• April 3, 2013
  • Marketing is taking CRM by storm; while we’ve all been fixated on social media, many companies — both vendors and end customers — have been acting more broadly by acquiring and extending marketing solutions.

    At the recent Microsoft Convergence 2013 held in New Orleans in March, the company put a lot of emphasis on marketing.  Microsoft presented sessions on Marketing Pilot, a recently acquired and renovated marketing campaign company, and at the show announced its acquisition of Netbreeze a marketing analytics company.

    Also, at the end of last year Oracle bought Eloqua and Salesforce has introduced its third cloud dedicated to, what else? Marketing.  There are other examples too of free standing marketing companies like HubSpot and Marketo or companies like InsideView, a marketing intelligence company, growing like weeds.  So what’s going on?

    It would be a natural conclusion to say that marketing had been the final CRM frontier and that companies had reached stable points in their sales and service solution rollouts so they simply embarked on marketing.  But that’s rather simplistic and it violates a cardinal rule of business — spend money to make money or to save it, but don’t spend just to spend.

    To appreciate what’s going on you have to step back and take a more nuanced view of the market place and the economy at large.  When the economy tanked nearly five years ago it took with it a lot of jobs and capital, which resulted in slackening demand and that slack is still with us.  Advances in technology are eating up even white collar jobs today and all of this has a depressing effect on demand.

    Also, interest rates continue to test the zero lower bound as Paul Krugman might say, in part because corporations are flush with cash and because consumer borrowing is still lackluster.  There isn’t enough demand for capital so rates luff like a sail in a headwind.  Not enough people have jobs and banks, especially today, won’t lend to people who don’t have the means to repay the way they did in, say, 2005.

    So, this is a long-winded way of saying that demand is slack, that customers are the rate limiting reactant in the economic formula.  When demand is slack, companies without a clue hire more sales people, savvy companies step up their marketing games to help identify likely customers without spending the expensive resources involved in putting a sales person on the road.  And all of that is a long-winded way of saying that marketing is hitting its stride because demand is slack.

    You could argue that in other times and circumstances, for instance when there is no demand such as at the beginning of a new market, a niche or a category, it makes sense to do missionary selling and marketing is a bare bones affair dedicated to generating PR and brochures.  But this is not then.

    Today, most markets are not new.  Customers have already bought version one or two and are smart about what the next edition ought to deliver.  They’re also happy to not spend their money if they can’t get the deal they want.  Oh, and by the way, there’s a lot of competition today so forget about those 65% gross margins that version one delivered, that’s not on the table.  Smaller margins have little room for expensive and risky approaches to the market.

    For all these reasons, and some others, marketing has become the hottest ticket in town and most of the CRM vendors have demonstrated an understanding of this reality and they are acting accordingly.  Consequently, marketing vendors are having a field day.

    This won’t last forever, nothing does, at some point the wheel will turn and there will be whole new fields to conquer with some new idea and the need for the elaborate, scientific and statistically based marketing that we are now constructing, will fade away.  We’ll probably hear some company talk about expensive and over engineered marketing approaches in favor of sleek new ideas about the relative importance of sales over marketing, like they just invented the wheel.

    But for now, demand is down, margins are under pressure and competition is tough, tough, tough.  And marketers are getting their day in the sun.

    Published: 11 years ago

    Oracle scored points in its ongoing battle with for primacy in the CRM world.  Personally, I am not sure it matters much because the two companies’ approaches to CRM are so different.  Coke or Pepsi?  Harley-Davidson or Honda?  Who knows?  At the end of the day, it’s about helping a customer realize a vision of customer outreach.  Today for Sony-Ericsson the answer was Siebel.

    What’s interesting about the selection is that it plays so well to Siebel’s strengths.  Over the last five years and under the wing of Anthony Lye, Oracle has carefully managed a customer base of some of the world’s largest companies as they grapple with what to do in the face of increasing complexity brought on by cloud computing and social media.

    They’ve done a lot, not simply upgrading Siebel and incorporating new technologies but they’ve gone a step further and analyzed how Siebel customers would interact with their customers in the years ahead.  The answers were surprising and inspiring.  One big take away from Siebel’s thinking is the importance of conventional B2C marketing.

    The result has been a sophisticated product and a business process they call clienteleing (not sure about that spelling).  With it, a vendor representative uses analytics and customer history to make intelligent recommendations.  The result is marketing in action or customer experience management and it matters to companies that have hundreds of thousands or even millions of customers.

    The product works well on conventional computing devices as well as mobile and gives a vendor selling consumer devices an edge, especially in an age of product line extension.  Simply put, there are so many choices and options today that a vendor can use the automation help.

    Marketing has made huge strides in the greater marketplace during the CRM era but one knock against it is that marketing products are largely still separate, third party add-ons.  The integrated solutions have done great service and are very useful.  But tight integration between advanced marketing products and the rest of a customer record — an Oracle specialty — might have pushed the deal over the line for Oracle.  I expect we’ll hear more from Oracle as it potentially builds out a niche in this kind of marketing automation.

    Published: 13 years ago

    Marketing has become the new hot spot in CRM.  During the recession and even before, there was a great flurry of interest in customer service and related things.  Consequently, we have seen a lot of attention being paid to customer experience and much of the social media oriented growth in that period was centered on the existing customer.

    As the economy has begun to improve the orientation has been more toward sales but with a decided twist.  By their actions, vendors have made it clear that they understand that the rule of the day is cross selling and up selling the customer base.  That’s a big difference from rushing out to sell net new brands, products and categories.  With that shift it becomes more important than ever to market well and at a macro level that spells the rising importance of marketing automation.  This might seem redundant but it is not.

    When we sell net new categories marketing is rather bare bones.  Uber-marketer Thor Johnson describes marketing in explosive new markets as PR and brochure marketing and he has a point.  When the world is a green field you need little more than a list of names to cold call.  But the tenor of these times requires more incisive understanding of customer motivations and needs, hence the emphasis on data gathering through social and other channels, analytics and even revenue performance management.

    I have written about all of these ideas before but the difference between then and now is that I was early then and today the change is upon us.  You don’t need to look far for proof.  The Salesforce-Radian6 nuptials are proof enough but if that was the only proof point you could be skeptical.  However, numerous indicators suggest that this is real.  Revenue performance management (RPM) with its emphasis on embedding analytics into sales and marketing business processes is a case in point.

    RPM is all about building greater certainty into the sales process and if you dig a little it makes perfect sense.  When selling into an established customer base the demand is relatively lower than it is when selling into a new market but the costs don’t change much.  Consequently, a smart vendor will not simply chase every suspect but gather evidence of need, demand and ability to pay before committing expensive sales resources.  Depending on the market, the vendor might forget all about direct sales and opt for channel representation or retail selling, each of which off-loads significant expense.

    The reasons are manifold.  Margins are smaller the second or third time around and subsequent products have to pack more value.  Look at your latest wireless phone, how does it compare in features and functions with the device you had at the beginning of the century?  Now, how does your monthly wireless bill compare with the bill you paid ten or more years ago?  I rest my case.

    All of that speaks to an era when marketing is ascendant.  The last time something like this happened, in the US at least, manufacturing was king and we were able to stamp out any number of products for pennies.  To keep the engine of commerce running we marketed the heck out of products and ushered in the golden age of advertising abetted by the rise of new technologies ideally suited to mass marketing — broadcast medial.

    The situation is not identical today.  Manufacturing went to ultra low wage countries and we became an economy dominated by the service industry.  Smart vendors have tried to raise the idea of service to an art form calling it an experience and, of course, the experience starts with marketing, and our own new messaging technology, social media.

    This entire preamble has a CRM point.  If you look at the major CRM suites marketing is, in many cases, under-represented.  It is a sub-division of accounting in many places and that might be a good thing.  Before marketers could take an equal place in a company’s revenue discussion, they had to learn to talk the corporate talk.  In addition to the usual lingo of clicks, responses, placements and square footage, marketing has had to learn the language of ROI and it has done that or at least the process is underway.

    Today, in addition to the understanding of the art of marketing, advanced marketers are speaking the language of cost per lead, campaign ROI and revenue.  This change comes along at precisely the right time as vendors in both B2B and B2C worlds grapple with a dynamic marketplace where success requires more than brute strength cold calling or uninspired retailing.

    In this environment I expect to see more of the established CRM companies taking a second or third look at marketing and to strengthen their offerings beyond the basics.  This makes for an interesting time if you happen to be an independent software company specializing in marketing, social media marketing or analytics.  The IPO market is beginning to build but as the Salesforce-Radian6 deal shows, a good company doesn’t necessarily need to IPO in order to have a big payday.

    Published: 13 years ago

    A long time ago I wrote a white paper about how on-demand technology would change business.  The paper covered all of the ideas you’d expect including lowering costs and improving access to on-demand applications.  But there was another part of the paper that speculated that if technology was that easy to come by then the next thing to look for was enhanced service based on the technology.

    In other words, technology access would cease being a gating factor in executing business processes.  Replacing technology as a gating factor would be having the smarts to use it optimally.  I envisioned that service companies that had operated more or less locally would, or at least could, become national or global by selling their expertise based on the on-demand technology.  The computer and telephone enabled public relations firms to become national in scope, but a bit more is required for a marketing services company or a design company for example.

    It has taken a long time and it seems what happened first and what I had not fully foreseen was the globalization of applications based on platform technologies.  Right now, Salesforce appears to be the most successful practitioner of that art.  But now we appear to be at the beginning of an era when business services will become global or at least national based on the consolidated expertise of some organizations.

    Judging by some of Sage Software’s recent actions, that globalization might be taking off at the SMB end of the spectrum.  Recently, Sage announced new marketing services for its ACT! customers.  The first service will be email marketing available on-demand.  Now this may not seem to be a very big move since there are many independent email marketing providers already on the market like Constant Contact, ExactTarget, VerticalResponse and many others (you get 36 million hits on Google).

    But don’t lose sight of the bigger picture.  With a three million user installed base in North America that has many marketing needs beyond email, Sage is poised to build a services engine that could eventually rival its software business.  This would be a very smart end run around the company’s own business model limitations.  To be precise, Sage sells its products exclusively through a reseller channel.  The resellers deliver product, customization and advice leaving slim pickings for Sage beyond the license revenue.

    The primary way Sage grows in this model is through product sales and by recruiting new partners.  But no market is infinite and the market of resellers is relatively small compared to the market of end users.  You see where I am going.  There is nothing prohibiting Sage from offering services based on the products it makes and the installations that its partners effect.  As a matter of fact, offering this kind of service, which only makes the end customer more productive, should drive demand for the products themselves.  Looks like a smart and virtuous circle to me as well as a new kind of on-demand service.

    I believe the era we are entering will be constraining for many companies in several ways, not the least of which is transportation.  As fuel prices resume their rise with the recovery, companies will need to find ways to take travel costs out of their value propositions.  That should mean a need to enhanced marketing as in, how can we use marketing rather than face time to close more deals?

    The answer to that question goes beyond email marketing and probably beyond the meager efforts that so many SMB companies now use to sell their products.  Centralizing key services that can be delivered at scale via the Internet will enable SMB’s to continue to compete in select markets against larger competitors.  It is also a growth market and who doesn’t like that?

    Published: 14 years ago

    We are all junkies for leading economic indicators.  Whether it’s the first spring swallow or an uptick in orders for semi-conductor fabrication gear, we love to call the start of a new movement, if only because it signals the end of something more prosaic.

    So it is now at what appears to be the end of a bad recession and the beginning of a new economic cycle.  The aforementioned semi-conductor sector has done its thing along with house prices and general real estate activity is picking up.

    But what about the trailing indicators — those things that take their time going down when the economy hits the skids?  A notorious lagging indicator is always employment.  Companies cut jobs as a last resort in the early stages of a downturn and cautiously re-hire after the first indicators of recovery are in full bloom.

    Newspapers and TV talking heads meanwhile wring their hands about a “jobless recovery” as if the economy is spring loaded and able to bounce back with the seeming alacrity and speed of a toy.  They are always surprised at employment latency and the headlines hardly vary from recovery to recovery.

    I have my own economic indicator that I watch with guarded optimism at this time of a recovery and fright when the economy seems to be going south.  It is marketing spending and a corollary is the number of people I know in marketing who are out of work and having difficulty finding it.

    In late 2007 I began hearing whispers of a housing bubble getting ready to burst and through early 2008 the whispers turned to shouts but marketing spending seemed to be on pace.  Later analysis showed that the recession actually began around the same time as the whispers but marketing spending was resilient.  I recall having lunch with an already out of work CMO in May 2008 and we were musing about the arc of the economy that year.

    “Do you think things will pick up in the second half (of 2008)?” he asked.

    “I don’t know,” I said not wanting to deflate him.  “I think we’ll see when we know about marketing spending after July first.”

    My idea, which I explained to him, was that the marketing money being spent at that point was loaded into budgets that had a more or less calendar year cycle.  The real test, coming after July first, would be whether companies with June 30 year ends would be as bullish or with six months more perspective, they might pull in their horns.  The distinction is important for our industry because so many companies in the technology sector have June 30 year-ends, thus their marketing spending renews on July first.

    At the time, my reading of the tea leaves advised caution because I had not seen the typical run up to a new spending year in the second quarter of 2008.  In other words, fewer companies were asking for quotations, planning programs and the like.  I was right.  The second half of 2008 was slower than the first half and a lack-luster summer gave way to a wild autumn ride on Wall Street that erased doubts about the economy’s direction as well as untold fortunes and more than a few marketing jobs in the technology sector.

    The first indicators of renewal have, indeed, been spotted both economy-wide and in the tech sector.  I know of at least one out of work mid-level marketing person who got a job offer last week and several senior people now consulting so there’s that (highly unscientific, I know).  But I still have not seen a general if cautious uptick in marketing spending plans.  This would be the quarter for that to happen if companies are intent on starting the new year with any momentum.

    Marketing costs money even in today’s highly automated and socialized marketing world.  There is still time to make plans for early next year even if they get delayed and the first harbingers of revival lead me to think that we are about to see the first tentative steps.  Those chip makers and house builders can’t all be wrong.

    Published: 14 years ago