If you ever wanted to give yourself a nice, easy job you probably would not pick on-line retail marketing—the pseudo-math alone will kill you. Consider the algorithms that keep the balls in the air. You need to track and predict customer behaviors of all sorts like what was previously bought or even looked at, who the customer is demographically, as well as the vagaries of your own products, promotions, locations, people and who knows what else.
Ironically, these are the kinds of things that human beings can do rather well. I once went into a Nordstrom store to buy a shirt because a business trip went long. The woman who greeted me in the men’s department sized me up immediately and directed me to the color I wanted and my size all in about 10 seconds. I was amazed.
But people are finite resources, don’t scale well, and they are relatively expensive. My sales associate had a lot of colleagues and they all had the advantage of seeing customers to size them up. Today’s retail environment is not often that simple and we find ourselves dealing with thousands of customers at once who are often online and not subject to visual inspection. Consequently, we need software that not only does the sizing up, but that also figures out what we want or need, sometimes before we do. That’s the goal that modern retailer software vendors have set for themselves and something that Salesforce this week signed up for when it introduced Salesforce Marketing Cloud Predictive Decisions.
Like other products in this niche, Predictive Decisions analyzes customer engagement and proactively delivers recommended content, products, or offers, to create personalized customer journeys across channels at massive scale. It is hard to analyze this offering and to say whether it is better than a competing brand or not but that’s not the point.
Predictive Decisions is a great example of how companies can take the next steps in solving for the customer. In my recent book, I make the observation that empowered people + adequate computing + well-tuned processes are the secret to future business success and Predictive Decisions is a great example of this “rule” in action.
This is really the old People, Process, and Technology mantra turned on its head to great effect and if you break down my little formula you can reach a startling conclusion. Consider this: people and technology are in a dead heat today. Organizations understand that they can’t simply recruit and hold onto only the top talent and therefore they have to succeed with rank and file employees—that has always been true.
Likewise, technology per se (let’s say hardware to be specific) is not the game changer it once was because great, fast computing is now ubiquitous and cheap. So it’s really hard to steal a march on your competition to gain market advantage through hardware.
But in process we have access to an almost infinitely variable set of competitive advantages if we can adapt and leverage them. This is what Predictive Decisions promises to do in my view. With analytics and algorithms running at the speed and scale of technology rather than that of a person’s brain, a vendor can process huge numbers of variables and synthesize solutions that result in content, products or offers that are relevant to each customer.
But, don’t be confused, this isn’t about the offer or content—this amounts to building custom processes for each customer on the fly at the exact moment the process is needed. I know lots of vendors, and maybe even Salesforce, will disagree with me but the most important output of products like Predictive Decisions is not the recommendation whatever form it takes. What’s most important is that the system, by generating a unique process for each customer, remains authentic to the situation.
I use authentic when others might be comfortable with personal or similar words. But there is no such thing as personal anything when dealing with a set of algorithms; if the algorithms are good, they generate a facsimile of reality and that’s authenticity. Truth be told, most customers don’t want personal relationships with every vendor and attempting the personal might even hinder what ought to be a straightforward and professional interaction. That’s why I use authentic.
When my shopping experience is over, I am not having a beer with the associate or the computer. My highest goal is to interact with someone or something that gets me and therefore enables my success and that’s all about process. So congrats to Salesforce on yet another product release but this one isn’t about technology, it’s all about process and Salesforce customers should be glad about that.
The continuing roll out of platform technology is bringing many applications together to support better, and in many cases new, business processes. Not long ago it was nearly impossible for back office people to know about what the front office was doing, in fact, it was hard for marketing and sales to know how they were affecting each other. But now with platform technology bringing attention to and fostering better interfaces between front and back offices and even between departments, it’s easy for different areas of the business to gain a better understanding of operations as a whole.
Improving the linkage between sales and marketing has been a long term quest that has not been fully met yet, but we can see the outlines of a future that’s more integrated and informed. More exotic combinations are also beginning to present themselves. For instance, compensation management is coming into focus as a system that can bring together and influence both front and back office business in ways that few people could have predicted. Compensation is becoming a crossroads of sorts between HR, accounting, sales, marketing, and even service areas.
This should be no surprise. Compensation management systems are the heart (and record keepers) of how we motivate and reward people. The number of potential interfaces between compensation and the rest of the business suite is big and includes much of the rest of the business.
Since compensation is the natural reward for good business behavior it is also an accurate predictor of all kinds of activity within a business. For example, integrating CPQ (configuration, pricing, and quotation) with compensation provides the finance group a window into the pipeline that has not existed before. While the aggregate pipeline numbers can be developed from more traditional sales reports, linking CPQ with compensation provides an easy way to peer into the revenue mix in time to make any needed adjustments.
This approach could easily open a window to show product marketers if the sales department is penetrating the market with specific offerings such as a new product line that replaces an older one. This information would be useful to the supply chain as well as to the sales and finance teams. Of course deals in the pipeline cannot be counted as revenue, but taking a big data approach businesses can develop organizational metrics for things like close rates and make fairly accurate projections about revenue and future supply demands.
At the same time, data integration gives sales people and their managers better insights into their own forecasts. A pipeline deal without a proposal or one with a proposal that is aging without customer activity should provide more insight into forecast quality than a more generic pipeline report.
Compensation management will certainly help the finance department to close the books faster and to accurately pay the sales team. Both are valuable to any business, but considering compensation management this way only accounts for limiting a liability. This may include the cost of making a compensation error or the time required to tabulate all of the commissions, bonuses, spifs, and other incentives as well as wear and tear on the finance group that has the responsibility for running the numbers.
A more integrated approach to compensation and integration across departments suddenly gives business leaders greater insight so they can improve operations. That’s a significant development and one that will likely be emulated across many businesses in the year ahead as platform technology makes it easier to consider whole business processes that span departments and not just the transactions that those processes result in.
Platform is changing everything
If you think that cloud platforms are simply a nice alternative to software licenses, you should think again. It’s human nature to apply new technologies to old problems and that’s what such an approach really does. But sooner or later, and that means now in this case, the market figures out the true impact of new technology and things change in significant ways. Platform is like this. For almost 15 years we’ve seen SaaS and its variants taking up space in the market and picking off niches that were less desirable to the big license software vendors. That idea crossed the chasm just before the Great Recession, which muffled the impact for a few years but today, subscriptions are back with a vengeance. All of the shows I’ve been to lately are put on by cloud vendors and all either have platforms or want to convince you that they are well behaved citizens in almost any major platform ecosystem. So cloud computing + subscriptions = massive change, but…
Subscriptions are the tip of the iceberg
Subscriptions are the first of a long line of new business models that will disrupt business as we know it. The world doesn’t need to move completely to a subscription economy or even a majority subscription economy before subscriptions and other models will have a significant impact on the vendor customer relationship — hint, it’s already happening. I got this from my own observations but they were crystallized by Jeremy Rifkin through his book, The Zero Marginal Cost Society which I read on airplanes, mostly. Rifkin’s thesis is simple. If you can subscribe, rent, borrow or, even better share, something (possibly even make it with your handy dandy 3D printer), the marginal cost to the consumer becomes something close to zero. Ditto for home generated electricity from roof to solar panels and greatly reduced logistics needed. The implications are significant because an economy with even 20 percent of its commerce done through subscriptions, exchanges, and sharing makes it very difficult for a conventional company to show growth and profits. So what happens to Capitalism? Thomas Piketty is fascinated by…
Capital in the Twenty-first Century
Piketty’s book, which I also read on airplanes and, which at 577 pages gives you some idea of the amount of travel I have been doing, sees the twentieth century with its wars and economic disruptions as an outlier to history. Piketty thinks the average growth rate of the global economy will settle back into a long term range of 1 to 1.5 percent (from a Chinese high of up to ten percent per annum) in this century but that capital growth will maintain an average between 4 and 5 percent resulting in continued and exacerbated inequality. According to Piketty, the top percentiles in Europe own the equivalent of 6 to 7 times GDP as wealth while in the US the number is more like 5 to 6 times. Piketty’s point is that this kind of wealth accumulation could go on for a long time.
But Rifkin already sees a zero marginal cost society reaction to Piketty in which capital might become irrelevant. The two books should be read together as they form a big picture story. But all of this means that…
We will need to deal with the IoT soon
The Internet of Things (IoT) is growing out of the above-mentioned trends. Subscriptions and platforms including an Energy Internet and a Logistics Internet that together with the Communications Internet are pushing hard on the zero marginal cost accelerator, drive this. It makes sense to me that in a free market where the individual is free to pursue enlightened self-interest, that zero marginal cost models will become a norm. IoT will be the near zero cost approach to understanding customers in an attempt to eek out profit when capital becomes mostly irrelevant. If that all happens, it will be the first time the 99 percent had a revolution that didn’t involve blood shed a la French Revolution or the American one for that matter. All of this suggests that sales is no longer the effective end of the CRM stick and that…
Marketing is leading CRM
Zero marginal costs imply no margin to be dedicated to sales activities or people so it is very interesting to see the leaps that marketing automation is making. From Eloqua to Marketo to the Marketing Cloud and more, marketing, with its superior analytics (compared to sales) is sitting in the catbird seat. Sales and SFA aren’t about to go away but all of the above puts more pressure on sales people to come in from the cold and accept modern techniques without the complaints about SFA or CRM that it’s hard to use or that it detracts from selling time. Those arguments simply don’t hold water any more. I pity vendors using them to sell their favorite sales automation strategies. Interestingly, this affects how we engage because I think…
Customer engagement is wide of the mark
As customers we may not want an interrupt driven, broadcast advertising model for relating to vendors but neither do we want a neurotic relationship with any vendor that is always asking “How do you like me now?” Who are these guys, Ed Koch? In a country that highly prizes independence and a go-it-alone mentality (not saying it’s healthy, BTW) the neurotics won’t prevail. What we’ve been iterating towards all these years, and I suspect what vendors develop a rash to whenever they think about it, is an interrupt model driven by the customer. I really think that’s it. The vendors best positioned in this economy that seems to be determined to re-invent itself yet again, are the ones that can best prepare to be interrupted and not be surprised when it comes. All this suggests greater reliance on platform supported IoT and sensing customer relationships, so here’s a simple question…
Can we please be done trying to accelerate the sales process?
Enough. Done. Finito. Havlicek stole the ball. It’s all over. Railroads accelerated the sales process. So did telegraphs, telephones, automobiles, and maybe fax machines. Everything else is anti-climax. Why? If you follow the train (no pun) of the last few sentences, over the last couple of centuries we’ve been reducing the lag time between sales touches, which has arguably reduced the sales process time. Trouble is we’re now down to nearly instant communication so where do we go from here? If you’re a high-speed trader like in Michael Lewis’ new book Flash Boys you need to work in nanoseconds to affect outcomes. My bet? Not gonna happen in everyday selling in a zero marginal cost world. The key point is that people playing the customer role still make decisions the way they did before railroads. They think about the decision, weigh the pros and cons, sleep on it, or ask a trusted friend. All of this takes time. If your business really, really needs to accelerate selling then refer to the point about marketing above. The way to make it appear that selling is accelerating is to stuff more quality leads and deals into the pipeline and to use good metrics to verify that you aren’t back-sliding.
The end game (for now)
All this adds up to increased emphasis on the customer buying process but we also now have to add in the sharing, networking, community oriented processes too. I still see plenty of daylight for CRM to prosper but the relative mix is definitely skewing towards service and marketing as customers continue to pursue their idiosyncratic needs based on logic they alone fully comprehend. Meanwhile he who has the best platform, one that supports incredibly agile business processes and their constant reformation might not win but certainly will survive. That’s my view from seat 16B.
One of the subtexts to the marketing automation explosion is analytics. Having a CRM system might make you wonder why marketing automation is needed at all but the reasons boil down to analysis and improved data collection.
Let me share some information with you from a new marketing study I did this summer. First the data — we asked marketers if they used CRM, marketing automation and business intelligence to process marketing data. The big dog was CRM with a 54 percent share. Next came marketing automation with a full third, and last was business intelligence with 22 percent. So far, so good.
I also asked what kind of data marketers collected and got some typical responses. From that data we get measures like cost per lead, cost per program, cost per revenue dollar, total leads and similar things — heavy on controlling costs. But only single digit responses came in for time stamping marketing events, measuring deal velocity and average lead time in a marketing stage. To me these are all critical measures that still too few people are using and it’s sad because these things separate monitoring marketing performance from managing it.
When you put the two things together — whether or not they’re using analytics and what kind of data companies are collecting, and thus analyzing and reporting on, you see there’s some work to do. I’d say from this data and some other stuff I am tracking, that we are squarely at the monitoring and not the management stage of the marketing revolution. In other words it’s still early days. That’s not to say that there are no companies out there doing the right thing the right way, just not enough to move the needle much.
What would it look like if the needle was moving? Good question. I think we’d be moving away from monitoring marketing as a cost and more companies would be managing it as a strategic weapon. When you can collect the data we’re collecting — which is pretty good, though not perfect, we still need more of a sense of time — and use analytics rather than simple report writers, will be able to cross tabulate seemingly unrelated data to derive new insights.
For example, suppose you were half way through the reporting period and it was clear you were going to miss your number. What would you do to rectify the situation? Obviously, you’d have to put more deals in the pipeline but, and this is critical, do you know how to generate leads with relatively short fuses so that the marketing spend will have an influence on the current quarter? You can depend on sales to beat the bushes to see what happens and you can always try to find some low hanging fruit in the customer base for upsells or cross sells. But that’s rather random and it has a 50/50 chance of working. In the end everyone would look heroic for trying and some heads might roll but that isn’t the same as making the number.
That’s a tough assignment but one that analytics is suited to providing an answer for. If you time stamp marketing events, chances are good that you can figure this out without breaking a sweat because you could figure out close time by program. If you had two marketing programs, one with a close time for leads that’s less than the 45 days or so that you have or one with a 90 day rate it’s a no brainer which one you’d use but so many marketing organizations don’t yet slice and dice their data to provide these results.
So while it’s good to be able to tell the CFO what you spent and the VP of sales the number of marketing qualified leads you generated and how many of them were accepted by sales, none of that really talks the talk of the boardroom which is much more along the lines of winning and not simply doing your job.
Some of my other data also shows that sales is still not providing enough feedback to marketing on the leads it develops and that’s too bad. But I suspect it’s because the two organizations — in too many instances — have not come to agreement on what a lead is or what an opportunity is and why it’s important to give feedback. It also suggests that there isn’t enough agreement on the marketing-sales process and handoff.
What happens when a sales person rejects an MQL? It should go back to nurture in many cases, but too often marketing doesn’t have visibility into the sales pipe and rejected MQLs just evaporate rather than going back into the hopper. So to net it out, we’re making progress, there’s more to do, and these are classic signs, to me, of an early market in marketing. And the tools you use determine the kind of results you can imagine. Funny how that works.
Bulldog Solutions Blends SiriusDecisions’ Waterfall Method with Full Circle’s Performance Management for New Paradigm in Marketing Management
One of the great unsung themes running through marketing today is organization, which says a lot about how far marketing has come in the Internet Age. Not long ago, organization was less critical because virtually all leads were the same. They were low quality and generated from broadcast methods like advertising and direct mail, which meant that they required much more effort to convert into something useful in sales.
But a lead that comes from a business card collected at a trade show is potentially different. So is a registration on a website that provided a piece of thought leadership to the prospect in exchange for the data provided on a form. These leads should take less time to make sales ready and have a higher chance of closing on average. So why would a marketing organization comingle these leads with those that came from a lower productivity campaign?
They shouldn’t. When comingling occurs it becomes hard or even impossible to determine which marketing campaigns provide the biggest bang for the buck. That’s the essence of SiriusDecisions’ new and improved marketing waterfall methodology. Now, I am not an expert in the method nor do I work for Sirius, but intuitively it makes a great deal of sense to do that kind of organizing.
Keeping birds of a feather leads conceptually segregated makes it much easier to do meaningful things with them. For instance, you wouldn’t send the same introductory content to a prospect that has a defined need, budget and timeframe that you would send to someone just looking for information. Rather than that, you’d fast track that lead and ensure that every time you touch it you add value. And that takes organization.
If you organize your marketing pipeline into distinct tracts, or as SiriusDecisions would say, waterfalls, you will be better able to apply consistent policies and procedures. You will also be able to determine to a higher degree of certainty, which programs work best in particular situations.
Bruce Brien is senior vice president of client success for Bulldog Solutions, a business-to-business demand generation agency for enterprise businesses in high tech, financial services and insurance, and he knows quite a bit about marketing, demand and organization. Bulldog has been using Full Circle CRM since December of 2012 and with a full quarter of data and experience he has a good perspective on the Sirius waterfall methodology and Full Circle CRM. I caught up with him the other day to see how things are going.
Brien is level headed and logical about everything and while he rarely uses the word “organization” that’s pretty much what he means when he says things like, “Full Circle is not a magic bullet, you have to decide to fix your processes first.” Fixing processes means making sure your data is clean and that you have data governance rules in place and follow them. In a word, organized.
If you are an old school marketer this might surprise you but the point is clear, if your database includes opportunities without contacts or it has multiple duplicate entries, then you will need to de-duplicate and update your data before you can reasonably expect to have success with either the waterfall or Full Circle. While you are at it institute some data governance rules to prevent this sort of thing from happening again. You will also need some buy-in from sales about what a lead really is and about how the SFA system needs to relate to marketing for the simple reason that many SFA systems don’t offer data governance so people must. That’s organization again.
With organization, Brien has discovered he can learn a lot using Full Circle. For instance, Bulldog now measures four separate waterfalls for each of its key lead sources — one for marketing, one for sales, one for telesales, and even one for existing customers making repeat purchases. Each waterfall has a cascade of well-defined events and rules that stipulate how and when a lead matures along its path to a sale.
The rules and data governance are all part of more organization. In this case, they represent agreements within marketing and between marketing and sales, concerning what a lead is and what should be done at each step in a phase. Full Circle CRM comes into play here because its analysis can tell the user how things are proceeding at each part of the waterfall. Full Circle CRM helps managers to understand what specific results accrue to each process and how well matched results are to the type of lead in each phase.
In prior marketing approaches, where the leads were less organized it would have been harder or even impossible to figure out if a particular program was working or what its returns were because the programs were operating over a heterogeneous group of leads. But with the Waterfall method to organize marketing flow and Full Circle to do the attribution, it’s easy for Brien to see what’s working and what’s not.
Full Circle’s greater ability to attribute results to specific inputs, “Just gives you the information you need to make adjustments,” according to Brien. Early in the life of a Full Circle implementation, those adjustments might come frequently but over time the pace should slow as you might expect in any fine tuning situation.
You should also expect that the cadence of change would depend on your sales cycle. Enterprise sales cycles that can take six to twelve months are slower than sales of more tactical goods and services and so the rate of change would be different. But no matter how you slice it, the days of quick and sometimes dirty marketing are behind us. What’s here now is a demand for greater accuracy and precision and that takes greater organization.