January, 2014

  • January 29, 2014
  • NOTE: Some of this might be repetitive, but the idea of assessing where we are in the marketing automation revolution mass sense, to me at least.

    500px-Gartner_Hype_CycleAfter two years of fairly hectic activity in the marketing automation space it might be useful to ask where all the commotion has gotten us.  Once a captive of finance, which was concerned with reeling in marketing’s costs and rationalizing expenses with known, or at least knowable, benefits, marketing automation emerged in the last couple of years as a powerful tool for businesses trying to navigate the still dangerous waters of an ailing economy, a fragile recovery, and, oh, yes, a marketplace changing rapidly due to the influence of social media.

    The merger activity of the last couple of years has left the biggest players with competent marketing suites that few could have engineered on their own because marketing is a discipline that frankly requires different DNA than you typically find in sales and service.  As luck would have it, ExactTarget, part of the Salesforce Marketing Cloud, has done the hard work by producing a report, “2014 State of Marketing.” It is a good report too, full of statistics about current use and future plans and while I might quibble with some of the findings, it is a thorough compilation based on more than 2,500 responses by professional marketers.

    My immediate reaction upon reading it was that the marketplace is about mid-way through its transformation.  Already, high percentages of respondents say they have put in place many of the rudiments of what has become in aggregate a very large suite of tools.  A few numbers will give you the feeling of the report: 88% say they use Email Marketing, and 81% say they already use Data and Analytics while 78% use Social Media Marketing, 64% use Display/Banner Ads, and 75% use Landing Pages.

    There is much, much more in this attractive and graphically rich report and you can pick it up for a song even if you can’t sing.  What struck me is how well we have the outbound side of marketing covered and how much more work there is to do to analyze what’s going on in the market.  To me the data show that the tools have changed but the process remains the same and that’s the big point.

    I also read The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, by Erik Brynjolfsson and Andrew McAfee, two economics researchers from the MIT Sloan School.  It’s another pile of paper worth picking up because the authors make the point that the last thing to change during a transformation involving applying new technologies to business, is process.  How we use new technologies is what gives them their lasting power; prior to that adjustment you might be hitching a horse to a car.

    So it is with marketing thus far but as I’ve said already, that’s par for the course.  The cost of modern social based marketing is so low compared with previous generations of marketing tools that few businesses seem inclined to figuring out the best processes.  It’s cheap, cheap, cheap to plaster the market with emails or other outbound strategies.  We can now send out millions and millions of emails just to see what sticks and if a one percent response rate is all you get, so what?

    One telling statistic from the ExactTarget report shows that only 37% of the respondents use lead scoring and while 30% say they’ll try it this year but a full third say they don’t plan to use it.  But lead scoring is one of those things that can materially improve the responses you get from your marketing effort and it goes right to the heart of the process idea expressed by Brynjolfsson and McAfee.

    Lead scoring is about process and interestingly in their book Brynjolfsson and McAfee make the eye opening assertion that an average person with a decent computer, and a top-notch process can out perform a smart person or even a smart person with a good computer.  Think about those millions of emails.  Process is that thing that proves the worth of the technology investment but it has to be grown organically and that growth only starts when you decide to do something different with the new tools.

    It seems that finally developing process as well as other ecosystem externalities of the core innovation are what eventually brings the hype cycle full circle.  From a Trough Of Disillusionment to a Plateau of Productivity, as the Gartner folks would say, an innovation gains its rightful place in business when we begin to change processes to better use the technology in the first place.

    So, it’s clear from the report that the majority of you have spent the last couple of years gathering the marketing technologies you need to compete in some very changed markets.  But if you are not yet seeing the benefits you expected when you first took on the new tools, consider re-examining your marketing processes.  You might be surprised that with just a few tweaks you can make big things happen.  A good place to start is in lead scoring, you’ll be amazed at what you find.

    Published: 10 years ago


    Second Machine AgeI read two things recently that go together like peanut butter and jelly and they make for an interesting exercise.  The first is a new report, “2014 State of Marketing” from ExactTarget, one of the Marketing Cloud components of Salesforce.com.  The other is The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, by Erik Brynjolfsson and Andrew McAfee, two economics researchers from the MIT Sloan School. 

    Exponential growth

    This is the second effort by Brynjolfsson and McAfee in as many years and this book follows up with more detail last year’s effort: Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy.  While the first book hints at the benefits of the digital age, the new effort is a cautionary tale about the downside of automation as machines replace people at routine tasks (and some that are not routine).  But really the two should be considered one big volume.

    The central metaphor is the chessboard and exponential growth, which the authors boil down to the notion that the future evolution of technology builds on past experience but with an exponential twist.  For example, if you place a grain of rice on square one of a chessboard and double the prior amount on each subsequent square, very soon the pile is mind bogglingly large.  By the time you reach the second half of the board there isn’t enough rice in the world to do the doubling.

    Such is the power of exponential growth that it is hard to imagine the downstream effects once doubling begins and that is the point of other exponential effects in our lives such as Moore’s Law.  Let’s save the truth squad’s report for another time, you know, Moore’s Law is not a “law” like gravity or anything close or that each time Moore’s Law bumps up against the ceiling, someone comes along to rewrite it and provide more head space.  True laws don’t require rescue.

    What started as a prediction about doubling the number of transistors on a silicon chip every 18 months has been transformed into a more general statement about the power of layering invention on top of invention, technology on technology in a very short time until you have something unrecognizable to the original generation of technologists.

    In the world of digital data and automation driven by Moore’s Law, the second half of the chess board becomes a wonderland full of amazing machines doing smart things — cars that drive themselves is a favorite example.  But the second half is also full of pitfalls.  Machines can drive themselves, prepare tax returns autonomously, fabricate products, win Jeopardy!, and many more miraculous tasks that make us obsolete.  But machines are terrible (still) at doing the simple things any 2 year old does not to mention complex communication, social-motor-cognitive things and other jobs that might only require a high school diploma.  Teach a computer to tie your shoes and you will really have something.

    The authors’ solution is not to fight the machines but to find ways to win with them.  In a kind of 1 + 1 = 3 approach they make the interesting suggestion that a weak human with a good computer and a good process usually beats a really fast computer alone or even the computer plus a smart human.  This might be the most important point in the book and it drives us right into the report and my point about marketing automation in general.

    Applying it to marketing

    The “2014 State of Marketing” document represents information gleaned from a survey of more than 2,500 marketers and covers future plans and approaches to marketing.  What caught my eye is that in so many areas of marketing the demand for marketing technologies is saturating rather quickly.  To a large extent companies have surrounded themselves with outbound social marketing tools and many are disillusioned for predictable reasons.

    A summary page shows data about current and future use of specific marketing automation technologies.  Many of them already have high participation rates like 88% say they use Email Marketing, and 81% say they already use Data and Analytics while 78% use Social Media Marketing, 64% use Display/Banner Ads, and 75% use Landing Pages.  Indeed, it seems like the majority of outbound marketing tools have high adoption rates overall.

    If I had to evaluate the state of marketing in line with this data and the MIT scholars, I’d have to say that we’re only at the 1 + 1 = 2 stage.  We’ve got great machines and smart people using the combination of marketing hardware and software but I’d say that we still lack process.  That’s because process is one of those things that comes along rather late in adopting new technologies.

    Process conundrum

    The most natural way we adopt technology is to attach it to old processes.  So we see from the report that organizations are sending out well over a million of emails per year — about half send less and half send way more.  This says that the processes used in marketing have not changed much from the days of sending offers through the mail.  Back in the day you sent mail because it was a cheap way to see what would stick.  Today sending out massive numbers of offers isn’t just cheap, it is virtually free but it makes you wonder about all the discussion of how new technologies would enable us to hit the bull’s eye rather than relying on making random and rather poorly defined offers.

    The processes now being used by many marketers are scarcely different from the old spray and pray approaches of broadcast media days.  The whole point of adding a social element is to figure out which customers to invest marketing effort in but the cost of using social in broadcast mode is so low that few of us are bothering to think differently about our processes yet, or so it seems.

    500px-Gartner_Hype_CycleIt all comes back to the hype cycle and the realization that there seems to always be a gap between introducing a new technology and having it achieve its greatest utility.  The reason for the gap, which you can infer from Brynjolfsson and McAfee, is that it takes time for complementary technologies and processes to evolve once the primary innovation has occurred.  In our experience those things come from ecosystems of other vendors who develop things and processes that optimally utilize the original innovation.

    If you look at the data from the report you can clearly see that marketers have adopted modern outbound technologies sure enough but old processes are being maintained while inbound strategies play catch up.  A telltale sign from the report is that only 37% of the respondents use lead scoring and while 30% say they’ll try it this year, a full third say they don’t plan to use it.

    But lead scoring could easily be the poster child for process, for getting from old school broadcast marketing to the future.  And who wouldn’t want that?  Consider this.  Your leads, even from a well-structured nurturing campaign, are a dog’s breakfast of potential deals that will never close and some that will if a sales rep picks up a phone.  Wouldn’t you like to know which is which?  Of course you would because leads are a perishable commodity just like the bananas in a grocery store.  A lead doesn’t rot like a banana but it goes away because someone else is going to approach it first and that’s what lead scoring helps with.

    This is all in line with other bits of data that I have collected suggesting that even with the analytics capabilities marketers now possess we still don’t collect enough of the right stuff.  Specifically, we let sales off the hook too often by not demanding feedback on the quality of marketing qualified leads.  How do you improve without it?

    Also, we still don’t collect enough data about our marketing processes and this goes right to the heart of the 1 + 1 = 3 argument.  By default we collect data about our programs such as costs and what’s harvested, i.e. leads, dollars, products.  But what we fail to collect is data about our processes, specifically time.  We often don’t timestamp marketing processes and without that simple extra data collection we give up knowing how long marketing opportunities stay in various states.  Absent this basic data and the information derived from it we can’t easily know which programs work best and a whole array of other stuff.

    This is getting long so let me net this out.  We’re mid-way through the social revolution according to the data.  But according to the book we haven’t yet figured out how best to use the stuff that we have.  That knowledge is on the second half of the chessboard and it is only when we get to that point that we’ll see the big marketing benefits we’ve always been promised.  You can call it a hype cycle if you want but from now on I’m going to call it the creativity gap.

    Note: This blog was cross posted at the Lattice Engines blog.

    Published: 10 years ago


    Many thanks to my growing Chinese fan-base for their extended comments on this blog.  It’s great to know that so many of you are so interested in CRM and all of the recent developments here.  I’d be remiss if I didn’t make one teeny tiny point for your edification though.  The vast majority of my rapidly growing readership does NOT read Chinese in any of its forms, nor do I.  Unfortunately, then, I must continue removing your enthusiastic comments from my site.  I realize that I am depriving many people from learning about great deals on watches and erectile dysfunction remedies but, as I say, my peeps don’t do Chinese.  Have a nice day!

    Published: 10 years ago


    modern-architecture-in-the-summer-capital-of-BulgariaIf this is going to be the year of the platform that I discussed last time, it will also be the year of the subscription business model.  This is, I hope, the last time I drag out the “year of” phrase attached to anything significant unless it’s the year of MY Tesla and that’s highly unlikely. The real reason for any description in the context of “the year of” is that it is shorthand for, hey, this stuff has reached critical mass and it’s now time to pay attention or risk having your lunch money taken.  So it is with subscriptions and their enabler the software platform. 

    Curiously subscriptions and platforms have grown up together even though neither is yet a necessary or sufficient requisite of the other.  ZipCar and its ilk don’t have formal platforms and the idea is not relevant to their models.  Wireless vendors all have homegrown platforms primarily to run their Byzantine pricing and billing models and while that’s closer to the heart of the matter it’s still off center.

    Software platforms have lately become the enablers of subscriptions just as subscriptions have opened up the market for platforms.  Platforms may be the saddle point of maximum technology flexibility and business agility and lowest cost to operate which fits well with the subscription model.

    Late last year a report came out of the Economist magazine’s Intelligence Unit that pinpoints the state of subscriptions.  It’s nothing that I haven’t been saying for the last five or six years but the Economist logo adds some prestige.  To recap, subscriptions are good at enabling customers to get exactly what they want without the added cost and overhead of ownership.  Subscriptions also enable the CFO to spend limited funds more incrementally and thus get greater value for every hard earned buck, pound or euro, etc., etc.  What’s not to like?

    However, one thing the report takes to the next level is the idea that subscriptions now have sufficient critical mass to be seriously evaluated by the enterprise and that’s breaking new ground.  More importantly, the definite implication is that enterprises should not simply consider subscribing to things like Salesforce — if they haven’t already, their lunch money might already be gone.  The implication is that enterprises ought to be thinking about how to deconstruct their products and services while reintroducing them as subscriptions.

    Surely, the Economist doesn’t mean to say that everything should go to subscriptions in the next three years.  If they did there would be much rejoicing at the intersection of Routes 101 and 92 in Silicon Valley, home to a disproportionate number of subscription pioneers.  Taking business to subscription nirvana will take longer than three years and when it’s done there will still be conventional companies selling products and services just as there are still a few thousand pesky mainframes in mission critical business processes at this very moment.

    I do think, though, that even those survivors out on the long tails of the Bell curve will have to adopt a subscription mentality.  What I call the Subscription Culture takes us beyond simply the Subscription Economy to a place where customers think like subscribers regardless of what their vendors are doing.  Succinctly, this means people have been trained to expect the same kinds of customer relationship that a subscription company provides and disappointing them is not good for the top or bottom lines.

    The subscription relationship includes some obvious goodies like very low costs amortized over the life of the relationship and the absolute right to pick up stakes and move on if ever the customer sees that all the succulence of the subscription has dried up.  In that regard, there is nothing as American as a subscription, westward-ho and all that, less obvious, but more critical for the vendor, is the imperative to never let the subscription get stale.  That tall order falls again into the lap of, not just analytics and big data, but the platform, which ought to have the analytics, workflow, social listening and collaboration all built in.

    By all that, you can see that the Economist’s report is not wrong in expanding the concept of subscriptions to include other related models like renting.  It seems subscriptions are slightly more popular in America and rental models are slightly preferred at the moment in the UK.  Either way you slice it — and it might just be tax laws defining the relative need to take title to something — the fundamentals of subscriptions like how to configure, price, pay for, and support them will be relatively consistent.  So this leaves us with the year of the platform supported subscription service run by, and in many cases purchased by, the enterprise.

    NOTE: Next time I write about subscriptions and even platforms it will be with an eye to Erik Brynjolfsson’s and Andrew McAfee’s excellent new book, “The Second Machine Age: Work, Progress, and Prosperity in a time of Brilliant Technologies.” These two MIT professors have their fingers on the pulse of a very important trend and I am advising people to take a look at it in the same way a time traveler might advise you to mortgage your house and put the cash on Secretariat to win the 1973 Kentucky Derby.  (BTW, I don’t know these guys and I am not making anything endorsing their book.)

    Published: 10 years ago


    cloud-computing-providerMany thanks to Chris Bucholtz for the work he does selecting, reading and ranking the top CRM blogs of the year.  Chris’s list contains 20 top blogs here and here and it includes names of friends like Paul Greenberg, Jesus Hoyos, Esteban Kolsky, Brian Vellmure, and Louis Columbus just for starters.  If you want to know what’s going on in CRM you can start with that list.

    Tracking 20 blogs to get enough familiarity with them to judge and rank them is a tall order.  Bloggers post frequently and even if Chris reads just one post from each blog each week that’s a minimum of a thousand per year.  I am sure he reads much more than that too.  So hats off to Chris for this valuable service.  If you’re wondering I also made the list, which is very gratifying.

    Published: 10 years ago