos.

"Yet, there is also significant common ground on which to build a new era of cooperation and synchronization between marketing and IT. There is mutual agreement on the central role technology now plays in defining the customer experience, delivering strategic customer insight, and in reaching and engaging a digitally driven marketplace."

The CMO Council generously shared the detailed data with me. This provided hours of amusement as I recrunched the numbers from my own perspective. I’ve included some of results below with their permission (although of course the interpretations are my own). If you care about these issues, it’s well worth $199 to see the rest.

CMOs and CIOs agree they need to work together, and why. Both cited customer insight and analytics as top reasons to work together. Marketing measurement and ROI rank lower, although CMOs care about them more than CIOs seem to think.


They also agree they have much work to do:

- only 3% of CMOs and 1% of CIOs said their company was heavily committed and invested in interactive digital marketing strategies”

- just 8% of CMOs and 6% of CIOs said they had fully integrated online and offline analytics

But the relationship is far from perfect.

CMOs and CIOs often blame each other for failures.

- Many more CMOs than CIOs said they had “problems or challenges implementing marketing solutions or IT projects to further marketing effectiveness” (64% of CMOs vs. 48% of CIOs). That is, marketers are less happy that IT realizes.

- CMOs blamed failure on lack of IT priority, lack of IT expertise, IT keeping marketing “out of the loop” and IT resistance to solution sourcing.

- CIOs blamed failure on marketing bypassing IT and working directly with the vendor and marketing taking control and isolating IT.

- Both groups did agree on other causes including insufficient funding, lack of time and technical resources, solution complexity and lack of management support.


CMOs and CIOs select tools separately.

- CIOs were much more likely to base selections on consultation with technical groups (enterprise IT, web, contact center and back office) and somewhat more dependent on vendor interactions at conferences.

- CMOs rely more on consultations within marketing, including internal meetings, strategic planning and audits and assessments. But the CIO figures are still fairly high: CIOs are not ignoring marketing’s input, although marketing may be largely ignoring IT.

- Incidentally, both groups cited online research much more often than industry analysts, peer groups or formal needs assessments and RFPs. This reinforces the common notion that online information is increasingly more important for marketing system buyers.


CIOs are less in tune with digital marketing efforts than they think – and CMOs know it:

- 76% of CIOs felt their CIO understood marketing objectives and requirements, but just 54% of CMOs felt their CIO understood marketing needs.

- CMOs were nearly twice as likely as CIOs to feel their company is growing its digital marketing spend (35% of CMOs vs 20% of CIOs).

- CMOs were also more likely to think their firm was aggressively adopting new marketing technologies or was testing new solutions (combined 39% of CMOs vs. 28% of CIOs). CIOs were more likely to think the company was still at the evaluation stage or not a priority (combined 24% of CMOs vs. 34% of CIOs).

- CIOs were much more likely than CMOs to feel that IT was playing a major leadership role in digital marketing strategy. But the majority of both groups also listed the CMO as a digital marketing leader. Near-majorities also credited senior management.


CMOs and CIOs disagree on the CIO's job.

- CMOs take a limited view of the CIO's role. Mostly, they want the CIOto handle the mechanics of data and integration.


- CIOs agreed that better data was their first priority, but otherwise felt they should focus on new types of systems and interactions. They show particular interest in social media.


CMOs and CIOs have different views of spending, too.

- CMOs and CIOs agreed that they spend the most on operational activities including email, Web analytics and CRM. But...

- CMOs reported much more spending on campaign management, marketing platforms and marketing analytics than CIOs. Either the CIOs aren’t paying attention to marketing systems or the CMOs are spending money outside of IT. Or both.

- CMOs also reported more spending on email and search marketing than CIOs. That makes a bit more sense: much of that money doesn’t flow through IT.

- CIOs reported more infrastructure spending such as content management, data warehouse, customer interactions and call centers than CMOs. That one also makes more sense since many of those items fall outside of marketing.


Two more observations on spending:

- Reported spending on multi-channel campaign management and integrated marketing platforms (27% and 23% for CMOs, respectively) was much higher than spending on enterprise marketing management or marketing resource management (both at 10%). I personally think they are close to the same thing, so I’m guessing this is mostly about labels. But perhaps enterprise marketing management is truly a broader and more advanced concept – suggesting there is indeed a large untapped market.

- Spending on marketing performance analytics (22% of CMOs) was more common than spending on ROI modeling and performance measurement (11%) . Could be another labeling issue – or maybe ROI is more specific, more demanding and less common. You decide.

Alsa Marketing Adds Multi-Language Capabilities to Low-Cost Marketing Automation

Summary: Alsa Marketing is a late entry to small business marketing automation. They support multiple languages, which should gain them some business. Otherwise, though, it will be tough for them to compete with better-established players.

It’s harder every day for a new company to enter the business-to-business marketing automation industry. Of the three classic competitive strategies – low price, great service and innovative products – there are plenty of low price options and leading vendors work aggressively to help their clients succeed. This leaves unique features as the only viable strategy for a new firm.*

Alsa Marketing, a Montreal-based firm that launched its product in June, has one significant differentiator: it supports multiple languages (French, Spanish and English) in its user interface and in lead profiles. So far as I know, this is unique in the lower end of the market (Alsamarketing starts at $750 per month for up to 10,000 leads and 25,000 emails). Not surprisingly, the company’s 35 or so clients are mostly Canadian and European.

Alsa has some other unusual features. These include support for multivariate tests on landing pages (but not emails); automated posting of Jigsaw and social media data into lead profiles; fractional revenue attribution; and SugarCRM synchronization. These can all be hard to find, although they’re certainly not unique. (As I discussed last week, I’m no fan at all of fractional attribution – but Alsa tells me their clients like having it as an option. **sigh**)

The system also provides a solid set of standard capabilities. Users can import lists, compose and send emails, build landing pages, execute multi-step event-triggered campaigns, monitor Web behaviors, score leads, exchange data with SugarCRM or (soon) Salesforce.com, and run reports. Also can capture results of Google Adwords campaigns and has a URL-shortener to track traffic from social media. The user interface and functionality are perfectly nice but not exceptional.

Alsa also provides prebuilt templates for standard campaign workflows. The vendor argues that this removes a critical roadblock for many marketers, who have trouble building such workflows on their own. I’m not sure it’s really a big issue and, in any case, other vendors provide similar help. In general, Alsa says it has concentrated on helping its initial clients to use the system successfully: again, while this is clearly important (and might save some consulting fees), similar help is available from its competitors.

At best, superior support could built Alsa a small but loyal customer base. Multi-language might open a larger market, at least until competitors match it. I wish Alsa nothing but the best and will be interested to see how things work out.

Fractional Response Attribution is Worse Than Nothing

Summary: Should companies apply fractional revenue attribution when more sophisticated methods are impractical? I think not: it gives inaccurate results that could result in bad decisions. Better to avoid financial measures at all if you can't do them properly.

I spent most of the past week in San Francisco at overlapping conferences for the Direct Marketing Association and Marketo. My Marketo presentation was based on the marketing measurement white paper I recently wrote for them, which argues that measurement should be based on tracking buyers through stages in the purchase process. One corollary to this is not attributing fractions of revenue among different marketing touches. The analogy I’m currently using is baking a cake – it doesn’t make sense to assign partial credit for the final flavor to different ingredients: the recipe as a whole either works or doesn’t. Only testing can determine the impact of making changes.

Given this mindset, I was more than a little surprised to attend a DMA panel discussion where two of the more sophisticated marketing measurement vendors described their systems as providing fractional attribution. Both vendors also offer more advanced methods and both made clear that they used such methods in appropriate situations. But they seemed to feel that when adequate data is not available, fractional attribution is better than nothing.

I certainly understand their attitude. Many of the business-to-business marketers at the Marketo conference have exactly this problem: their data volumes are too small to accurately measure the incremental impact of most marketing programs. The best suggestion I can make is that they run whatever tests their volumes make practical. I’d further suggest that testing may actually be more practical than they realize if they actively and creatively look for opportunities to do it.

But, again, the vendors on my panel knew this. The examples they gave were situations where companies had previously attributed all marketing revenue to the “last touch” before an actual purchase or other conversion event. They used fractional attribution to help people (marketers and those who fund them) see that other contacts also contribute to those final results. The practical goal was to justify funding for early-stage programs that such as search engine optimization and display advertising that precede that “last touch” itself.

I’m all in favor of recognizing that early-stage contacts have value. But I still feel that assigning a fundamentally arbitrary financial value to those contacts is a mistake. The main danger is that people who don’t know any better may use these numbers to allocate marketing funds to the more “productive” uses. Such figures are not accurate enough to support such decisions.

I’d rather use non-monetary measures such as correlations between different kinds of touches and ultimate results. These can highlight the connections between early and later touches without providing financial values that are easily misapplied. Maybe this is just wishful thinking, but perhaps refusing to provide unreliable financial metrics will even highlight the need for tests that can provide truly meaningful ones—thus helping marketers to make the necessarily investments.

So what do you think: is fractional revenue attribution of reasonable compromise or a harmful distraction? Let me know your thoughts.

Doughnuts and Pizza Slices: Analyzing Consolidation and Competition Among Software Vendors

Summary: One way to understand consolidation and competitive trends affecting marketing software is to look at systems across several dimensions: how closely they relate to customers; whether they are operational or analytical; and whether they support online or offline activities. Combining these provides interesting insights into who competes with whom and what they're likely to do next.

On Wednesday, IBM announced formal completion of its acquisition of Unica. On Thursday, the New York Times reported speculation that Microsoft could buy Adobe.

Coincidence? Yeah, probably. And probably nonsense to boot.

But from my admittedly marketing-centric view of the world, Microsoft / Adobe makes more sense than one might think, as did IBM / Unica. Here’s how I think of things:

If you consider software applications from the view of customer relationships, they form a set of nested circles -- or perhaps a pile of doughnuts seen from above. At the center is the universe of potential buyers. The applications that reach these anonymous masses are applications that manage advertising.

The next circle holds marketing applications, which deal with both identified and unidentified prospects. The circle surrounding that holds CRM systems, which deal with identified customers as well as prospects. Surrounding that are ERM systems, which encompass both customer-facing and back-office applications. You can further extend the model by adding a circle for software platforms (operating systems and databases) and another for hardware.


Each larger circle can include the functions within the smaller circles. Thus, a marketing automation system like Unica or Aprimo includes advertising management; CRM systems like Salesforce.com provide marketing automation; and ERM suites like SAP and Oracle include CRM. Operating systems, databases and hardware support them all. In practice, the specialists in each field tend to be better than components of the larger surrounding suites: this is the essence of a “best of breed” strategy.

So far so good. But a system's relation to customers is just one dimension. Systems can also be classified functionally as operational or analytical, and as dealing with online or offline activities. If you combine those in a two by two matrix, this results in four classes of systems, which correspond nicely to real-world products: online operations (Web site management and ecommerce), online analysis (Web analytics), offline operations (traditional ERM systems) and offline analysis (business intelligence).


Things get really interesting (to me, at least) when you combine these two models. A complete solution for any application includes all four of the matrix quadrants: operations, analytics, online and offline components. So the application's "doughnut" extends through each quadrant.


The other way to look at this is to treat all systems within each quadrant as a unit. Keeping with our junk food theme, let's call those pizza slices.


I find the combination of doughnuts and pizza slices a useful way to think about the relationships among industry vendors. Functional systems tend to start out as pizza slices: general solutions that cut across all applications within their quadrant. Applications typically start out as doughnut quarters: that is, specialists within a single quadrant, usually operations. For example, CRM systems started out mostly as offline operational solutions for call centers and sales automation; marketing automation began largely as campaign management for offline contacts by direct mail and telemarketing.

Functional vendors expand first by thickening features within their original quadrant and then by spreading into adjacent quadrants. Thus, offline operational systems can grow either by adding offline analytics or by adding online operations; online analytical systems can grow by adding online operations or offline analytics; etc.

Applications vendors expand by first completing their own doughnut and then moving into adjacent doughnuts, typically inward: ERM vendors beef up their CRM capabilities (e.g., Oracle buys Siebel Systems); CRM vendors add marketing capabilities (Pegasystems purchases Portrait Software); and marketing automation vendors add advertising support such as planning and marketing resource management (Unica buys MarketingCentral). It’s harder to move in the other direction, since the vendors in the surrounding circles are typically larger.

What makes IBM / Unica so interesting is that IBM has been buying pizza slices (CoreMetrics, Sterling Commerce, Cognos, SPSS) while Unica is a doughnut. The combination is tough to digest. Do you slice up Unica’s various components and reassign them to the Web operations, Web analytics and business intelligence units? Or do you keep the doughnut together and enrich it with parts of the other products? What happens to that little offline operations slice (direct mail, call center, etc.)? And do you fill in the center (advertising support) with something more substantial?

Adobe started as a specialized application for offline operations (printing), which would make it a thin pizza slice. It has grown by thickening its offline features and, more recently, by expanding into adjacent slices: online operations and, with the Omniture acquisition, online analytics. It has also narrowed its focus towards the center of the pizza, on the marketing and advertising doughnuts.

This narrowed focus is what makes Adobe an interesting partner for Microsoft. Microsoft doesn’t have much of the Web analytics slice and would like to strengthen its position in the marketing and advertising doughnuts. The blogger who called the Microsoft rumor “nonsense” suggested that Google is a more likely partner, basically as an anti-Apple move. That makes some sense, but Google already lives in the online marketing and advertising slice, so Adobe would just thicken their presence. Google would like to complete the offline portions of its marketing and advertising doughnuts, but Adobe doesn’t help much there. And I don’t think Google has much interest in moving into Adobe’s other slices.

The "junk food chart" offers quite a few other insights. One is the opportunity for many marketing automation vendors to grow by adding more advertising support -- a major weakness in most products. Another is the likelihood that Web site vendors and Web analytics vendors will themselves push more actively into marketing automation. A third would be the challenge that big online vendors will face in growing if they don't more into offline operations like CRM. You can also plot individual companies on the chart to see how they stack up against competitors both within and outside their existing markets. It's interesting stuff and a great way to work up an appetite.

Four Must-Have Metrics for Marketing Measurement

Summary: Four critical metrics tell you most of what you need to show the value of your marketing efforts and to optimize your results. And, here's a funny picture.

There’s still time to sign up for my October 7 Webinar on stage-based marketing measurement (sponsored by Marketo and hosted by the American Marketing Association). During my extensive, um, research, I was very pleased to find the following picture to illustrate the concept of stages:


I like this picture both because it's amusing (a major priority) and also because it illustrates that stage definitions are constructed, not discovered. (I suppose the proper science is that evolutionary stages are objective facts, in which case our monkey friend in the photo simply has it wrong. But the deeper point still stands: whether it’s evolutionary stages or purchasing stages, someone imposes conceptual order on the jumble of reality.)*

If the picture isn't enough reason to attend, the Webinar will also present four essential metrics of stage-based marketing measurement. (Quick review: stage-based measurement tracks the ability of marketing programs to move leads through stages in the purchase process. This is more meaningful than attributing some fraction of the final revenue directly to each program. I’ll cover this in the Webinar and also discuss it in a recent whitepaper Winning the Marketing Measurement Marathon).

In case you can’t attend the Webinar, I thought I’d share the four metrics here.

1. Marketing ROI.
Purpose: to show the company’s return on its marketing investment.
Inputs: marketing costs and marketing-related revenue.
Metric: return on investment (= revenue / cost)
Comment: As with any ROI calculation, the trick here is to determine which costs are associated with which revenues. It’s always hard for marketers to know which revenues they helped to generate, but I’ll assume a database or digital environment that identifies the treatments applied to individuals and their actual purchases. In this situation, marketing ROI is calculated by summing all marketing costs for a cohort of customers sharing some common feature such as original source, acquisition date range or first purchase date. Note that a meaningful calculation must also include spending on people who never purchase, so a cohort based on purchase dates must somehow include non-buyers.

2. Program ROI
Purpose: measure the relative performance of individual marketing programs.
Inputs: incremental marketing cost, incremental revenue
Metric: incremental ROI
Comment: Obviously the key word here is “incremental”. Marketing programs exist in the context of other activities that influence buyer behavior. The only thing you can really measure is the incremental change that occurs when a particular program is added or removed from the mix. Combined with incremental costs, this gives an incremental ROI for the program. Spending more on high ROI programs and less on low ROI programs is how marketers optimize their results. Remember, though, that ROI is just one part of the equation. In practice, marketers must balance it against considerations such as revenue goals and marketing budgets.

Incremental measurement requires formal tests that compare performance of two similar groups which differ only in whether they received a particular program. These tests can cover any type of program, including nurture programs that don’t acquire new names. Proper measurement must track through the end of the buying cycle, since a program’s impact on early stages might vanish or even be reversed at later stages. One common example: a free introductory offer that yields higher initial response but doesn't add to the final number of paying customers.

3. Stage Results
Purpose: understand movement of leads through the buying stages
Inputs: marketing costs per stage, conversions (= number of leads that move to the next stage), conversion time (= time in stage before conversion to next stage; a.k.a. velocity), lead inventory (=number of leads in each stage)
Metrics: conversion rate, cost per conversion, average conversion time
Comment: These statistics describe how leads are moving from one stage to the next. The information is used to project future behaviors, to identify problem stages, to track changes in stage performance, and to compare the effects of marketing programs. Where leads in different cohorts (based on original source, acquisition date, marketing treatments, etc.) behave differently, statistics should be gathered separately for each cohort.

One statistic you can't calculate is the ROI for stage investments. This is counter-intuitive: stage ROI should be possible because you're making investments at each stage and the investments produce leads with higher values. But in fact the aggregate value of a cohort of leads remains the same as they move through the stages; all that happens is that unproductive (i.e., valueless) leads drop out. That is, even though the value per lead increases, there is no increase in the value of all leads combined. Without a value change, you can’t calculate a return on investment.

(Actually, there is a bit of value change as leads move through the stages because leads in later stages will need less additional investment to reach the final sale. But the expected revenue for the cohort stays constant. Of course, to the extent that a particular marketing program creates an incremental change in total value, this can be measured like any other program ROI.)

4. Revenue Forecast
Purpose: estimate future period revenues (by week, month, quarter, etc.) from the current lead inventory.
Inputs: lead inventory per stage, conversion rate per stage, conversion time per stage
Metric: revenue forecast by period
Comment: Revenue projections are among the most critical of corporate statistics. The stage-based approach allows more accurate projections of revenue over time, starting with the current lead inventory and known stage statistics. If the projections can distinguish marketing-generated leads from other leads, they can also give a concrete measure of the value that marketing has provided to the organization. If leads from different cohorts behave differently, the projections need to use separate assumptions for each group.

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* Platonists and creationists, with their respective theories of absolute Forms and divinely-created immutable species, might argue that species actually do have an independent existence. They're wrong.

Do Small Businesses Need Marketing Automation?

Summary: Vendors who target small businesses include provide functions beyond traditional marketing automation. This helps business owners who need to generate revenue as efficiently as possible. But larger firms need to be efficient too: so expect all marketing automation systems to eventually expand in similar ways.

The replies are rolling in from the survey of vendor features that I mentioned last week. (Reminder: you can upload the 150+ questions for your own RFP from www.raabguide.com.)

One interesting reaction has come from vendors serving the smallest companies (I’m talking really small here -- under 10 employees). These include Genoo, Hubspot, Infusionsoft and OfficeAutoPilot. A couple have noted that my questions only cover standard marketing automation functions (email, landing pages, nurture campaigns, lead scoring, CRM integration and reporting), while their products offer additional functions. The most common added function is sales force automation, but some also offer different combinations of e-commerce, order processing, customer support, blogging, Web site optimization and paid search.

On one level, this broader scope makes perfect sense. Small companies don’t have the money to pay for multiple systems and, probably more important, lack the technical resources to integrate them. In addition, most small firms have pretty basic needs, so even the “light” editions of full-featured products like Salesforce.com can be overkill.

But if small companies really want a single system, why hasn’t one grown to dominate the marketplace? Vendors like NetSuite do offer such products, but they’re not targeted at very small businesses. Rather, the most successful small business systems tend to do one thing: think accounting (Intuit Quickbooks), Web hosting (Godaddy), email services (Constant Contact) or CRM (Salesforce.com).

Some of these vendors have tried to poach on other territories, but without much success. I think that’s because there is relatively little interaction between the different systems. As a result, small businesses haven’t felt much pain from keeping them separate.

Marketing among very small businesses is often limited to a bit of local advertising and a Web site. Among those who use actual marketing systems, the most common are simple outbound email. More aggressive businesses might add auto-responders such as Aweber, with pricing as low as $19 per month for 500 subscribers. From there, it's a logical progression to the small business marketing automation vendors I mentioned earlier, although the big jump in prices poses a hurdle: costs start upwards of $200 per month.

The progression from outbound email to auto-responder to nurture campaigns and the rest of marketing automation makes perfect sense, corresponding to new marketing efforts as a business grows more sophisticated. But broader scope inevitably encroaches on other existing systems.

In the case of marketing automation, landing pages encroach on Web hosting and search engine optimization vendors while marketing databases encroach on CRM and social media management. As the elephants in those fields begin to notice flea bites from marketing automation systems, they’ll eventually consider extending their own systems in return. We’ve already seen this with Oracle’s purchase of Market2Lead (now apparently embedded in the Oracle OnDemand CRM system) and, depending on how you look at it, in IBM’s purchase of Unica. We’ve also seen various Web content management vendors (Marqui, SiteCore) add marketing functionality.

Generally speaking, nipping the ankles of elephants is more likely to get you crushed than make you rich. But the case may be different for marketing automation vendors. This will depend on showing that they’re replacing a cost center (e.g. Web hosting, customer service) with a revenue generator, or that their integrated approach yields more revenue than the current isolated systems (e.g. sales automation, search engine marketing, outbound email).

This means that the small business vendors who feel my survey is too narrow are right. Their buyers need more than traditional marketing automation features. I expect vendors in that space will continue to expand their scope accordingly, even as vendors in other spaces add marketing automation features for the same reason. And I expect this broader scope will eventually percolate upwards to larger companies, although this will happen more slowly because of organizational barriers to cooperation.

Webinar and White Paper on Marketing Measurement

Marketo yesterday released Winning the Marketing Measurement Marathon, a white paper that I wrote for them. This was timed to coincide release of their new Revenue Cycle Explorer, which adds advanced reporting to their Revenue Cycle Analytics line. (See my August 3 post for more details on Revenue Cycle Analytics.)

I'll also be speaking with Marketo in an October 7 Webinar hosted by American Marketing Association. Please join us.

150+ Questions for Your Marketing Automation RFP

Summary: I've posted a list of nearly 200 RFP questions that I hope many people will adopt to their own needs. If it's used widely, buyers and vendors both benefit.

Death, taxes and RFPs. For business software vendors, all three are equally inevitable – and it's not clear which they dislike most. In my on-going humble efforts to serve the industry, I’ve posted nearly 200 detailed questions that could serve as the backbone for many RFPs. The list is available in the Resources section at www.raabguide.com; it’s free once you register.

The thought here is that everyone would benefit if many buyers worked from a standard list. Vendors could prepare one set of answers and buyers would get faster and more reliable responses to a thorough set of questions.

I do have a minor ulterior motive in posting this list. Those of you familiar with the Raab Guide to Demand Generation Systems know it already contains very detailed information on major vendors (Aprimo, Eloqua, Genius.com, Manticore Technology, Marketbright, Marketo, Neolane and Silverpop). But preparing each entry takes a tremendous amount of work and, frankly, it’s hard to make sense of the results. So I’ve come up with a list of mostly yes/no questions that highlight key differences among vendors. This is much easier to prepare and probably easier for buyers to use. I’ve sent this list to two dozen vendors and will publish the results in a new report as soon as the replies come back. Posting the list will encourage the vendors to participate, since they can expect other people to ask the same questions.

Obviously I wouldn't have planned the new report if I didn't think it was worthwhile. Still, the approach has several drawbacks. Here's how I'm dealing with them.

- It relies on the vendors to answer accurately. Outright puffery aside, written questions are open to interpretation and you can bet the vendors will give themselves the benefit of any doubt. The best I could do was to make the questions as specific as possible. Here’s a typical example:

share assets across campaigns: marketing materials such as templates, emails, Web pages and forms, content blocks and links can be shared across campaigns. “Sharing” means the component is stored outside of a specific campaign in a central repository which is accessed during campaign development. The system may either create an independent copy of the item for each campaign, meaning changes to the local copy or the master do not affect each other, or it can establish a link between the campaign and the master copy, meaning any change to the master will be reflected in all campaigns using that item.

Hopefully this is precise enough that a “yes” actually means something. I’ve also described a couple of alternative ways of solving the problem, in the hope that this will encourage buyers to dig deeper on their own.

- The list is generic. Buyers have different needs. Each will care about only some of the questions on the list and about other questions I’ve left out. Of course, I can (and just did) warn buyers to select the items that matter to them. Beyond that, I’m creating separate weights for how important each answer is to small, medium and large marketing departments. That will let my final report include summary scores that help identify which vendors are best suited for each type of buyer.

Naturally, people will disagree with some of my weights. But that’s a healthy debate. In fact, prioritizing requirements is the most important discussion buyers can have when selecting a product. So bring it on.

- Not everything can be scored. Usability, vendor support and reliability are just some items that are hard to capture in yes/no questions. They also can change pretty rapidly. I can’t offer a solution other than to stress the importance of buyers doing their own research through demonstrations (based on their own scenarios), reference checking and conversations with other users.

In theory it should be possible for social media to provide a public forum for such issues. But I don’t see a way to do this without having self-interested parties distort the results. Suggestions, anyone?

* * *

Speaking of suggestions, I’m sure people will think of questions that should be added. I actually have a few myself. Changes will have to wait because the current set has already gone out to vendors. But if this concept generally works, we can expect future iterations of both the report and the master list. So there will be time for updates. If this really takes off, perhaps the list can be maintained in a communal form such as a Wiki. Raab Associates does not need to own this.

Indeed, a truly ideal solution would be for vendors to post their answers on their own Web sites. That would give buyers clear, consistent information without issuing a RFP at all. I’m not holding my breath for that one, however.

In any case, please download the list, use it as you see fit, and let me know what happens. As near as I can tell, everybody wins.

True Influence's LeadPAC Offers Pay-Per-Click Email. Think About It.

Summary: LeadPAC lets marketers pay for email responses as easily as they pay for search responses. It’s a major improvement over traditional lead generation.

I can’t recall a vendor with the same business model as LeadPAC from marketing automation vendor True Influence. That's pretty rare in itself, but what really matters is that LeadPAC's model offers some powerful benefits. That's worth some excitement.

So what, exactly, makes LeadPAC so special?

LeadPAC lets marketers order prospect lists based on segmentation criteria such as title, industry and company size. Nothing new there. The system will also send emails to those names without the marketer loading them into a separate system: a little harder to find but still far from unique. But here's the new part: users only pay for responses.

I’ve seen marketing agencies and direct response media that work on a cost-per-lead basis. But I’ve never seen it baked into the email engine of a marketing automation system. If you're aware of a similar product, please let me know.

Of course, the classic pay-per-click medium is paid search, and above all Google AdWords. It's no accident that LeadPAC resembles AdWords in both function and appearance. True Influence CEO Brian Giese said the goal with LeadPAC is to give marketers a way to create real leads quickly, using AdWords as a model.

Like AdWords, LeadPAC lets clients set a target cost per name and a weekly budget for their spending. Again like AdWords, the system keeps sending promotions – in this case, emails – until the budget is reached. The system further resembles AdWords in having some automated intelligence: in the case of LeadPAC, this means spacing the emails, limiting any name to one contact per week, and taking into account different response rates based on time of day and day of week. One thing it doesn't do – yet – is build predictive models to select the most responsive names within the specified universe. Nor is pricing based on AdWords-style bidding: clients pay a fixed fee ranging from $10 to $30 per name depending on the level (senior executives cost more than department managers). Just to be clear, that's all they pay: there's no fee for the marketing automation system itself.

Setting up a campaign in LeadPAC involves three basic steps.

- Select the audience by choosing from personal and company attributes including title, department, level, location, company size and ownership. The prospects come through LeadPAC’s partnerships with major consumer and business list vendors.

- Define the email to send, starting either with vendor-provided templates or by uploading a client's own template. LeadPAC provides a typical editor and standard features such as previewing the email and sending test messages.

- Define the campaign start date and weekly spending limit. Once clients submit their campaign, LeadPAC reviews it for content, reasonableness and compliance with anti-spam regulations.

Clients receive lists of responders on a regular basis. They can load these into any marketing automation system or True Influence's own marketing automation product, which lets them run multi-step nurture campaigns, apply lead scores, and synchronize data with Salesforce.com.

The beauty of all this, as with AdWords, is simplicity. Clients still need to specify their audience and create their email offer. But the cost-per-response model saves them the effort of managing details such as importing and refreshing lists, spacing their mailings over time, and tracking which segments respond best. This takes usability beyond the interface, by actually eliminating tasks rather than just making them easier to do. It makes email lead generation possible for companies that lack even basic skills in managing such programs.

Indeed, clients paying only for responses have little incentive to optimize their list selections or their copy. The vendor alone bears the cost of low response rates. This is probably part of the reason that True Influence reviews the campaigns for reasonableness.

Interestingly, one cure for this problem is to have clients do even less. If TrueInfluence deployed automated response modeling, it could avoid having anyone define target segments and still improve its response rates. Add some automated copy testing and marketers would be about as close to push-button lead generation as I can imagine.

Of course, email is just one part of lead generation and an even smaller part of full-scale marketing automation. So marketers will have plenty of work whether or not they use LeadPAC. But as an example of ways to really make marketing easier, LeadPAC is food for thought.

Hard Data to Justify Your Marketing Automation Investment

Summary: So you want some hard numbers to prove the value of marketing automation? Here's a bunch.

A client asked yesterday if I had some benchmark information to justify the cost of her marketing automation project. This set off an hour-long scavenger hunt through my hard drive, followed by sporadic afterthoughts later in the day. Since this is a question that comes up pretty often, I figured I’d share some of the more useful results. If anyone else cares to expand on this list, even better.

1. Neolane “Making the Business Case for Enterprise Marketing Software”. This paper contains step-by-step instructions for building a business case and even a link to a slide deck you can use as a template. It includes five pages of properly sourced industry statistics from Aberdeen, Forrester, Gartner and SiriusDecisions. Some of the more helpful tidbits:

• 10% or greater revenue increase within six to nine months In 2009 for companies that automate lead management processes (Gartner, “The Top Six CRM Marketing Processes for a Cost-Constrained Economy,” 2008)

• 15% reduction in five-year total cost of ownership for companies that integrate inbound and outbound marketing (Gartner, “Cost Optimization in Multichannel Campaign Management,” 2009)

• 25% or greater improvement in Waterfall Conversion Rates for companies with best-in-class processes vs. companies with average processes (SiriusDecisions, "Field Marketing 2.0: The Heart of Growing Conversion Rates," 2008)

	Best in Class	Average	% higher
Inquires to Marketing Qualified Leads (MQLs)	nearly 10%	3.9%	150%
MQLs to Sales Accepted Leads (SALs)	nearly 75%	58%	29%
SALs to Sales Qualified Leads (SQLs)	nearly 61%	49%	24%
SQLs to Closed Business	31%	23%	35%

Incidentally, SiriusDecisions reported newer but very similar figures in the recent Neolane-sponsored Webinar 'Making the Business Case for Marketing Automation'.

2. Eloqua “The Business Case for Integrated Demand Generation” offers data from Forrester, CSO Insights and several Eloqua clients. The data is a couple of years old but still valid. Statistics include:

• 16.5% higher campaign response rates and conversion rates

• 50% decrease in time to execute campaigns

• 100% increase in number of campaigns

• 85% decrease in cost per lead

• 18% higher revenue

• 9.3% higher sales quota achievement and 7% higher win rates

• 100% increase in deal size

3. Aberdeen Group has published many studies related to marketing automation. These follow a standard format: use performance to classify companies as best-in-class (top 20%), average (mid 50%) and laggard (bottom 30%) companies, and then look at differences the business processes and technology. This makes sense if you want to profile top-performing companies, but it also means Aberdeen never directly compares results of companies that use a particular type of system to companies that don’t. That makes it a bit harder to use Aberdeen data to justify a marketing automation investment. But lots of people do anyway.

Aberdeen Group, “Lead Lifecycle Management,” July 2009

	Best in Class	Average	% higher
Return on Marketing Investment	75%	45%	67%
Lead to Sales Conversion Rate	8%	3%	167%
Average Increase in Response Rate	12%	7%	71%

Aberdeen Group, “Crossing the Chasm with Automated Lead Management”, January 2010

	Best in Class	Average	% higher
Average Revenue Growth	59%	9%	556%
Average Email Clickthrough Increase	23%	6%	283%
Average Lead to Sales Conversion Improvement	23%	13%	77%

Aberdeen Group, “Sales Intelligence: Preparing for Smarter Selling”, February 2010

	Best in Class	Average	% higher
Win/Loss Rate	34%	26%	31%
Lead Conversion Rate	27%	21%	29%
% Reps Achieve Annual Quota	52%	44%	18%

Aberdeen Group, “The Convergence of Sales and Marketing Technologies”, December 2007
(These figures differ a bit from the other Aberdeen data. First, they compare Best-in-Class to all other companies, rather than Average performers. Second, they also report improvements that respondents specifically said were “a result of integration between marketing technologies and CRM”.)

	Best in Class	Non-Best-In-Class	% higher
Bid-to-Win Ratio Increase	24%	18%	33%
Lead Conversion Rate increase	23%	16%	44%
Average Revenue per Account increase	15%	12%	25%
Average Deal Time decrease	13%	10%	30%
Average return on marketing campaigns inrease	27%	13%	108%

4. CSO Insights publishes highly regarded studies of sales performance. I don’t have their most current data available but figures from earlier years are widely cited.

CSO Insights, “Optimizing Lead Generation: What’s the Payback,” 2006

	Best in Class	Average	% higher
% reps making quota	66.1%	56.8%	16%
% firms w/lead to first call conversion > 50%	48.7%	32.2%	51%
win rates	55.6%	48.6%	14%
% firms w/ramp-up time for new sales people of 7 months or more	49%	65%	-25%

5. Two final tidbits on the every popular question, What’s lead nurturing worth?

Marketo, in its Webinar Secret Sauce for Demand Generation, generously revealed its own results comparing nurtured vs. non-nurtured leads. The key finding here is that nurturing tripled the number of “slow” leads (taking longer than one month) that eventually reached Marketing Qualified status:

	with nurturing	without nurturing	% higher
Fast Leads (MQL<1>	20%	20%	0
Slow Leads (MQL>1 mo)	20%	6.67%	200%

Market2Lead (before they were absorbed by Oracle) told me they had analyzed their own customers' data and found:

• 9% higher average deal size for nurtured leads vs. non-nurtured leads

• 23% shorter deal time for nurtured than non-nurtured leads.

DataMentors Offers Low-Cost Marketing Database

Summary: DataMentors has launched a low-cost marketing database product with limited functionality. It's an interesting test of what marketers really want.

Marketing database software and service vendor DataMentors last week tossed its hat into the ever-more-crowded ring of marketing automation for small(ish) businesses. The new product, DataPoint, is a limited version of the company’s flagship PinPoint system. Like PinPoint, it combines DataMentor’s DataFuse data cleansing and matching software with a private-label version of SmartFocus campaign management and analysis. The difference is that PinPoint scales to tens of millions of customer records, while DataPoint is limited to 100,000 customers, one million prospects, fifty data fields and quarterly file updates. Pricing is $2,000 per month, probably less than half what most marketing automation vendors charge for a 100,000 name installation.

Wait. Back up. Did I just write quarterly updates? Fifty fields? Warm up the eight track and fluff out my mullet, modern marketing automation products don’t have those types of limits. Nor does DataMentor’s own PinPoint. What's going on here?

Even though DataPoint includes the quite sophisticated campaign management features of SmartFocus, it’s really less a marketing system than a tool for data analysis. Marketers without any access to their customer data will be happy to load their files into DataPoint and do all the cool slicing and dicing that the SmartFocus engine makes easy. They might produce some outbound campaigns as well, but lack of fresh data means these are going to be pretty generic.

It’s tempting to relate this old-school approach to the origins of DataMentors itself: it was co-founded by industry veteran Bob Orf , the “O” is OKRA Marketing, a pioneer marketing database vendor founded in 1987 when small records and infrequent updates were the rule. But DataMentors has kept up with the times: Orf says that most PinPoint systems are updated daily or weekly, and the company even offers real-time, Web service access to its data quality system. And of course DataPoint users can upgrade to a more powerful version if they’re willing to pay.

That being the case, it’s probably more useful to think of DataPoint as part of the market for on-demand business intelligence – competing in some ways with companies like Birst, PivotLink and Oco. Although those systems are more flexible than DataPoint, they share its low deployment cost and focus on analytics rather than marketing execution.

One key advantage DataPoint has over those systems is integration with DataFuse, a highly sophisticated matching engine that was DataMentor’s original product and remains the cornerstone of its business. Another difference is that DataMentors has recently licensed consumer and business databases for its clients to use as prospect lists or to enhance their own files. DataFuse users can access these for an extra $1,000 per month – another highly competitive rate. DataPoint clients will also benefit from the deep expertise of DataMentors staff, particularly in the banking industry.

A configuration like DataPoint is not something I would have expected in today’s market, where continuous updates, flexible data models and near-real-time customer interactions are standard operating procedure. But I have tremendous respect for the DataMentors team and trust them to know their market. It will certainly be interesting to see how well DataPoint works out for them.

LeadForce1 Adds Mind Reading to Marketing Automation

Summary: LeadForce1 infers Web visitors' intent and sales stage from the contents they read. It combines this with standard B2B marketing automation features to provide better-qualified leads to sales people.

The B2B marketing automation industry has reached the stage where product features are similar and companies compete primarily on business and marketing savvy. This intrigues me in its own way although it's not as much fun as looking at cool new technologies. Of course, if you’re a vendor offering a cool new technology, the stakes are higher.

Such is my take on LeadForce1. The company’s product touches the standard marketing automation bases: outbound email, landing pages and forms, lead nurturing, scoring and integration with Salesforce.com. It adds some less typical features for telephone lead qualification, which makes sense for reasons we’ll get to later. But its most intriguing claim is that it supplements the usual Web behavior tracking with reports on visitors’ intent and sales stages.

LeadForce1 does this by capturing the text that visitors hover over, click on, highlight or copy, and comparing it with keywords that indicate intent and sales stage. The system starts with a standard list of keywords which clients can modify to match their business. “Intent” is usually related to customer interests, such as a particular problem or product line. “Sales stage” uses a standard progression of research, consideration, trial and purchase, which clients can change if they wish. Because B2B purchases are often made by a team of specialists, the system assigns interests separately to each individual but assigns a single sales stage to everyone from the same company.

Intent and sales stage reporting are not merely random cool features. They help rank leads and send alerts as part of a larger focus on delivering qualified names to sales people. Related capabilities include reverse IP lookup of the company of anonymous visitors, connections to Jigsaw to provide contact names of those companies, and the aforementioned telephone lead qualification. In fact, LeadForce1 is targeted in part at Web publishers who collect leads and resell them to other businesses. Its ability to enhance these leads with intent and sales stage makes them more targeted and, thus, more valuable. This is why LeadForce1 sometimes refers to itself as being in the “lead exchange” business, although it currently seems to prefer the label “marketing automation 2.0”.

Sales people would certainly benefit from knowing the intent and sales stage of their leads. Of course, you do have to wonder about the accuracy of the information. LeadForce1 currently does some response tracking but mostly relies on clients to decide for themselves which keywords are effective. It does plan to add more rigorous analysis using the data it already collects. The same data will also be used to measure the impact of marketing contacts on changes in intent and sales stage and to forecast movement of leads from one stage to the next. The results will be interesting and, assuming the system proves reasonably accurate, should be quite valuable.

LeadForce1 was launched about two years ago and currently has 224 customers. Pricing is based on the modules purchased, number of users and number of leads. Monthly cost can be as low as $500 although a typical clients spends about $3,000 per month.

With so many customers, and growing quickly, LeadForce1 may survive the marketing automation industry consolidation as an independent firm. If not, its technology is useful enough that there's a good chance it will find its way into other systems.

IBM Buys Unica: Will Acquisitions Now Shift to B2B Marketing Automation?

IBM announced this morning that it was purchasing enterprise marketing automation leader Unica for $480 million, more than double the company’s current stock market valuation. This is wholly unsurprising: as the last and only big independent left in its space, Unica was obvious acquisition bait. It was also a motivated seller, since it faced an increasingly impossible struggle to fund the product enhancements necessary to compete with the likes of SAS, Teradata and Siebel / Oracle. Conversely, IBM is on a customer intelligence acquisition spree that has already included Coremetrics Web analytics, Sterling Commerce B2B integration and Cognos and SPSS business analytics.

There’s been some comment (I’m looking at you, Jonathan Block of SiriusDecisions) relating the IBM/Unica deal to consolidation with the B2B marketing automation industry. Sorry, but I don’t see a connection. As I discussed in my own post on industry consolidation, Unica belongs to the class of marketing systems that serve consumer marketers. Its acquisition is basically the completion of the consolidation of that space, not the start of consolidation among B2B marketing automation vendors. (I’m overstating a bit: there are a couple of B2C vendors left including Neolane, Alterian and SmartFocus, although the latter two use proprietary database engines that would make them difficult to integrate into a larger enterprise suite. Probably the most prominent survivor is Aprimo, but they’re more B2B.)

If there’s any connection at all, it’s that this acquisition may spur Web content management vendors to accelerate their own acquisition of marketing automation capabilities. I discussed this a bit in my post on Adobe’s acquisition of Day Software and in the industry consolidation post. Given that there are so few B2C marketing automation vendors left, the Web content management players are almost forced to consider buying a B2B marketing automation system. (The other option would be email vendors like ExactTarget and Responsys.)

This isn’t really a bad thing: the B2B marketing automation products have pretty much all the capabilities of the B2C systems and then some. On the other hand, most B2B systems are designed for smaller data volumes and have less flexible data structures.

The bottom line is probably that the upper tier B2B marketing automation vendors (Eloqua, Silverpop, Aprimo, possibly Marketbright) are next in line to be bought. But you already knew that.

Genius.com Offers Free Edition: How Much Does It Lower True Cost of Entry?

Summary: Genius.com has added a free version of its system. But I think its strategy of offering an intermediate product between email marketing and full marketing automation may actually be more useful in attracting new customers.

On Monday, Genius.com announced “the first free, instant-on demand generation solution”, a description carefully crafted to distinguish their offering from the free version announced by LoopFuse in June. The key term here is “instant-on”, which Genius defines to mean “instantly integrated website tracking, email marketing and social media campaign tracking” along with fully automated integration with Salesforce.com, including custom fields in standard objects. LoopFuse also provides automated Salesforce.com integration, but doesn’t have Genius’s Web tracking technology.

Since Genius has highlighted the issue, let's dive into its Web tracking. How it works it this: Genius creates URLs that send visitors to a proxy server, which in turn forwards their page calls to the client’s actual Web site. The proxy server continues as an intermediary through the entire visit, so it can track all pages the visitor sees. The same method is used in Web advertising, email links and linked embedded within social media messages. Because the tracking is done by the proxy server, there’s no need to make changes (i.e., add a tracking tag) to the Web site itself. This is what makes the tracking truly “instant”.

So far so good, but let’s be clear: the proxy server only captures visits that begin with a Genius-generated URL. So if I respond to a Genius-generated email, all the details of my initial visit are captured. But if I come back later by typing www.genius.com into my browser or searching for Genius on Google, the proxy server isn’t involved and Genius won’t know about me unless a traditional tag has been added to the Web pages. Genius does support such tags but now we’re beyond the realm of “instant on” and, indeed, of the free Genius system.

Genius' tracking technology is clever and unique enough that they’ve been able to patent it. But conventional marketing automation systems automatically track their own emails, landing pages and Web forms, also without touching the corporate Web site. This is not quite as powerful (or cool) as the Genius approach, but does reduce practical difference.

I wouldn’t have gotten into this had Genius not made “first free, instant-on” the focus of its announcement. What really matters is that they have a free offering, which implies two things about the system itself:

- they can provide fully automated, instant provisioning, which means their technology is sophisticated and their operating costs are low.

- the system is easy enough that new clients can use it with a minimum of support. Genius Marketing Vice President Scott Mersy told me yesterday that the company expects most users will learn what they need from a sequence of educational emails and online materials. He did add – and this and this is important – that limited phone support will be available to free users.

What does the free offering mean from an industry standpoint? I discussed this at some length in my June post on the Loopfuse’s free product. Bottom line: a free version will gain vendors some customers they wouldn’t get otherwise, but probably not create a huge difference in their market share or growth of the market itself. A marketing automation system is a highly considered purchase. Buyers recognize they will make a substantial investment in time and materials, so an extended free trial (which is what most free versions boil down to) is just one of many factors they weigh in selecting a starter system. Free systems may also attract companies so small that the free system is all they need. But those companies will never be a source of much revenue, even if the vendors manage to sell them some additional services.

In other words, the true purpose of a free system is to lower buyers' full cost of entry enough to attract a large number of new customers. This cost includes not just the software, but also the time spent to learn and operate the system, to develop new campaigns, and to design new business processes. This is why automated provisioning and self-service support really matter: they imply time savings for the users as well as the vendor.

In terms of entry costs, it's significant that Genius’ free version is based on their “Demand Generation” system, which occupies a middle ground between their “Email Marketing” and “Marketing Automation” products. The company provides a handy comparison table which shows that Demand Generation includes social media and Web tracking, triggered actions, Web forms and progressive profiling, but not drip campaigns, automated lead nurturing, lead scoring and landing pages. That is, it captures and tracks leads but doesn’t do sophisticated lead nurturing. This greatly lowers entry costs by asking users to start with a smaller, simpler set of tasks.

Although competitors will no doubt cite the limits of Genius Demand Generation as a weakness of Genius’ free offering, Mersy said the company will actually make the full Marketing Automation version available to free users who want it. He said they chose to start free users on the simpler system only to simplify their initial deployment.

That’s probably a very clever move – as is offering the Demand Generation version. Many marketing automation vendors have a “lite” system that is similar to the Genius Email Marketing, which includes Web behavior tracking and Salesforce.com integration as well as outbound email. But the next leap is typically to full marketing automation. An intermediate product provides a smoother growth path for marketers who want to start small and slowly expand their marketing automation efforts. This addresses two key obstacles to first-time purchase:

- it lets Genius offer a substantially lower entry price than competitors, without dropping the price of its full system. Starting price of Demand Generation is around $800 per month, slightly higher than the $600 per month of Email Marketing but significantly below $1,100 per month for Marketing Automation.

- it lets marketers grow into the complete system at their own pace, rather than purchasing something that requires extensive campaign development and process redesign to use fully. Of course, marketers could also just not deploy these features in another system, but the psychology of that is quite negative.

It remains to be seen whether having an intermediate Demand Generation product really gives Genius a substantial competitive advantage. If it does, it won't last long because the approach could be easily copied. Still, Demand Generation represents a creative approach to a fundamental challenge in the market. For that reason alone, it’s worth watching.

Day Software Acquisition Adds Some Marketing Features to Adobe, But Gaps Remain

Summary: Adobe added Web content management, digital asset management and social media features to its arsenal when it purchased Day Software last month. But it still lacks key pieces of a complete marketing solution.

Last month, Adobe announced their $240 million acquisition of Web content management vendor Day Software. Adobe was already a major force in Web development through its Dreamweaver, Flash and ColdFusion products, not to mention Omniture for Web analytics. But Day fills out its line by adding enterprise-class content management, digital asset management and social (blog, Wiki, etc.) publishing. In fact, the fit is so obvious that it doesn’t seem to have generated much comment, at least among the marketing gurus I read.

But the significance to marketers may be greater than they think. Back in February, Day released its 5.3 version, which specifically aimed at letting marketers manage their Web promotions without help from technical specialists. Of course, this is a goal shared by so many vendors that it verges on cliché. In particular, it’s also one of the main benefits offered by the landing page, Web form and microsite features of marketing automation systems.

Still, as I’ve argued many times, it ultimately makes more sense for marketers to build their pages in the company’s core content management system than in separate marketing automation tools. This can only happen if the content management system provides the features that marketers need to do their jobs.

Day’s 5.3 release attempted to do this by adding targeting capabilities, including segmentation and segment-driven personalization. Segments can be based on anonymous visitor characteristics such as referring site, search keywords and geolocation; on history captured in a registered visitor’s profile; and on attributes of the pages viewed. Profiles can also be enhanced with non-Web data, such as purchase history.

As you might expect, Day does a particularly good job of tracking visitor activities within the Web site. The system uses Javascript on each page to track cursor movements and capture the details of what each visitors has looked at within the page. It can also read the visitor’s browser cache to check for visits to specified external sites, a technique that’s legal although many privacy advocates think it shouldn’t be. The system also supports multi-variate content testing, which can be related to customer segments or operate independently. Tests are judged on click-throughs, which are captured within the system.

Are these features really enough to replace a dedicated marketing automation system? Surely not: marketers still need to maintain a marketing database, send emails, respond to trigger events, score leads, and integrate with CRM. In fact, Day itself expects clients to integrate with marketing automation products for campaign execution. The system does have connectors that let marketers create their emails and Web pages within Day and use an external system to deliver them.

Day’s Chief Marketing Officer Kevin Cochrane told me yesterday that he sees marketing automation as separate from Day’s business of building “customer facing solutions”. But companies that want to integrate all their online (and ultimately offine) marketing will want to combine both sets of features. Although Adobe already owns many tools used in marketing departments, it lacks the campaign management features at the heart of marketing automation. I expect that Adobe and other major Web content management leaders will eventually acquire email and/or marketing automation vendors to fill the remaining gaps.

Don't Fix Your Marketing Process

Summary: In a constantly changing world, flexibility is more important than optimization. Marketers need people, processes and technology that allow them to react quickly to new opportunities.

The always-insightful Adam Needles is running a series of blog posts this week that summarize the “real state” of B2B demand generation. So far, his main points have been that the role of B2B marketing has expanded to cover the entire buying cycle from initial lead generation through closed deals and that new technology must be accompanied by changes in people, process and content to have an impact. Tomorrow’s post will apparently discuss the need to tie marketing efforts to revenue.

This is good stuff and well articulated, but industry gurus have been making similar points for a long time. The real question is what to do about it. HOW can marketers adjust their staffing and processes, given the practical constraints of time and budget? And can systems provide specific capabilities that will make the adjustment easier?

The conventional wisdom is that marketers need to become more efficient, more attuned to individual buyers’ movement through the purchase cycle, and better coordinated with sales departments. But although these are certainly valid goals, I think they understate the problem.

Specifically, they make an implicit assumption that marketers are facing a stable situation. This is what allows them to design a new set of processes and techniques optimized for that situation.
I’d argue that the situation is highly unstable. Marketers face continued rapid change in the methods and media they have available. In this situation, any optimized process will rapidly become obsolete. So, the key requirement is flexibility itself. The most successful organizations will be those whose people, processes and technology can most effectively exploit new opportunities as they appear.

(The classic example of the conflict between stability and flexibility is the competition between Ford and General Motors in the 1920’s. Henry Ford relentlessly, even obsessively, optimized his company to make Model T’s more efficiently. But even though Ford kept driving down his costs, he ultimately lost to a General Motors that was able to change its products more quickly. Just thought I’d throw that in there.)

What does an organization optimized for flexibility look like? I think it keeps its processes simple, so they can be easily adjusted. This may mean they’re broken down into many small, connected processes that can be changed individually without affecting the other processes around them. (“Modular” and “loosely coupled” are better terms for this but sound too geeky.)

It certainly means that results are measured closely and frequently, so successes and failures are identified quickly and exploited or discarded as appropriate. It also means the organization makes experimentation easy, in terms of funding, staff time and tolerance for mistakes. It probably suggests that staff members should be more generalists than specialists, which implies greater willingness to pay for training and perhaps wider use of outside resources to provide particular skills on demand.

From a technology standpoint, flexibility implies ease of integration with new data sources, marketing methods and external systems. That’s very different from one vendor trying to include as many functions as possible. (On the other hand, multi-function suites always do seem to win in the market, precisely because they require less integration. Perhaps this will change if integration itself becomes easy enough.)

Flexibility also implies greater ease of use, particularly in terms of setting up and modifying marketing programs and processes. The need for many small, loosely connected processes has some specific implications for interface design. The need for measurement also implies better reporting technologies – a topic that several marketing automation vendors have recently begun to address.

Circling back for a moment to staff skills, all this integration, process coupling and analysis seems to mean that those "generalists" are going to be more technically adept than today's marketers, even if they are not as specialized in terms of the particular media. I'd like to believe that really great technology and interfaces can reduce the level of technical skill required, but suspect that won't happen any time soon.

I’ll admit these are somewhat half-baked notions, since they were largely triggered by Adam’s posts this week. On the other hand, I’ve been thinking for quite some time that we need to move beyond just telling marketers to nail down their processes. Perhaps a recognition that we must manage in a period of continuous change is a good next step.

Marketo's Enterprise Edition and Revenue Cycle Management: Looking Under the Hood

Summary: Marketo continues to follow its own path. Enterprise Edition adds the complex security needed by large organizations but sticks to simple campaign flows. Revenue Cycle Management blazes an important new trail for others to follow.

I finally caught up with Marketo for a briefing on their Enterprise Edition (announced in March) and Revenue Cycle Analytics (announced in May). Since both are somewhat old news, and Marketo describes them in detail on its Web site, I’ll just make a few comments.

Executive Edition shows what Marketo believes is needed to service large marketing organizations. The most extensive enhancements provide finer-grained control over user rights. This is critical in large organizations, where regional and product groups may be responsible for different market segments and where users will have different functional specialties and approval authorities. Enterprise Edition supports these by adding user roles, “lead partitions” to control access to database segments and “workspaces” to make Marketo objects (contents, campaigns, lists, etc.) available to different user groups. User roles (but not lead partitions or workspaces) are now available in Marketo’s Professional Edition as well.

These changes are a big advance over earlier versions of Marketo, which distinguished only between users and administrators and let all users access pretty much everything. Enterprise Edition also adds a “sandbox” environment for training, testing and development – the sort of things that small companies might do on a live system, but large organizations cannot safely allow.

The other major big-company need that Enterprise addresses is more sophisticated integration with other corporate systems. Related features include LDAP integration with enterprise security systems and a Web services API to call Marketo functions and access its data.

Perhaps most interesting is that Marketo did NOT expand the complexity of its actual campaign flows. These remain fundamentally linear: that is, all leads follow the same flow from step 1 to step 2 to step 3, etc. Rules within each step can deliver different treatments to different segments, but everyone still moves to the same next step unless they leave the campaign altogether. Other enterprise-level marketing automation systems can create different branches within their campaigns, so different segments follow entirely separate paths. This makes it easier to design and visualize fundamentally different treatments for different types of leads, something that matters more in a large enterprise with many different lead types. I’ve always considered branching campaign flows to be one of the key requirements for an enterprise-level marketing automation system. It seems that Marketo disagrees.

(Actually, Marketo disagrees with much of the preceding paragraph. Everything in it is factually accurate, but I'm happy to clarify that (1) several campaigns can run simultaneously, sending leads through different flows and (2) steps within Marketo campaigns can remove leads or send them to other campaigns (3) Marketo can connect several campaigns to produce the same flows as single branching campaign in other systems.)

Revenue Cycle Analytics breaks some important new ground. As I commented in an earlier post on purchase funnel measurement, Marketo’s approach is not conceptually unique. The basic idea is to track leads through stages in a purchase funnel, which is similar to pipeline reporting in many sales automation systems. It just starts earlier in the process.

However, Marketo's implementation brings this reporting to a new level. Most specifically, Marketo has introduced a star-schema reporting database, which I’m pretty sure no other marketing automation system currently offers. (Market2Lead had something similar but is no longer sold.) This is important because the structure of an operational marketing database, which most B2B marketing automation systems also use for reporting, makes it hard or impossible to do the necessary time-based analysis.

Other components are similarly sophisticated. These include graphical models that track movement of leads through the stages, detailed analytics with specialized measures such as conversion rates and speeds, statistical projections based on current inventory and historical flow rates, and executive dashboards. The models capture more than a simple linear pipeline: they support skipping and backwards flows among stages, splits within flows for different lead types, complex stage definitions, and transitional stages where leads are processed and reassigned.

Marketo is also tackling the difficult issue of allocating revenue to multiple individuals and marketing touches. Its methods are not particularly advanced: credit can be spread evenly or based on marketing-assigned weights. But no one else has found a much better solution, particularly at the low volumes of most B2B marketing programs.

My only real complaint is that you can't actually buy it all today. Marketo is releasing Revenue Cycle Analytics in stages. The database itself was available for the May announcement and the modeling engine was released in July. Initial analytics are set for delivery this month (August), with the really cool projections and dashboards out during the first half of next year. This delay could prove costly, since funnel-based marketing measurement is a hot topic and other vendors could well build or partner to deploy something similar in the interim.

Pricing of Revenue Cycle Analytics starts at $1,500 per month and grows with database size. Incidentally, I don’t think they’ve published that figure anywhere before, so there’s a bit of news in this post after all. Huzzah.

Manticore Technology Sees Expertise as Key to Success as a Demand Generation Vendor

Summary: Manticore Technology released some modest enhancements to its demand generation platform today. The company takes a conservative approach to marketing automation, stressing the importance of process over flashy software. I’m not sure this will be enough to thrive as the market develops, but customers will benefit regardless.

Manticore Technology today released the latest version of its marketing automation system. Changes include a drag-and-drop design tool (similar to Microsoft Powerpoint); integration of opportunities and custom objects from Salesforce.com; better reporting on Web site visitors; and, real time sales alerts on Web activity.

Each of these makes Manticore a bit more useful but none breaks new ground for the industry. So rather than review them in depth (you can read Manticore’s press release for details), I’ll look at Manticore’s broader business approach as outlined by Marketing Vice President Christopher Doran.

First some background. Manticore launched its B2B marketing automation system in 2003, making it one of the older vendors in the industry. With a $2,000 per month starting price and a solid mix of features, it sits squarely in the middle of the market. The firm has grown steadily but slowly, reaching just under 125 active clients. These include a few very large firms but mostly mid-size businesses and divisions of larger companies. Unlike faster-growing competitors, Manticore has been largely self-funded.

In a stable industry, this would be a comfortably conservative position. But the marketing automation space is changing rapidly. A mid-tier company which is neither growing quickly nor dominating a particular niche could easily be left behind. At least, that's my opinion.

Manticore doesn’t see it this way. According to Doran, the company has found that the real key to success is guiding clients through successful execution of demand generation programs. Manticore wants clients to understand that demand generation is a business process. It positions itself as a "trusted advisor" that sells based on its expertise, not on technology.

Part of this approach is to give clients a methodology. Manticore offers a straightforward one: define the stages in your marketing funnel; benchmark performance at each stage and identify bottlenecks; create transitional content to move prospects into new stages; define nurture programs to reduce bottlenecks; execute the programs; measure the results and compare them with your goals. The product supports this methodology but does not insist on it.

Doran sees Manticore's customer support group as playing a key role in delivering its expertise. Support staff are trained to help clients address their business issues. This fills a key gap between buying the software and hiring an actual marketing consultant. Manticore relies on business partners for such consulting services.

Of course, Manticore recognizes that it cannot succeed unless the product itself remains competitive. As the latest round of enhancements illustrates, Manticore remains focused on the core demand generation features of email, landing pages, lead nurturing and sales integration. The company is avoiding extensive investments in “inbound marketing” technologies such as search engine optimization and paid search advertising. Nor will it expand into marketing resource management features for planning and budgeting. Doran did say he expected to add some social media features and deeper reporting. And the company will continue to stress its traditional message of ease of use – although at this point, most other demand generation vendors make a similar claim.

I remain skeptical about Manticore's approach. It's true that process is more important than technology and that services to new users were the key to success in earlier marketing automation generations. But today there are plenty of consultants and agencies to provide that support, so it's probably not necessary for vendors to do it themselves. As a practical matter, I think most buyers will prefer systems with a broader scope, flashier presentation and more aggressive marketing. But so long as Manticore and similar firms remain financially sound, they can sell to the minority of buyers who understand the value of expert service. Perhaps that's all Manticore really needs.