Marketing Automation Dissatisfaction: Are Users Buying the Wrong Systems?

I took a preliminary peek at the results of the marketing automation deployment survey that VentureBeat and I have been fielding for the past few weeks. There are some hints of really interesting insights, but we don’t have enough responses yet to publish. Like the sheriff in Blazing Saddles who held himself hostage, I'm writing this to encourage more people to complete the survey so we can release it.

First, some context. One of the rarely-spoken truths about B2B marketing automation is that a sizable minority of users – roughly one-third in most surveys – are not happy with their results. I wrote about last year in a pair of posts (here and here).  One purpose of the new survey was to probe for the reasons. We tested a number of possibilities: buyers are picking the wrong systems; they lack the skills to operate their systems; systems are too hard to use; marketing automation programs don’t deliver enough value to be worth the effort.

The results are open to interpretation but one figure jumped out at me: 25.9% of the respondents cited “missing needed features” as a top-three challenge in successfully using their systems. This wasn’t the most common answer but it still means that one-quarter of the users bought a system that didn’t meet their needs – that is, they bought the wrong system.

Answers about time spent on the search, number of systems considered, evaluation critieria, training, and staffing seem to consistent with this view. We’d gain some clarity if we could split the responders into groups: for example, were people who looked at more systems or searched for longer periods more happy with their selection?

This is where you come in, Dear Reader. We need more responses before we can publish the full results or do deeper analysis. If you’ve recently purchased a marketing automation system, please take the survey yourself and encourage others to do the same. Everyone who takes the survey will get a free copy of the report.

New Marketing Automation Report: Venture Funding is Key to Success

I released the 2012 edition of our B2B Marketing Automation Vendor Selection Tool (VEST) report today, an event that deserves more hoopla that I’ve given it. The VEST provides by far the most detailed, objective information available on industry vendors. It includes nearly 200 data points on 21 products, thumbnail sketches of each vendor’s strengths and weaknesses, and three industry quadrants showing leaders in different market segments. It’s also interactive: you can change the weights assigned to different items and watch the vendors zoom around the quadrant as a result. For those of us who don’t get out much, that’s downright exciting.

Although the VEST is primarily intended to help people who are buying a marketing automation system, its database also provides a statistical portrait of the industry. After rooting around in the numbers like pig hunting truffles, here’s what I dug up:

Core marketing automation is growing fastest. We classify industry vendors into four groups:
- micro business vendors (Infusionsoft and OfficeAutoPilot)
- HubSpot (a category of its own because it’s not quite standard marketing automation and is big enough to treat separately)
- enterprise vendors (Neolane, Aprimo, Silverpop, and Oracle)
- core B2B marketing automation (everybody else: Eloqua, Marketo, Pardot, Genius, Act-On, et, al.)

The enterprise vendors don’t release meaningful installation counts – some refuse to provide any data and others don’t distinguish B2B from B2C clients. So we’ll exclude them from further analysis. The table below shows growth for the remaining groups:

As you see, core vendors grew almost twice as fast as the micro-business group and considerably faster than HubSpot. There was some speculation last year that the micro-business vendors were growing the fastest. Myth busted.

Revenue grew faster than installation counts. The previous table shows that combined growth across all categories is 46%. But that doesn’t mean much because the selling prices are so different. Adjusting for revenue per client, I estimate that industry revenue grew about 55% last year.  I could show you my calculations, but then I'd have to...well, you know.

New leaders can still emerge, but venture funding is required. A year ago, the three largest core vendors were Eloqua, Marketo, and Genius, and Act-On was an also-ran. Today, the Marketo has more clients than Eloqua (although not more revenue), Pardot has replaced Genius in the third position, and Act-On is coming up fast.

It's no mystery why the market remains fluid: venture capital lets new entrants shoulder their way to the top. Of the five top-ranked core vendors, all but Pardot has substantial venture funding. None of the remaining ten core vendors do – and their average growth is much slower. Self-funded firms can survive but it’s unlikely they will become leaders.

Specialization is increasing. We ask vendors for client counts in four segments: micro-business (under $5 million revenue); small business ($5 to $20 million revenue), mid-size business ($20-$500 million revenue) and big business ($500 million and higher). Most gave us answers, although Act-On was a prominent hold-out.

It’s no surprise that the micro vendors sell almost exclusively to micro clients. HubSpot’s base is much more diverse, although the micro and small sectors still account for 75% of its base. Of the core vendors, Marketo and Genius are the most small business oriented, with the two smallest categories accounting for over half of their customers. Pardot is tightly focused on small and mid-size clients, reflecting their disciplined sales approach. Eloqua has by far the most big-business clients of any core vendor, a proportion that has grown dramatically since the first VEST report one year ago.

For more information on the new VEST report, visit www.raabguide.com/vest.

Marketers Do a Bad Job Selecting Marketing Automation Systems

I presented my Seven Deadly Sins of Marketing Automation Software Selection during last week’s Webinar with Neolane. (To replay the Webinar, click here.)  If you’re wondering how many companies actually commit those sins, the sad answer is: a lot. Here are some statistics.

• About half of buyers consider only one system, I’m told by various vendors. Some may have known exactly what they needed in advance, but most are just buying the first system that seems to do what they need. And it’s a safe bet they haven’t analyzed their requirements well enough to understand those needs correctly.

• 66% of buyers base their selection process on meetings within marketing. This isn’t bad in itself, but many don’t talk to anyone else. You do also have to wonder how other 34% make a decision if they’re NOT talking to anyone in marketing. (This and the following figures come from the CMO Council study “Driving Revenue Through Customer Relevance”, which I analyzed in detail last year).

• 42% of buyers rely on online research. Again, not a bad source in itself, but far from sufficient. The real problem is comparing this figure and the previous 66% to…

• 25% of buyers consult with in-house IT. Think about that: 75% of CMOs are making a major system investment WITHOUT consulting their IT group. This would be fine if most marketers were experts at technology acquisition. But they’re not. Software-as-a-Service  makes it possible for marketers to purchase and deploy a marketing automation system without help from IT, but that doesn’t make it a good idea.

• 19% of buyers do a formal needs assessment and Request for Proposal (RFP). Again, this means the other 81% are buying a system without a formal buying process. Maybe some are just skipping the RFP, which isn't always needed. But I know from my own experience that plenty of marketers don’t do a needs assessment either. That's a big problem: you can't make a sound choice without one. Remember: when you don't know where you're going, any road will take you there.

• 25% do a pilot deployment. A pilot isn’t essential if you’ve run a good selection process. But for the vast majority of marketers who haven't run a good process, a pilot is their last line of defense before buying the wrong system. That so few run one means the most are buying blindfolded and hoping for the best. Let’s just say that this is not a good idea. 

B2B and B2C Marketing Automation: Understanding the Differences

As you might have guessed from my recent list of B2C marketing automation systems, I’ve recently been spending some time helping consumer marketers to select vendors. This is more a return than a departure: although I’ve written mostly about B2B systems for the past few years, my earlier work was largely in consumer marketing. Like any traveler, I’ve returned home with some new perspectives. Here are some observations

- consumer marketers have to build databases; B2B marketers don’t. You can file this under “things so obvious that it feels stupid to even mention them”, but it’s still an important difference. In setting up a consumer marketing system, the primary discussion is always around where the data will come from and how it will be managed. This accounts for most of the work and most of the cost. By very sharp contrast, B2B marketers rely primarily on their CRM system (that is, Salesforce.com or a competitor) as the primary data source, and complement that with information captured directly by the marketing automation systems’ own landing pages and Web tracking tags. The CRM integration can be set up in days, if not minutes, and next to no time is spent worrying about the marketing database design or update processes.

On the whole, this situation is an advantage for B2B marketers, since they can direct their attention to other issues and can start using their systems almost immediately (for simple tasks, at least). But it also means that B2B systems are much less flexible than B2C marketing automation systems, since the B2B systems are built around a fixed data structure that is derived from the CRM data model. Only a few B2B vendors can add custom tables to systems and I doubt any could accommodate a fundamental departure from the core CRM data structure.

The main practical implication of this is that consumer marketers would have a hard time using a B2B system. (So do the largest B2B marketers, who also need specialized data structures and update processes.) This is frustrating for consumer marketers, who see the huge variety, slick features, and attractive pricing of the B2B systems. Some B2C systems offer similar features and pricing with the same Software-as-a-Service business model. But the total costs are still higher because someone has to build and maintain the underlying database.

- B2B systems include landing pages and web behavior tracking; most B2C systems don’t. It’s technically possible for B2C systems to offer these features, and some do. But many B2C products leave them out. I’d guess the reason is B2C marketers more often have the capabilities available from other sources, such as a Web content management system or Web analytics product. We can probably expect more B2C systems to add them as vendors see that marketers like having them integrated with their primary system.

- B2B systems are cheaper. B2B marketing automation systems start around $750 per month, or under $9,000 per year, and a typical B2B installation probably runs under $30,000 per year. By contrast, it’s pretty much impossible to imagine a B2C system that costs less than $50,000 per year. As I mentioned earlier, that’s really frustrating for B2C marketers.

- B2C deployments are easier. This might spark some debate. But B2C marketers don’t have to deal with marketing-sales alignment, can usually measure results directly, and are often already running the same types of campaigns they expect to run with marketing automation. This means there’s less need for process reengineering, program design, content development, and the other changes that often trip up B2B marketing automation projects. Of course, the exception is building that new marketing database, which I’ve already noticed is much harder for B2C. But the need for the database is obvious from the start and plenty of experts are available to help. So I’d say the risks of a failed deployment are much lower for B2C.

These are simply the differences that pop out as I look at consumer marketing systems with fresh eyes. Further thought might reveal others.  What’s intriguing is that B2B marketers, often considered less sophisticated than their B2C cousins, may actually be more advanced in some ways. It’s worth putting aside the old attitudes and considering what each group can learn from the other.