“I used to hate POCs (Proof of Concepts) but now I love them,” a Customer Data Platform vendor told me recently. “We do POCs all the time,” another said when I raised the possibility on behalf of a client.
Two comments could be a coincidence. (Three make a Trend.) But, as the first vendor indicated, POCs have traditionally been something vendors really disliked. So even the possibility that they’ve become more tolerable is worth exploring.
We should start by defining the term. Proof of Concept is a demonstration that something is possible. In technology in general, the POC is usually an experimental system that performs a critical function that had not previously been achieved. A similar definition applies to software development. In the context of marketing systems, though, a POC is usually not so much an experiment as a partial implementation of an existing product. What's being proven is the system's ability to execute key functions on the buyer's own data and/or systems. The distinction is subtle but important because it puts the focus on meeting the client's needs.
Of course, software buyers have always watched system demonstrations. Savvy buyers have insisted that demonstrations execute scenarios based on their own business processes. A carefully crafted set of scenarios can give a clear picture of how well a system does what the client wants. Scenarios are especially instructive if the user can operate the system herself instead of just watching a salesperson. What scenarios don’t illustrate is loading a buyer’s data into the system or the preparation needed to make that data usable. That’s where the POC comes in.
The cost of loading client data was the reason most vendors disliked POCs. Back in the day, it required detailed analysis of the source data and hand-tuning of the transformation processes to put the data into the vendor’s database. Today this is much easier because source systems are usually more accessible and marketing systems – at least if they’re Customer Data Platforms – have features that make transformation and mapping much more efficient.
The ultimate example of easier data loads is the one-click connection between many marketing automation and CRM “platforms” and applications that are pre-integrated with those platforms. The simplicity is possible because the platforms and the apps are cloud-based, Software as a Service products. This means there are no custom implementations or client-run systems to connect. Effortless connections let many vendors to offer free trials, since little or no vendor labor is involved in loading a client’s data.
In fact, free trials are problematic precisely because so little work goes into setting them up. Some buyers are diligent about testing their free trial system and get real value from the experience. But many set up a free trial and then don't use it, or use it briefly without putting in the effort to learn how the system works. This means that all but the simplest products don’t get a meaningful test and users often underestimate the value of a system because they haven’t learned what it can do.
POCs are not quite the same as free trials because they require more effort from the vendor to set up. In return, most vendors will require a corresponding effort from the buyer to test the POC system. On balance that’s a good thing since it ensures that both parties will learn from the project.
Should a POC be part of every vendor selection process? Not at all. POCs answer some important questions, including how easily the vendor can load source data and what it’s like to use the system with your own data. A POC makes sense when those are critical uncertainties. But it’s also possible to answer some of those questions without a POC, based on reviews of system documentation, demonstrations, and scenarios. If a POC can’t add significant new information, it’s not worth the time and trouble.
Also remember that the POC loads only a subset of the buyer’s data. This means it won't show how the system handles other important tasks including matching customer identities across systems, resolving conflicts between data from different sources, and aggregating data from multiple systems. Nor will working with sample data resolve questions about scalability, speed, and change management. The POC probably won’t include fine-tuning of data structures such as summary views and derived variables, even though these can greatly impact performance. Nor will it test advanced features related to data access by external systems.
Answering those sorts of questions requires a more extensive implementation. This can be done with a pilot project or during initial phases of a production installation. Buyers with serious concerns about such requirements should insist on this sort of testing or negotiate contracts with performance guarantees to ensure they’re not stuck with an inadequate solution.
POCs have their downsides as well. They require time and effort from buyers, extend the purchasing process, and may limit how many systems are considered in depth. They also favor systems that are easy to deploy and learn, even though such systems might lack the sophistication or depth of features that will ultimately be more important for success.
In short, POCs are not right for everyone. But it’s good to know they’re more available than before. Keep them in mind as an option when you have questions that a POC is equipped to answer.
Showing posts with label freemium. Show all posts
Showing posts with label freemium. Show all posts
Sunday, October 22, 2017
Monday, November 14, 2016
HubSpot Announces LinkedIn, Facebook Partnerships and Free Marketing Automation Edition at INBOUND Conference
HubSpot held its annual INBOUND conference in Boston last week. Maybe it's me, but the show seemed to lack some of its usual self-congratulatory excitement: for example, CEO Brian Halligan didn’t present the familiar company scorecard touting growth in customers and revenues. (A quick check of financial reports shows those are just fine: the company is expecting about 45% revenue increase for 2016.) Even the insights that Halligan and co-founder Dharmesh Shah presented in their keynotes seemed familiar: I'm guessing you've already heard that video, social, messaging, free trials, and chatbots will be big.
My own attention was more focused on the product announcements. The big news was a free version of HubSpot’s core marketing platform, joining free versions already available of its CRM and Sales systems. (In Hubspeak, CRM is the underlying database that tracks and manages customer interactions, while Sales is tools for salesperson productivity in email and elsewhere.) Using free versions to grow marketing automation has consistently failed in the past, probably because people attracted by a free system aren't willing to do the substantial work needed for marketing automation success. But HubSpot managers are aware of this history and seem confident they have a way to cost-effectively nurture a useful fraction of freemium users towards paid status. We'll see.
The company also announced enhancements to existing products. Many were features that already exist in other mid-tier systems, including branching visual workflows, sessions within Web analytics reports, parent/child relationships among business records, and detailed control over user permissions. As HubSpot explained it, the modest scope of these changes reflects a focus on simplifying the system rather than making it super-powerful. One good example of this attitude was a new on-site chat feature, which seems basic enough but has some serious hidden cleverness in automatically routing chat requests to the right sales person, pulling up the right CRM record for the agent, and adding the chat conversation to the customer history.
One feature that did strike me as innovative was closer to HubSpot’s roots in search marketing: a new “content strategy” tool reflecting the shift from keywords to topics as the basis of search results. HubSpot’s tool helps marketers find the best topics to try to dominate with their content. This will be very valuable for marketers unfamiliar with the new search optimization methods. Still, what you really want is a system that helps you create that content. HubSpot does seem to be working on that.
With relatively modest product news, the most interesting announcements at the conference were probably about HubSpot’s alliances. A new Facebook integration lets users create Facebook lead generation campaigns within HubSpot and posts leads from those campaigns directly to the HubSpot database. A new LinkedIn integration shows profiles from LinkedIn Sales Navigator within HubSpot CRM screens for users who have a Sales Navigator subscription. Both integrations were presented as first steps towards deeper relationships. These relationships reflect the growing prominence of HubSpot among CRM/marketing automation vendors, which gives companies like Microsoft and LinkedIn a reason to pick HubSpot as a partner. This, in turn, lets HubSpot offer features that less well-connected competitors cannot duplicate. That sets up a positive cycle of growth and expansion that is very much in HubSpot’s favor.
As an aside, the partnerships raise the question of whether Microsoft might just purchase HubSpot and use it to replace or supplement the existing Dynamics CRM products. Makes a lot of sense to me. A Facebook purchase seems unlikely but, as we also learned last week, unlikely things do sometimes happen.
My own attention was more focused on the product announcements. The big news was a free version of HubSpot’s core marketing platform, joining free versions already available of its CRM and Sales systems. (In Hubspeak, CRM is the underlying database that tracks and manages customer interactions, while Sales is tools for salesperson productivity in email and elsewhere.) Using free versions to grow marketing automation has consistently failed in the past, probably because people attracted by a free system aren't willing to do the substantial work needed for marketing automation success. But HubSpot managers are aware of this history and seem confident they have a way to cost-effectively nurture a useful fraction of freemium users towards paid status. We'll see.
The company also announced enhancements to existing products. Many were features that already exist in other mid-tier systems, including branching visual workflows, sessions within Web analytics reports, parent/child relationships among business records, and detailed control over user permissions. As HubSpot explained it, the modest scope of these changes reflects a focus on simplifying the system rather than making it super-powerful. One good example of this attitude was a new on-site chat feature, which seems basic enough but has some serious hidden cleverness in automatically routing chat requests to the right sales person, pulling up the right CRM record for the agent, and adding the chat conversation to the customer history.
One feature that did strike me as innovative was closer to HubSpot’s roots in search marketing: a new “content strategy” tool reflecting the shift from keywords to topics as the basis of search results. HubSpot’s tool helps marketers find the best topics to try to dominate with their content. This will be very valuable for marketers unfamiliar with the new search optimization methods. Still, what you really want is a system that helps you create that content. HubSpot does seem to be working on that.
With relatively modest product news, the most interesting announcements at the conference were probably about HubSpot’s alliances. A new Facebook integration lets users create Facebook lead generation campaigns within HubSpot and posts leads from those campaigns directly to the HubSpot database. A new LinkedIn integration shows profiles from LinkedIn Sales Navigator within HubSpot CRM screens for users who have a Sales Navigator subscription. Both integrations were presented as first steps towards deeper relationships. These relationships reflect the growing prominence of HubSpot among CRM/marketing automation vendors, which gives companies like Microsoft and LinkedIn a reason to pick HubSpot as a partner. This, in turn, lets HubSpot offer features that less well-connected competitors cannot duplicate. That sets up a positive cycle of growth and expansion that is very much in HubSpot’s favor.
As an aside, the partnerships raise the question of whether Microsoft might just purchase HubSpot and use it to replace or supplement the existing Dynamics CRM products. Makes a lot of sense to me. A Facebook purchase seems unlikely but, as we also learned last week, unlikely things do sometimes happen.
Thursday, February 06, 2014
Genius and LoopFuse Are Acquired; Leadsius Picks Up the Freemium Banner
The past week has seen two acquisition announcements in the B2B marketing automation space: LoopFuse by SalesFUSION and LeadRocket/Genius by CallidusCloud, which owns LeadFormix. Both of the acquired vendors had bright prospects at one time but fell by the wayside. Interestingly, both pursued a “freemium” strategy of offering their system for free to users with small databases. The goal is to build a big base of users, some of whom will eventually pay real money for a larger installation. Since both vendors ultimately failed to survive, it might seem reasonable to conclude that freemium doesn’t work for B2B marketing automation, despite its successes elsewhere.
But this week also saw the start of a big freemium push by Leadsius, a new small business marketing automation vendor I wrote about two weeks ago. Leadsius reports more than 1,200 freemium accounts since they started offering them a bit over a year ago. Can they succeed where Genius and LoopFuse did not?
Obviously I don’t know, but it’s fair to say that the odds are against them. Genius and LoopFuse were both good products run by smart people backed by venture funding (a lot for Genius, a little for LoopFuse). Each reported thousands of freemium sign-ups that converted to paid accounts at a reasonable rate – “reasonable” being defined as an acceptable cost per new customer when the cost of the freemium accounts was included. The problem seemed to be that the absolute number of converted accounts wasn’t high enough to sustain the business, and neither vendor had enough business coming in from other sources. I’d also guess that freemium appealed most to small companies which didn’t generate much revenue even after they started to pay. (Even though many freemium users are departments within large companies, I'd suspect those firms buy different, enterprise-level systems when they decide to make a real commitment.)
Freemium is a much-discussed topic in tech circles, and there are many people who have thought more deeply about it than I have. My casual impression is it probably makes the most sense when there’s a network effect, meaning you need to attract lots of users quickly to succeed. Obviously it needs to be a product that’s easy to learn and use, so training and support costs are kept at a minimum.
My take is that freemium doesn’t fit well with marketing automation because marketing automation takes a lot of work to use effectively. Compare this with email and Web site hosting, where freemium has worked well: casual users can be quite successful with those products. In fact, the trend in the marketing automation industry has generally been to increase rather than remove barriers to getting started, by doing away with options such as 30 day free trials or free implementation support. Vendors like HubSpot and Infusionsoft have tried many approaches but ended up requiring significant up-front investment from new clients, specifically to screen out buyers who won’t put in enough work to succeed. That’s about as far from the freemium approach as you can get.
None of this means that Leadsius is set to fail. They might find a way to make freemium work or they might abandon freemium and succeed doing things the old fashioned way. From a prospective buyer’s perspective, what really matters are the quality of the system and the pricing, which are quite competitive. So long as they’re willing to learn from experience – and abandon freemium if that is what experience teaches – their prospects are bright.
But this week also saw the start of a big freemium push by Leadsius, a new small business marketing automation vendor I wrote about two weeks ago. Leadsius reports more than 1,200 freemium accounts since they started offering them a bit over a year ago. Can they succeed where Genius and LoopFuse did not?
Obviously I don’t know, but it’s fair to say that the odds are against them. Genius and LoopFuse were both good products run by smart people backed by venture funding (a lot for Genius, a little for LoopFuse). Each reported thousands of freemium sign-ups that converted to paid accounts at a reasonable rate – “reasonable” being defined as an acceptable cost per new customer when the cost of the freemium accounts was included. The problem seemed to be that the absolute number of converted accounts wasn’t high enough to sustain the business, and neither vendor had enough business coming in from other sources. I’d also guess that freemium appealed most to small companies which didn’t generate much revenue even after they started to pay. (Even though many freemium users are departments within large companies, I'd suspect those firms buy different, enterprise-level systems when they decide to make a real commitment.)
Freemium is a much-discussed topic in tech circles, and there are many people who have thought more deeply about it than I have. My casual impression is it probably makes the most sense when there’s a network effect, meaning you need to attract lots of users quickly to succeed. Obviously it needs to be a product that’s easy to learn and use, so training and support costs are kept at a minimum.
My take is that freemium doesn’t fit well with marketing automation because marketing automation takes a lot of work to use effectively. Compare this with email and Web site hosting, where freemium has worked well: casual users can be quite successful with those products. In fact, the trend in the marketing automation industry has generally been to increase rather than remove barriers to getting started, by doing away with options such as 30 day free trials or free implementation support. Vendors like HubSpot and Infusionsoft have tried many approaches but ended up requiring significant up-front investment from new clients, specifically to screen out buyers who won’t put in enough work to succeed. That’s about as far from the freemium approach as you can get.
None of this means that Leadsius is set to fail. They might find a way to make freemium work or they might abandon freemium and succeed doing things the old fashioned way. From a prospective buyer’s perspective, what really matters are the quality of the system and the pricing, which are quite competitive. So long as they’re willing to learn from experience – and abandon freemium if that is what experience teaches – their prospects are bright.
Wednesday, November 17, 2010
LoopFuse Captures More Web Traffic Data
Summary: LoopFuse has extended its system to capture more Web traffic data, which lays the foundation for future analytics.
LoopFuse recently released its latest enhancements, which it somewhat grandiosely labels as making it “the First and Only Marketing Automation Solution with Inbound Marketing”. In fact, as the subhead to their press release states, what they’ve really done is somewhat more modest: add “real-time Web traffic intelligence” by providing features to capture search terms, referring sites and page views, and link these to individual visitors.
The new release also adds real-time social media monitoring (directly for Twitter and Facebook, and through Collecta for blogs, YouTube and other sources).
These features are certainly useful. But my idea of "inbound marketing" is more along the lines of HubSpot, which provides search engine optimization, paid search campaign management, social media monitoring and posting, blogging, and Web content management. Although LoopFuse might eventually add those functions, it hasn't yet and isn’t necessarily moving in that direction.
Accepting their labels for the moment, let’s look at what LoopFuse has added:
- “content marketing” is a set of reports that tracks Web traffic related to different assets. Users get a list of the assets ranked by number of page views. They can then drill into each item to see a graph of traffic over time and to see details such as the number of visitors, views per visitor, and referring domains and pages. Because the views are tied to individual visitors, users can also click on the referring domain to see what other pages people from that domain visited. This is essentially the same information as provided by...
- “inbound marketing”, which shows visitor sources by category (direct links, paid search ads, organic search) and details within each category (specific messages, ads or keywords). As just noted, users can drill down to see which Web pages were viewed by visitors from each source.
- “social monitoring” provides real-time monitoring of user-selected terms on the various social Web sites. Unlike the other Web traffic data, this information isn’t stored within the LoopFuse database and isn't tied to specific individuals. LoopFuse plans to provide some trending reports in the future. Of course, the real trick would be linking social media comments to lead profiles.
All of these are valuable reports. Having them within a single system is particularly helpful for the small businesses targeted by LoopFuse, where all channels are likely to be handled by a small department and possibly the same individual. Otherwise, the users would need switch among several systems to do their job. In larger firms, where different people would be responsible for different channels, each channel can be managed by a separate system without requiring anyone to use multiple products.
Saving effort is nice, but the real value of a unified marketing database is being able to coordinate marketing messages and relate all marketing contacts to sales results. LoopFuse hasn’t publicly revealed its approach to marketing performance measurement but definitely has something in the works. I’m particularly hoping they'll use the detailed behavior information to relate outcomes to specific marketing messages, rather than just looking at movement through purchase stages. Although stage data by itself can project future revenues, it must be tied to specific marketing programs to measure those programs’ value.
In case you’re wondering, LoopFuse is storing the new Web traffic data in denormalized tables that are separate from the operational marketing database. This enables much quicker response to ad hoc queries and, should eventually support the time-based views needed for trends and stage analytics.
For those of you keeping score at home, LoopFuse’s Roy Russo also told me that the company stores each client’s data in a separate database instance. Russo said this has proven more scalable and cheaper than the textbook Software-as-a-Service approach of commingling several clients’ data in a single instance. So far as I know, most (but not all) marketing automation vendors use same approach as LoopFuse.
Russo also said that all data in the system is accessible via standard API calls, something that’s also not always possible with competitive products. In fact, Russo said LoopFuse’s entire interface is built on using the published API, which means that technically competent clients could build alternative interfaces to embed LoopFuse data and functions within other systems. If nothing else, this gets them Geek Style Points.
Of course, no discussion of LoopFuse is complete without mentioning its freemium offer, launched last June amid considerable controversy. The company says that nearly 1,000 accounts have now signed up for this, which is impressive by any standard. No news yet on how many have converted to paid.
One side effect that I hadn't anticipated – although LoopFuse apparently did – is that agencies and consultants use the freemium to service new clients, who convert to paid when their volumes grow. This gives LoopFuse an edge in the competition for channel partners. The value of that edge is a bit uncertain, though, since an increasing number of service firms – including Pedowitz Group, Annuitas and LeftBrain Marketing – are now working with multiple marketing automation vendors.
LoopFuse recently released its latest enhancements, which it somewhat grandiosely labels as making it “the First and Only Marketing Automation Solution with Inbound Marketing”. In fact, as the subhead to their press release states, what they’ve really done is somewhat more modest: add “real-time Web traffic intelligence” by providing features to capture search terms, referring sites and page views, and link these to individual visitors.
The new release also adds real-time social media monitoring (directly for Twitter and Facebook, and through Collecta for blogs, YouTube and other sources).
These features are certainly useful. But my idea of "inbound marketing" is more along the lines of HubSpot, which provides search engine optimization, paid search campaign management, social media monitoring and posting, blogging, and Web content management. Although LoopFuse might eventually add those functions, it hasn't yet and isn’t necessarily moving in that direction.
Accepting their labels for the moment, let’s look at what LoopFuse has added:
- “content marketing” is a set of reports that tracks Web traffic related to different assets. Users get a list of the assets ranked by number of page views. They can then drill into each item to see a graph of traffic over time and to see details such as the number of visitors, views per visitor, and referring domains and pages. Because the views are tied to individual visitors, users can also click on the referring domain to see what other pages people from that domain visited. This is essentially the same information as provided by...
- “inbound marketing”, which shows visitor sources by category (direct links, paid search ads, organic search) and details within each category (specific messages, ads or keywords). As just noted, users can drill down to see which Web pages were viewed by visitors from each source.
- “social monitoring” provides real-time monitoring of user-selected terms on the various social Web sites. Unlike the other Web traffic data, this information isn’t stored within the LoopFuse database and isn't tied to specific individuals. LoopFuse plans to provide some trending reports in the future. Of course, the real trick would be linking social media comments to lead profiles.
All of these are valuable reports. Having them within a single system is particularly helpful for the small businesses targeted by LoopFuse, where all channels are likely to be handled by a small department and possibly the same individual. Otherwise, the users would need switch among several systems to do their job. In larger firms, where different people would be responsible for different channels, each channel can be managed by a separate system without requiring anyone to use multiple products.
Saving effort is nice, but the real value of a unified marketing database is being able to coordinate marketing messages and relate all marketing contacts to sales results. LoopFuse hasn’t publicly revealed its approach to marketing performance measurement but definitely has something in the works. I’m particularly hoping they'll use the detailed behavior information to relate outcomes to specific marketing messages, rather than just looking at movement through purchase stages. Although stage data by itself can project future revenues, it must be tied to specific marketing programs to measure those programs’ value.
In case you’re wondering, LoopFuse is storing the new Web traffic data in denormalized tables that are separate from the operational marketing database. This enables much quicker response to ad hoc queries and, should eventually support the time-based views needed for trends and stage analytics.
For those of you keeping score at home, LoopFuse’s Roy Russo also told me that the company stores each client’s data in a separate database instance. Russo said this has proven more scalable and cheaper than the textbook Software-as-a-Service approach of commingling several clients’ data in a single instance. So far as I know, most (but not all) marketing automation vendors use same approach as LoopFuse.
Russo also said that all data in the system is accessible via standard API calls, something that’s also not always possible with competitive products. In fact, Russo said LoopFuse’s entire interface is built on using the published API, which means that technically competent clients could build alternative interfaces to embed LoopFuse data and functions within other systems. If nothing else, this gets them Geek Style Points.
Of course, no discussion of LoopFuse is complete without mentioning its freemium offer, launched last June amid considerable controversy. The company says that nearly 1,000 accounts have now signed up for this, which is impressive by any standard. No news yet on how many have converted to paid.
One side effect that I hadn't anticipated – although LoopFuse apparently did – is that agencies and consultants use the freemium to service new clients, who convert to paid when their volumes grow. This gives LoopFuse an edge in the competition for channel partners. The value of that edge is a bit uncertain, though, since an increasing number of service firms – including Pedowitz Group, Annuitas and LeftBrain Marketing – are now working with multiple marketing automation vendors.
Thursday, August 12, 2010
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.
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.
Wednesday, June 30, 2010
LoopFuse Offers Free Marketing Automation System: Another Step Towards Industry Consolidation
Summary: LoopFuse has launched a free entry-level version of its marketing automation system. It's one example of how vendors are now competing to attract new users. Only the winners will survive industry consolidation, which may be here sooner than you think.
LoopFuse today promised to “transform” the marketing automation industry by offering a free version of its system. Although LoopFuse and others already provide free trials, this is indeed different: while most free trials expire after 30 days and often have limited functionality, LoopFuse’s FreeView can be used for as long as you like and provides pretty much the same features as the paid version of the system. The critical constraint is that volume is limited to 2,500 prospect names, 5,000 emails and 100,000 page views per month. In practice, this means that only very small companies will actually be able to use the free system as their primary long-term marketing system.
LoopFuse knows that, of course. When they briefed me last week, they said the main purpose of the new system is really to entice trial among companies just starting with marketing automation. They’ll make their money when users see the value they gain and pay for higher volumes and add-on features.
Personally, I’d argue that the really significant news out of LoopFuse is their newly tiered pricing structure. The entry point of $350 per month (for up to 10,000 prospects with unlimited emails and page views) is much lower than the $1,000 to $2,000 starting price of most full-function marketing automation systems. Prices at higher volumes are also much lower than competitors. This will put substantial pricing pressure on vendors who, in many cases, are already struggling to reach sustainable margins.
Here’s where the free system comes back into play. To make a free product viable, LoopFuse needed to engineer as much cost as possible out of the entire client life cycle. This means it had to be possible for clients to purchase and configure the system, learn how to use it and resolve support issues with next to no involvement by LoopFuse staff. Once this was accomplished, LoopFuse was in a position to charge lower fees to its paying clients as well. Other vendors – notably Pardot – have followed a similar cost-removal strategy. But LoopFuse may have been more focused than anyone else.
This doesn’t mean that LoopFuse’s success is guaranteed. Other vendors have similar price points for the small business market (see my list of demand generation vendors) although I suspect their internal costs are higher.
More important, price is just one factor in picking a system. Features, ease of use, and support from the vendor and business partners are usually (and rightly) the main considerations. The free product should increase the number of companies that try LoopFuse first, which will gain it paying customers down the road. But I think that most buyers will recognize that they are likely to stay with their first system and conduct a careful evaluation before they start.
For evidence that a free entry-level product does not automatically drive out higher priced systems, consider the hosted CRM market. Salesforce.com easily dominates despite the presence of surprisingly capable free products like ZohoCRM and FreeCRM .
Whatever the result for LoopFuse, the new offering is part of a larger pattern within the industry. Marketing automation (more precisely, B2B marketing automation) has now passed beyond the pioneer stage where fundamentally different approaches compete for acceptance. At this point, we all pretty much know what a marketing automation system does and, truth be told, the major systems are functionally quite similar.
Competition now shifts from building a technically better system to surviving the inevitable industry consolidation. This requires finding ways to attract masses of new customers as they enter the market.
LoopFuse’s price-driven approach is one such strategy. But many vendors have recently taken others:
- Eloqua, Silverpop, True Influence and at least one other vendor I can’t name are planning new interfaces that they believe will substantially improve ease of use, which they see as the critical barrier blocking many potential buyers. I’m skeptical that truly radical improvements are possible but am certainly eager to see what they come up with.
- LeadLife has embedded best practice hints throughout its system, another way to support adoption by users who lack marketing automation knowledge.
- Infusionsoft has repositioned itself as “email 2.0” rather than marketing automation. They believe this makes it easier for their target customers (under 25 employees) to see them as the next logical step beyond standard email.
- Genius.com added a new Demand Generation edition that falls between its basic Email Marketing and full-blown Marketing Automation products. This is another way of easing the transition from basic email marketing.
- LeadForce1 launched a solution that uses advanced text analysis to measure user intent, and thus provide much better guidance to salespeople than conventional behavioral analysis. Although their approach is based on superior technology, it's still a way to attract customers by offering radically greater value than competitors.
- Marketo now calls itself a “the revenue cycle management company”, giving equal public weight to lead management, sales insight and analytics. They still haven’t briefed me on this or their features to support large enterprises, but they seem to be seeking larger, more sophisticated clients who will presumably provide higher profit margins. Given how many other vendors are targeting small businesses, this certainly makes sense. But Marketo will also find itself competing with established marketing automation vendors like Aprimo, Neolane and Unica. who are entering this market from a different direction. It will also be competing with Eloqua, Silverpop and, perhaps most dangerously, the Market2Lead technology recently purchased by Oracle.
The Market2Lead-Oracle deal raises the other major question facing marketing automation vendors: what role CRM vendors will play? In addition to Oracle, CDC Software (owner of Pivotal CRM and MarketFirst) recently invested in Marketbright.
Of course, the really big question is whether Salesforce.com will make a similar move. There have been off-and-on rumors along those lines for months, followed by stout (if not necessarily credible) denial from Salesforce.com that it has any interest in that direction. I’ve tended to take them at their word, but Oracle and Salesforce.com are blood rivals, so Oracle’s move could easily prompt a Salesforce.com reaction.
Oddly enough, no seems to consider whether Microsoft will enter the game. That's surely a possibility, and would move towards a certainty if its two big on-demand CRM rivals both added marketing automation products. We might even see Google and Intuit participate: both already sell to small business marketers.
My fundamental conclusion is that the B2B marketing automation industry is about to enter the long-predicted stage of vendor consolidation, and that this will move quite quickly. The survivors will serve particular market segments: primarily small vs. large businesses, plus possibly some vertical industry specialization. The window for new entrants is rapidly closing, so any new player will need a major differentiator that creates a clear advantage and distinct identity.
LoopFuse today promised to “transform” the marketing automation industry by offering a free version of its system. Although LoopFuse and others already provide free trials, this is indeed different: while most free trials expire after 30 days and often have limited functionality, LoopFuse’s FreeView can be used for as long as you like and provides pretty much the same features as the paid version of the system. The critical constraint is that volume is limited to 2,500 prospect names, 5,000 emails and 100,000 page views per month. In practice, this means that only very small companies will actually be able to use the free system as their primary long-term marketing system.
LoopFuse knows that, of course. When they briefed me last week, they said the main purpose of the new system is really to entice trial among companies just starting with marketing automation. They’ll make their money when users see the value they gain and pay for higher volumes and add-on features.
Personally, I’d argue that the really significant news out of LoopFuse is their newly tiered pricing structure. The entry point of $350 per month (for up to 10,000 prospects with unlimited emails and page views) is much lower than the $1,000 to $2,000 starting price of most full-function marketing automation systems. Prices at higher volumes are also much lower than competitors. This will put substantial pricing pressure on vendors who, in many cases, are already struggling to reach sustainable margins.
Here’s where the free system comes back into play. To make a free product viable, LoopFuse needed to engineer as much cost as possible out of the entire client life cycle. This means it had to be possible for clients to purchase and configure the system, learn how to use it and resolve support issues with next to no involvement by LoopFuse staff. Once this was accomplished, LoopFuse was in a position to charge lower fees to its paying clients as well. Other vendors – notably Pardot – have followed a similar cost-removal strategy. But LoopFuse may have been more focused than anyone else.
This doesn’t mean that LoopFuse’s success is guaranteed. Other vendors have similar price points for the small business market (see my list of demand generation vendors) although I suspect their internal costs are higher.
More important, price is just one factor in picking a system. Features, ease of use, and support from the vendor and business partners are usually (and rightly) the main considerations. The free product should increase the number of companies that try LoopFuse first, which will gain it paying customers down the road. But I think that most buyers will recognize that they are likely to stay with their first system and conduct a careful evaluation before they start.
For evidence that a free entry-level product does not automatically drive out higher priced systems, consider the hosted CRM market. Salesforce.com easily dominates despite the presence of surprisingly capable free products like ZohoCRM and FreeCRM .
Whatever the result for LoopFuse, the new offering is part of a larger pattern within the industry. Marketing automation (more precisely, B2B marketing automation) has now passed beyond the pioneer stage where fundamentally different approaches compete for acceptance. At this point, we all pretty much know what a marketing automation system does and, truth be told, the major systems are functionally quite similar.
Competition now shifts from building a technically better system to surviving the inevitable industry consolidation. This requires finding ways to attract masses of new customers as they enter the market.
LoopFuse’s price-driven approach is one such strategy. But many vendors have recently taken others:
- Eloqua, Silverpop, True Influence and at least one other vendor I can’t name are planning new interfaces that they believe will substantially improve ease of use, which they see as the critical barrier blocking many potential buyers. I’m skeptical that truly radical improvements are possible but am certainly eager to see what they come up with.
- LeadLife has embedded best practice hints throughout its system, another way to support adoption by users who lack marketing automation knowledge.
- Infusionsoft has repositioned itself as “email 2.0” rather than marketing automation. They believe this makes it easier for their target customers (under 25 employees) to see them as the next logical step beyond standard email.
- Genius.com added a new Demand Generation edition that falls between its basic Email Marketing and full-blown Marketing Automation products. This is another way of easing the transition from basic email marketing.
- LeadForce1 launched a solution that uses advanced text analysis to measure user intent, and thus provide much better guidance to salespeople than conventional behavioral analysis. Although their approach is based on superior technology, it's still a way to attract customers by offering radically greater value than competitors.
- Marketo now calls itself a “the revenue cycle management company”, giving equal public weight to lead management, sales insight and analytics. They still haven’t briefed me on this or their features to support large enterprises, but they seem to be seeking larger, more sophisticated clients who will presumably provide higher profit margins. Given how many other vendors are targeting small businesses, this certainly makes sense. But Marketo will also find itself competing with established marketing automation vendors like Aprimo, Neolane and Unica. who are entering this market from a different direction. It will also be competing with Eloqua, Silverpop and, perhaps most dangerously, the Market2Lead technology recently purchased by Oracle.
The Market2Lead-Oracle deal raises the other major question facing marketing automation vendors: what role CRM vendors will play? In addition to Oracle, CDC Software (owner of Pivotal CRM and MarketFirst) recently invested in Marketbright.
Of course, the really big question is whether Salesforce.com will make a similar move. There have been off-and-on rumors along those lines for months, followed by stout (if not necessarily credible) denial from Salesforce.com that it has any interest in that direction. I’ve tended to take them at their word, but Oracle and Salesforce.com are blood rivals, so Oracle’s move could easily prompt a Salesforce.com reaction.
Oddly enough, no seems to consider whether Microsoft will enter the game. That's surely a possibility, and would move towards a certainty if its two big on-demand CRM rivals both added marketing automation products. We might even see Google and Intuit participate: both already sell to small business marketers.
My fundamental conclusion is that the B2B marketing automation industry is about to enter the long-predicted stage of vendor consolidation, and that this will move quite quickly. The survivors will serve particular market segments: primarily small vs. large businesses, plus possibly some vertical industry specialization. The window for new entrants is rapidly closing, so any new player will need a major differentiator that creates a clear advantage and distinct identity.
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