Marketo

  • June 4, 2013
  • BenioffJune4

    Salesforce CEO, Marc Benioff

    Holy moly Salesforce announced they were buying ExactTarget for a cool $2.5 billion this morning.  The deal will do much to complete CEO Marc Benioff’s vision of a MarketingCloud to go along with the SalesCloud and ServiceCloud of the company’s core CRM suite.

    Some would say the Salesforce and the entire CRM suite vendor corps have been late to the market in developing a robust marketing solution and I would be one of them.  However, it needs to be said that the vendor community played things well by a lot of measures.

    For the last five years with a depressed economy it was natural to concentrate on service since the name of the game in a slowdown is to protect your core business.  That’s what a lot of CRM vendors did, they beefed up their service and support offerings building in elaborate social architectures that enable their customers to service their customers effectively and at lower costs than previous modalities.

    Fast forward to this year and the economy is picking up steam and that means a more traditional approach to gaining new customers and an emphasis on sales and marketing.  Sales we know had been the bread and butter of CRM so it was logical for the vendor community to go after marketing.

    For years, marketing has languished as the largely independent stepchild of CRM.  Marketing is widely acknowledged to be CRM but its business processes are very different from service and sales and for that reason many vendors always put off building robust marketing functionality into their CRM suites.

    Instead, marketing has remained independent with companies like Eloqua and Marketo running their own shows.  But Eloqua was recently bought by Oracle and Marketo had an IPO just a few weeks ago, Pardot was bought by ExactTarget, which I think made the acquisition much more attractive for Salesforce.

    However, I see some yellow flags waving on this deal.  First off, $2.5 billion bucks can buy a lot of development talent (and a good weekend in Vegas).  This is an expensive deal and I wonder why Salesforce didn’t want to build the solution itself.  They seem to prefer buying over building these days and while I can understand buying for strategic reasons, I have a hard time when I see making a purchase as the default position.  And, speaking of acquisitions, the buzz around the industry I had been hearing was about how long Salesforce would let Marketo wander around without taking them off the street.  Guess we know now.

    Secondly, there appears to be a fair amount of overlap between ExactTarget and Salesforce especially in the analytics arena.  If you back the analytics components out of the deal, then you have to ask how much more development there would have been to build something that was Salesforce native.

    None of that matters now; the deal is done and except for the price tag (I am a flinty, tight fisted New Englander after all) there is a lot to like about the combination.  Instantly Salesforce gets 6000 ExactTarget customers but then again many of them are already Salesforce customers too.  The combination also comes with serious marketing chops given that Gartner gave ExactTarget high marks in its recent Magic Quadrant.

    I think the companies this affects most are SAP, Microsoft and Sage — add in NetSuite too.  With Eloqua and now ExactTarget in enemy encampments there are fewer marketing options for these companies.  This could make Marketo the bell of the ball for these vendors though right now Marketo is well tuned to being in the Salesforce ecosystem but it is not exclusive to be sure.  So maybe Marketo walks out of this with a clearer landscape and more market power.

    At any rate, it will take a few months for the dust to settle but ExactTarget is already in the market and executing with Salesforce customers so for the most part it’s game on.

     

    Published: 10 years ago


    It’s been wonderful this spring being a part of all the vendor briefings now in high gear because in short but sometimes painfully dense bursts we get to know what each vendor has in store for the months ahead.  It’s a lot and that’s a good sign.  There seems to be a breakout happening.

    One of the themes running through all the events like a kid on a tricycle is marketing.  Everywhere you look marketing is making noise.  Oracle completed the acquisition of Eloqua, Marketo filed for an IPO, Salesforce is putting significant resources behind its Marketing Cloud and, most importantly, marketers are in the ascent.

    SiriusDecisions, an analyst firm, is holding a conclave this week in which it is discussing its new marketing waterfall methodology and marketers as well as associated vendors like Lattice-Engines and Full Circle CRM, just to pick two, are sending contingents to the event to see and be seen and to soak up the new marketing vibe.

    Closer to home, I am attending HubSpot’s second (?) annual analyst day at its Cambridge offices.  HubSpot became an early darling of the new marketing movement a few years ago when it turned marketing on its head and said, no, no, no, try this — which turned into inbound marketing — and was very successful.

    Generally, when marketing kicks it up a notch, as it is doing now, there are a couple economic possibilities.  Either we’re entering a new market/category/paradigm or the economy is showing signs of life after a recession and I think it’s possible both are happening right now.  The recession is slowly ending and marketing as a discipline is the new paradigm.

    In fact, and this is most interesting, the marketing upsurge started at the depths of the recession when austerity was big news and almost nothing was getting traction.  But it was almost as if the crowd said no, we don’t buy it, let’s get the economy moving again.  Let’s go on offense, let’s start marketing and selling again and we’ll spend some money to make it happen.

    Here’s where economics imitates life — a couple of weeks ago, the economic ideas underpinning the austerity argument, which has devastated Europe and made the sequester in DC a bad word, fell apart.  Two Harvard economists named Reinhart and Rogoff whose work had led the austerity charge were proved to have made significant spreadsheet errors.  If there was an Oopsie Award they’d win it this year for sure.

    The translation is that the Austerians (as Paul Krugman likes to call them) got it wrong.  The math errors and erroneous assumptions of the Reinhart-Rogoff model were inaccurate and the data did not support their conclusions.  Over night austerity is, if not stinking like a dead fish, at least sitting in the sun and beginning to decompose.

    What’s interesting to me is that the general marketplace began reacting long before the fall of the Reinhart-Rogoff model.  No one needed to be hit over the head with an old tire tool to change directions.  We’re anything but doctrinaire in this country and when something doesn’t work we make little adjustments, regardless of what officials and supposedly smart people tell us.

    That’s the beauty of our free market system.  It’s distributed and as non-hierarchical as you can get it and it works beautifully in a pinch.  In my own mind, I often compare democratic capitalism practices in the West with totalitarian capitalism practiced across the Pacific.

    The Chinese have a great ability to marshal their people and resources to output great quantities of goods but they still operate in a hierarchical, command and control manner.  Democracy and totalitarianism are political systems just as capitalism is an economic one.  Politics and economics have to operate together, you need one of each.

    I could never fathom how totalitarian capitalism could orchestrate the changes I’ve seen this spring.  The very idea of individuals deciding for themselves what to do in a confusing market with a totalitarian political system — even with free market capitalism as the economic model — and breaking away from official thinking is hard to imagine.

    To me that’s part of what CRM captures.  It’s the chaotic and the spontaneous that CRM tries to ride herd on.  Sometimes it works well and at other times it can fail.  But CRM has made important leaps forward.  Like economics and sociology or any of the soft sciences, it has come into its own as it has adopted many of the tools of soft science — the bell curve, crowd sourcing, big data and analysis, and, most of all, probability.  There’s just no way a political-economic system other than what we have in the West could come to the same conclusion.  It would be like asking a fish to invent fire.

    Published: 10 years ago


    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: 10 years ago


    It’s award season and everyone is getting into the act.  And why not?  There is a heck of a lot of business software goodness out there and not enough recognition if you ask me.  So even if a company like Salesforce has a customer voted award that ultimately reflects back on itself, no worries.

    Salesforce  recently  announced the 2012 Customer Choice Awards, the results of customer opinion and voting that ranked some of the more interesting applications in the AppExchange.  To be sure, many of the names on the list have been there before and many are the SaaS products of larger entities — some were acquired which is how the situation presents itself.  But each had to show something special or they wouldn’t have been voted for.  After all with more than 1700 apps in the AppExchange, there’s a lot to choose from.

    Briefly the winners are:

    • Adobe EchoSign by Adobe
    • Hoopla Scoreboard by Hoopla Software
    • Opportunity Management Optimizer by Sales Optimizer
    • Geopointe by Arrowpointe
    • Configurator by Big Machines
    • Xactly Incent by Xactly
    • Informatica Cloud Integration for Salesforce
    • Marketo Marketing Automation by Marketo
    • Jobscience for Professional Recruiting by Jobscience
    • Ascent by Precisio Business Solutions
    • Sales Pipeline Visualization by SalesClic

    What’s interesting to me is that most of the winners have nothing to do with social or very little, at least.  It says to me that maybe we’ve been spending too much time and mental energy on social recently and that real work still gets done away from social.  Moreover the value of getting the forecast right, or speeding up the contract execution process or enabling a better way to market or to support the HR department is at least as important as social, according to this customer sourced list.

    It is also fascinating to see how many non-CRM and non-traditional applications are on the list.  Many are true long tail apps that have thin (though not small) markets and might not even exist if it weren’t for the subscription business model.

    Finally, some of these apps are owned by large public companies and others have hefty chunks of OPM (other people’s money a.k.a. venture capital) giving them lift.  What’s important about this is the idea that these companies are serious money makers and are taken seriously by the capital markets.  No longer is it necessary to amass a big pile of money to spend on servers, desks and buildings.  A subscription company can get started for a song and be taken seriously by the users and by investors.

    So, next time someone tries to tell you that all vendor ecosystems are the same take a hard look and ask if they all do what this one does.  The Customer Choice Awards nicely highlight a new way to do business for vendors and customers.

    Published: 10 years ago


    So, just about a month after Dreamforce, Salesforce.com is coming to New York for one of its regional Cloudforce conferences.  The event will be at the Javitz Center in Manhattan on October 19.  Salesforce is expecting six thousand attendees.

    The focus of the event is supposed to be on the newly re-announced Marketing Cloud — the amalgamation, so far, of Buddy Media and Radian6.  I will be briefed under NDA about the news to be announced at the event but that hasn’t happened yet so, hey, let’s speculate.

    As many of my colleagues have suggested, the Marketing Cloud is a good and important down payment on a full-featured marketing component but it is heavily weighted toward social marketing.  They expect more acquisitions primarily to beef up the Marketing Cloud’s lack of a conventional marketing campaigns element — the kind that runs traditional marketing programs.  I am not so sure.

    Salesforce already has a bevy of more or less conventional marketing partners in the AppExchange like Eloqua, Marketo and others.  It’s true that these vendors are not monogamous but so what?  They have good connectors and integration and are doing everything they can to carpet bomb, er, I mean cover, the Salesforce installed base so why buy what’s free?

    My instincts (which are right about half the time — and less when I’m driving according to my wife) tell me that Salesforce is going in another direction.  The company has always exhibited a Blue Ocean Strategy approach to its business seeking out niches that haven’t been named and I expect it to do the same in marketing.

    That means they’ll concentrate on the myriad ways to market in the social world.  If they make an acquisition — and I bet there’s nothing on the radar right now — it will be to beef up social marketing not conventional stuff.  That would mean companies like HubSpot or Awareness or Nearstream or others (some in the CRM Idol contest) that use a healthy dose of new age thinking and social media to access and communicate with customers.

    So, what to look for in New York?  In addition to October baseball, I think you’ll see elaboration of the basic message doled out at Dreamforce.  The San Francisco session was packed with information and image-making and there really wasn’t time to unpack all of what the Marketing Cloud means for customers.  I think Cloudforce is the place where the unpacking will happen.

    Salesforce has been great at three-pronged marketing for a long time.  That’s where they tell you what they’re going to tell you, then they tell you and finally the circle back to tell you what they told you.  I think they’re at part two and Cloudforce New York will be more of a deep dive.

    I could be very wrong but that’s what it means to speculate.  Right?

    Published: 10 years ago