Marketing Automation Roundtable

I participated in a great round table discussion at the Mass Technology Leadership Council this morning. The group discussion touched on a wide range of issues related to deploying marketing automation systems. Some of the key success factors are summarized below by stage:

Planning

Executive buy-in and expectation management: To be successful, marketing automation projects require integration with other enterprise systems and repositories. Getting top level support for cross departmental cooperation is critical to long term success. However, project leaders must also be very concerned about executive expectations in terms of how quickly they will see measurable improvements in revenue. This is a function of your sales cycle and executives must have a clear vision of the time it will take to get hard numbers to report on.

Data management: MA systems are only as good as the fuel you put in them. Data quality measured by consistency, accuracy, and freshness will determine the fate of your MA project. Typical challenges include: de-duping contacts and accounts, harmonizing account hierarchies (who owns whom), enterprise standards for customer data, ongoing resources for data governance.

Cross departmental support: In the long run, MA systems, unlike other enterprise systems such as CRM, billing, support, etc. are wholly dependent on how well they are integrated with other systems. Specifically, the extent and efficiency of the closed loop reporting process from response to revenue. This requires cross functional support in terms of:

Data standards

SLAs between groups regarding issues such as:

Definitions for lead advancement

Engagement commitments (how long and how many touches to accept, reject, claw back, etc.)

Transparency and visibility of customer touch points from marketing to sales, finance, service, and support.

Scoping and Roadmap: Defining your marketing automation project vis-à-vis business objectives is critical for success. The project leader, business users, executives, as well as your implementation partner and vendor all need to have a very clear vision of where you will start and how you will build over time. At each stage of the roadmap It is important to scope, define, and communicate:

What processes are being automated

What metrics will be used to measure the success of the project and the performance of the system

What resources are necessary to implement, support and use the system

What output is expected from the system

Staffing and skills: MA systems require new skill sets and approaches to marketing. Technical skills with MA tools and analytics, as well as good process mapping are in high demand. They are difficult to hire, and once trained will raise the market value of your staff so be prepared.

Deployment

Campaign workflows: The key is not to get too far into the weeds in terms of nurturing workflow models. MA tools are capable of designing incredibly complex routing - marketers should err on the side of simplicity when getting started and build based on business drivers not just technical capabilities.

Integration: System level integration with the CRM is a must out of the gate. If not available from the start, integration with other systems should be planned on the roadmap for the MA implementation.

Training: MA requires new skills in terms of campaign design, execution, and analytics. This is a lot to ramp up on for the novice MA user. Training programs should be designed specifically for each type of user as they will have very different use cases with respect to system functionality.

Post Implementation

Measurement and reporting: This remains a commonly cited weakness of most MA implementations. All leading providers have decent reporting capabilities built into their solutions. But it can be confusing about what to report to whom. This gets more complicated the higher you go on the marketing org chart. The needs of a campaign managers can be met with data that is germane to the system , but marketing executives need a perspective that goes beyond the marketing department. They need metrics that show influence on the sales pipeline, into deal size and velocity, and customer lifetime value. Marketing has a key role to play in all stages of the customer experience.

Social/inbound marketing activity is another common point of disaggregation. IDC expects that to see new tools to better assimilate unstructured social data into the formal lead management process so that, at least retroactively, marketers can measure the outcomes related to social engagement.

Overall, the marketing automation landscape continues to be highly fragmented with new media, channels, and tools cropping up daily. While there has been some consolidation over the past three years, IDC expects to see much greater M&A activity over the next three as major tech players look to build infrastructure offerings that integrate all customer facing functions.

Channel Marketing from a Sales and Marketing Perspective

Complexity and Diversity at Scale

Channel marketing in large high tech companies is one of the most complex and diverse operational activities in all of marketing. Complexity and diversity are pervasive across: market, product, program, even organizational structure. Channel Management groups typically report to either marketing or sales. The trend today favors the sales reporting approach, especially for regions outside of the US. The in-country channel manager will either be or report to the regional head of Sales. Channel Marketing typically sits within channel management or corporate marketing. In many companies the main function of the channel marketing team is to act as a conduit between business units/product management and worldwide channels. This creates an inherently complex organizational structure from which a wide range of additional sources of complexity and diversity must be managed.

The Sales Perspective

From a sales perspective, channel management is all about recruiting and performance – identifying key opportunities and the partners best suited to capitalize on them, and investing in their success. This typically involves working with key partners to develop business plans, including staffing, investment planning, and performance goals. However, it is rare that these business development plans include specific marketing plans developed in conjunction with the vendor's channel marketing team.

This is a critical point of failure for many channel programs. Most partners do not have the marketing expertise needed to manage full scale, long term strategic branding and lead generation campaigns. Many do not even have marketing staff. As a result, much of the marketing effort focuses on discrete expenditures such as events – it is not managed as a coordinated set of campaigns optimized for a multi-channel, multi-touch, long sales cycle lead generation process.

The Marketing Perspective

From a marketing perspective, channel management is all about programs. Programs for recruitment, training, and of course, performance. Given the immense diversity in the channel it is impossible to offer a one-size-fits-all approach to channel marketing programs. But it is equally impossible to individually serve the needs of every partner.

The Partner Perspective

From a partner perspective, channel management is about of all things, consistency. It takes on average about a year for new partner programs to be fully adopted and implemented so changes must be highly rationalized and carefully rolled out by vendors.

Standardization and Specialization

Thus the need to find a balance between standardization and specialization. To find the right balance, specialization decisions have to be made first and the first specialization decisions that have to be made are about standards. The question is: what can we offer to every partner in each category and what opportunities/requirements are there for custom programs? This should be asked across a defined set of categories:

y Partner class: (Platinum, Gold, Silver, etc.): this one is obvious and universally addressed.

y Partner type: (Dev, VAR, ISV, SI, etc.) This one is also obvious but there is a lot of room for creativity. For example, do VARs get a special "turnkey" product offering that is not available to others?

y Region: This is an especially challenging area for channel marketers as there are real market differences in terms of culture, technology adoption/maturation, regulation, as well as language that make regional marketing more decentralized.

y Technical/Product focus: The need for specialization here is largely determined by the breadth of your offering portfolio. But companies with hundreds of solutions need to be especially careful not to overwhelm the partner community.

y Strategic alignment: Making changes to your market direction or product mix requires a huge commitment from the channel and they will require not only special programs but also special monitoring and guidance to ensure effective changes are made. Data is particularly important and additional incentives for feedback may be necessary.

y Partner potential: This is a two-fold problem - identifying the high potential partners and understanding the specific drivers of their business with your brand. Getting these research issues right is critical to moving the most valuable growth opportunities up the performance curve.

Standard marketing programs, campaign models, events, collateral and other go to market assets can be designed for each of these categories. Then specialized programs can be overlaid to facilitate coverage of partner capabilities relative to market opportunities.

It is important to understand that marketing programs for high tech sales must be highly leveraged over a wide range of media and market segments. They must be managed with a long term perspective. Most MDF, JDF, co-marketing approval processes focus on short term, discrete activities such as an event and are measured on 30 day or 60 day timelines. However, this is not an effective way to market complex solutions that require great education and deliberation on the part of the buyer.

IDC Recommends

To address this, IDC recommends that companies better coordinate their sales and marketing teams with respect to channels. Channel marketing should develop marketing plans as a normal part of the business planning and market development process. In addition, the partner community should be researched and assessed with the same depth and regularity applied to the markets they serve so any changes in business drivers can be quickly identified and incorporated into channel programs in the most appropriate way.

Three Ways to Update Your Funnel for the New B2B Buyer

B2B Buyer behavior is undergoing an extraordinary sea change triggered by Internet technology. Tech marketing and sales teams haven't caught up. They still rely on a 112-year-old sales funnel model. IDC introduces a new Customer Creation Framework better suited for the way customers really buy.

The Internet tsunami has radically changed B2B Buyer behavior. Before the Internet, the B2B buyer making a complex decision had few sources of information. Vendors leveraged that knowledge gap. The vendor sales person was the primary gateway to information the buyer needed to decide – a tremendously powerful position. Fast forward to today. The Internet and social media have triggered a turbulent change – the rich dialog has shifted on-line and away from the sales person.

As a result, the B2B Buyer in a complex sale is now an expert buyer with very different behavior and expectations.

• Buyers are constantly on-line. IDC research shows that IT buyers find online search and the vendor website more valuable sources of buying information than face-to-face conversations.



• Many times, buyers know more than sales people. 55% of buyers think sales people are only somewhat prepared or not prepared for initial meetings.



• B2B buyers, who are life-long consumers, bring that expertise to work, expecting concierge service.

The Internet tsunami has massively changed Buyer behavior. Yet, we’ve seen surprising little change in the traditional funnel.

The Empowered Buyer is Killing the Traditional Sales Funnel

The traditional sales funnel is 112 years-old and bears the unmistakable marks of the industrial-era. Buyers are treated like widgets that sellers manufacture into a product called a customer. But today's empowered Buyer is far from a widget. The industrial-era funnel is horribly out-of-touch with reality. Symptoms of a sick funnel are showing up in poor conversion rates, lengthening sales cycles, and marketing and sales management challenges.


A New Customer Creation Framework

To ensure that prospective buyers want to become customers, tech companies need a new framework that better aligns with the way buyers buy today. This framework should maintain what is valuable about the industrial-era funnel. For example, the graduated stages of the traditional funnel are a useful, practical tool for measuring progress.

In order to meet the needs of the 21st century tech buyer, this new framework, which IDC calls the Customer Creation Framework (Figure 2), must advance from tradition in three important ways:


Buyer-centric: Act like a Concierge
Replace the manufacturing mind-set with a service orientation. Act like a concierge who delights guests with information and support services that guide them through their "Buyer's Journey". The "Buyer's Journey" describes the cognitive process that a buyer goes through as he makes a decision. The industrial-era funnel was almost exclusively concerned with internal tasks – vendors must create awareness, stimulate interest, close deals, etc. These tasks will still exist. However, they are conducted in a spirit that put the buyer's needs front and center.

Integrate Marketing and Sales
Instead of the assembly-line-like hand-off between marketing and sales silos, the IDC Customer Creation Framework calls for an orchestrated collaboration between the two functions. The fact that today's Buyer desires high-quality digital buying support and never, ever, goes off-line has HUGE implications. The digital dialog is most intense in the early stages of the Buyer's Journey. However, Marketing, as the owner of the company’s digital dialog, can never disengage, can never hand-off. The sales team cannot simply wait for the “good leads”. They may meet a prospective Buyer at any stage – at an event, for example, or in the hallway of a current account. Sales people must be prepared to serve the Buyer at whatever stage he happens to be at. Marketing must be more active enabling this entire sales conversation.

Smart: Data-driven
Finally, IDC’s Customer Creation Framework is smarter than the traditional funnel. The entire customer creation process contains data that can be harvested to use as a feedback system. By analyzing this data, barriers and opportunities will be revealed. Companies can then use marketing and sales tactics like knobs and levers to tweak the behavior and outcomes of the pipeline. Tested marketing campaigns can be strategically applied to build advantage. Digital technology in the form of the Internet is killing yesterday's funnel. However, digital technology is also giving us amazing tools to manage in the new one.

Symptoms of a Sick Sales Funnel

Can you believe that the sales funnel is 112 years old? Hmmm. Seems like a lot has happened since then. No wonder the ole’ funnel is showing signs of wear. IDC research shows that the time it takes for tech companies to create a B2B customer has increased by 15% in the past year. Is it time for a fresh approach?

The sales funnel first appears in a 1925 book by Edward K. Strong called The Psychology of Selling and Advertising. Strong attributes the funnel’s invention in 1898 to Elias St. Elmo Lewis, a sales manager for National Cash Register (NCR). St. Elmo Lewis, who later helped found the Association of National Advertisers, called his sales funnel AIDA for the four stages of “awareness, interest, desire, and action”.

The traditional funnel uses an industrial era paradigm that treats a buyer like a widget. With the right machine, a vendor can manufacture that widget into a product called a customer. In the industrial model, the marketing team works awareness at the upper funnel when buyers aren’t too interested. As soon as there is serious interest, marketing sends the “lead” down the assembly line, handing off to a sales rep whose must fabricate an opportunity and produce revenue.

The problem is…the traditional funnel doesn’t work that well anymore.

Alarming evidence of sick sales funnels show up in the data. Tech vendors now take an average of 19 months to create a large account customer, an increase of 15% in just the last year. Some of this lengthening is certainly due to uncertain economic times. Greater risk aversion has increased the size of the average buying team from 5 people to 6. But we can’t blame everything on the economy. Buyers, IDC finds, don’t like this slowness. They want vendors help to shorten the cycle. According to the IDC Buyer Experience study conducted earlier this year, buyers want to push for a 40% reduction in the time to buy.

Poor funnel health also shows up in unsustainable conversion rates. Research from IDC’s 2011 Tech Marketing Benchmark and 2011 Sales Productivity Benchmark reveals that it now takes over 1000 marketing awareness targets to get one sale.

Symptoms of a sick funnel. Beyond the data, tech vendors are experiencing the effects of their sick, out-dated, funnel approach. Here are some common symptoms companies complain about. Does your company experience any of these symptoms?

1. Bickering: Sales and marketing teams bicker over the number & quality of leads.




2. Bad Data: You don’t have the right data to judge performance, predict the pipeline, and refine strategy




3. Wrong Tools: Sales people don’t have the tools needed to sell, in spite of the fact that they have access to a tonnage of content.




4. Failed sales: Sales people fail to convert most leads. Marketing has no idea what sales plans to do with leads.




5. Funnel Gaps: Prospects fall out of the pipeline, but you’re not sure when or why




6. Silos: Sales team thinks it’s a waste of time to provide feedback to marketing and your marketing team rarely seeks input from sales.




7. Missing Messages: You can’t nurture buyers because you lack the right content
   

We need a new funnel framework. Much has changed since the sales funnel’s 19th century invention. Business is far more sophisticated. The Internet and social media have dramatically changed the way buyers buy. IDC CMO Advisory has guidance for a funnel makeover in the form of a new Customer Creation Framework.

Here’s an introduction to that framework in an IDC webcast called, “Transforming Lead Management: How the new buyer is killing your funnel (and what to do about it).” (The webcast is recorded. Register and you can get the replay.)

Building the Big Tech Brand: Dell and Xerox

The last two years have been hard times for tech marketers: there has been major pressure to transform execution, coupled with a significant reduction in the rate of budget growth. This is truly the "We are being asked to do more, with less" situation that marketers casually complain about. But this time, it is reality.

Despite the headwinds, I have been very impressed with the major brand campaigns that Dell and Xerox have been able to execute.

Both Dell and Xerox have spent billions for a major make-over of their product portfolios: acquiring and developing significant Services and Software capabilities. So much has changed at these companies that the brand perception no longer matches the product reality.

Brand perception simplified is: "What do you think of, when you think of Dell?" And, "What do you think of, when you think of Xerox?". When I think "Dell", I think of several cardboard boxes of new PC gear lying in my driveway, fresh off the UPS truck. When I think "Xerox", I of course think "copiers".

Changing a company's brand perception is extremely difficult if not impossible. For how many years has our US auto industry been trying to change the negative brand perception for a now vastly improved product line? It has been, arguably, two decades. And still today, the brand perception does not yet square with the product reality.

If it doesn't square up, you have to make a big move. The CMO's of Dell and Xerox really had no choice but to undertake a major brand re-fresh and re-vamp. They needed to have brand perception start to match the product reality.

I am impressed by several factors in their execution:

1) The Dell and Xerox CMO's were successful because they presented their case as not a marketing issue, but a company issue.

2) These marketers created the budgets necessary to start the Big job. Major shifts require major monies. Having studied marketing budgets for so long I am convinced there is just no way to do this by shifting around the marketing mix of the run-rate budget envelope.

3) They were able to do this during the time of a recession. With 20/20 hindsight: they get extra points for having a lot more marketplace "voice", during a time when so many other vendors were hunkered down, scared and quiet.


The era of the Big Tech Brand is coming.

Going forward, our IT Industry will be one of consolidation and scale. It will be a slower growth industry and so the marketing challenge will be one of competitive share gains in addition to new market growth. And perhaps most importantly, the merging or our Business IT with our Personal IT will favor the biggest and best brands -- as the power of consumer "pull" will become a major factor in the IT decision equation.


Think deeply about your brand!

Does it square with product reality?

CMO's report universal lack of preparedness for key challenges

IBM released the findings of their Global CMO study yesterday and one of the primary conclusions is that CMOs feel unprepared to address key challenges. The most surprising thing is how consistent the feeling is across regions and vertical industries. CMOs generally face the same issues and report very similar levels of "unpreparedness" in the face of them. Top challenges include: data explosion, social media, growth of channel and device choices, and shifting consumer demographics, among others.

The findings are based on 1,734 structured in-person interviews with CMOs in large organizations conducted between February and June of 2011.Regional and vertical representation was reasonably well balanced. The sheer scale of the effort and the willingness of so many CMOs to participate indicate a role under siege.

In our research, IDC has learned that marketing is undergoing fundamental and painful transformations on several levels: new and expanding datasets, new channels and forms of communication, new tools and infrastructure requirements, new dynamic in customer acquisition, new pressure to prove business impact, new skills required for success. It is a multi-dimensional change that has many marketing leaders struggling to keep up.

The IBM study provides a strong basis for CMOs to educate their C-level peers on the challenges they face. However, by design, it does not offer practical models for addressing the issues. IDC has strong evidence that the customer data record is the fundamental design principle around which all customer facing activities and systems should be (re-)built. The customer record is increasingly the source for strategic insight, tactical planning, and performance metrics. Any marketer working in an organization without an enterprise customer creation process (with the requisite standards for customer records, data governance, and the infrastructure to support it) is set up for failure.

Unfortunately hardly any companies today manage customer creation as an enterprise process. We believe that this is the root of the universal "unpreparedness" revealed in the IBM Global CMO study. Having a practical model for implementing an enterprise customer creation process is the first step toward mastering all the key challenges CMOs and their marketing organizations are facing today.

ENTERPRISE customer creation is not something that only happens in marketing and/or sales. It encompasses every customer touch point over the lifetime of the relationship. It goes beyond the jurisdiction of any departmental leader and therefore must have C-level (CEO) endorsement and active support. It is the demand side equivalent of supply chain automation and we all know how WalMart conquered the world by mastering that side of the economic coin. On the demand side, the challenge is finding and forming relationships with prospective customers much earlier using channels and resources not traditionally thought of as marketing (or sales.) In addition the relationship needs to be tracked consistently from marketing to sales to finance, provisioning/fulfillment, support, etc - i.e. the customer data record must be uniformly defined and managed across departments. All the information associated with a customer record must be available to everyone involved in the process. It is a massive undertaking on par with the supply chain automation effort, but the reward is being months ahead of your competitors in terms of customer contact and relationship building – a key competitive advantage that will be very hard to displace.

Spark by Marketo

Marketo announced a new sub-brand called Spark targeted at the SMB market. It's a testament to how successfully Marketo has transitioned from SMB to the enterprise space that it has to go back and offer a new brand for what used to be its primary market. The demand for marketing automation at large enterprises is driving rapid growth for all marketing automation companies, and Marketo is no exception. So much so that smaller prospects are starting to perceive the company and its target market as having outgrown them. Not so.

SMB is intrinsic to Marketo's heritage and the company has no intention of walking away. The Spark offering is more than just a "lite" version of its flagship product. The idea behind Spark is that it is a bundle of software and services to help small companies quickly adopt and become expert in the use of modern marketing automation technology. Marketo is dedicating expert staff to offer training, support, and mentoring for its Spark customers. The importance of this cannot be overstated as marketing automation requires a higher level of sophistication, analytical ability, and business process expertise than most small companies have in their marketing departments.

The challenge for Marketo will be managing Spark as a sustainable business model. Typically the enterprise segment is much more profitable for software companies (SaaS or not). Large companies have more money, bigger projects, and greater potential for expansion into other business units. However, Marketo knows the SMB business well and has a subscription model revenue stream that's ramping up to the point where it can afford to support the launch of a down market offering until it starts to pay for itself. It is the rare company that can serve both segments well, but Marketo has clearly separated the two teams internally which IDC believes is absolutely critical for success.