Introduction
The debate about
the future of the marketing automation and management market, as a stand-alone
sub segment of the entire customer relationship management (CRM) market, continues,
partly owing to mixed signals coming from relevant point solutions providers.
On one hand, recent demise, and buyout of Xchange by Amdocs
(see Xchange
Adds To The List Of CRM Point Solutions' Casualties) was the last in
the array of less-fortunate point players. At the time prior to Xchange's assets
auction, allegedly over twenty companies expressed interest in buying Xchange's
assets, and in maintaining its products and supporting its customers, including
much better-performing direct competitors Chordiant Software,
DoubleClick, SAS, and especially Unica
Corporation. While the upbeat marketing management software vendor
Unica (www.unicacorp.com)
was initially marked as a very likely buyer of Xchange, the vendor, however,
slightly surprisingly elected not to make a bid for the Xchange's assets. Rather,
Unica has since announced a migration plan from Xchange's solutions to its Affinium
platform, given it has already migrated approximately 15 percent of Xchange's
customer base to Affinium, and the vendor touts that regardless of which company
has taken ultimate ownership of Xchange's remaining assets, converting to Affinium
will be the most attractive solution for Xchange customers.
The CRM market
as well as its marketing automation sub-segment remains both the land of opportunity
albeit with many sinister patches of quicksand traps for those with small footprint
breadth in the field. While the biggest or the richest packaged suite CRM or
enterprise resource planning (ERP) providers have been able to hang
onto flat new sales, possibly modest declines, or in more rare cases possibly
modest growth, only a lucky and more probably the most apt few with a true differentiation
in a selected number of markets have even bucked the trend and have shown some
enviable growth.
Every business
cycle begins with the attraction of the customer through sales and marketing.
This hopefully results in an order management and fulfillment process and ends
with a customer service, which can involve anything from field installations
through to enquiry and complaint management. All of these steps have to be executed
well without exception, since otherwise, the customer will end up on a competitor's
list of customers. The "64,000-dollar" question is how all business processes
work together. In the electronic world, the degree of flexibility and efficiency
of collaborative processes relating to the customer life cycle, product life
cycle, and service life cycle, to name but a few, will be a big determinant
of losers and winners. To that end, there seems to be a dichotomy between the
marketing automation promise of benefits enterprise-wide and the way it has
often been misused.
Appeal of Marketing Automation
The importance
of finding and keeping customers has only increased lately amid diminishing
new sales opportunities. The appeal of marketing automation has come from its
ability to tailor marketing campaigns and to track their effectiveness and control
marketing costs and to perform better-targeted, finer-grained, multi-stage and
multi-channel campaigns. These applications thus aim at helping organizations
segment their customer bases, identify specific customer needs that are not
that obvious to a naked eye, and build promotions and personalized campaigns
designed to meet those needs and thereby create additional revenue.
This is all done
by analyzing large volumes of scattered data, and then by identifying patterns
or trends that would not otherwise be apparent (particularly if one is to notice
an opportunity from a non-event, such as a customer has not used the ATM in
the last month). With this information in hand, enterprises can create custom
campaigns and track their effectiveness, and they can also leverage it to drive
other processes, such as real time, customer service interactions or cross-sell
opportunities (for example, customer service agents recommend products ad hoc
upon customer needs over the phone, or real time offers and promotions personalized
to customers navigating a web site).
In a nutshell,
marketing automation software should be able to capture, blend, mine, and analyze
large amounts of customer data from multiple sources, including online registries
or directories, customer databases, flat files, billing systems, and external
customer lists. That data is then used to target a consistent message across
multiple channels to specific segmented (profiled) customer sets. Theoretically,
these applications may justify the ROI rationale through
- A more effective
customer acquisition, owing to extremely focused campaigns that are personalized
and tailored to specific customer segments
- Increased customer
retention, owing to improved value for existing customers by continually presenting
personalized product and service marketing messages to more profitable customers,
and through effective cross-selling opportunities that leverages purchasing
histories and increases the likelihood of repeat business
- Improved marketing
strategies in almost real time, via the ability to examine many indicators
such as customer response rates, conversion rates, web site metrics, abandon
rates and general demographic data to continually fine-tune customer segments
and profiles, and discontinue marketing approaches that are futile if not
even counterproductive
- Cost reduction,
via the ability to evaluate the effectiveness of campaigns and to identify
successful strategies, to readdress ineffective campaigns and to manage the
costs of all campaigns within the organization
Analysis of the Marketing Automation Market
The
marketing automation market has been fragmented since its advent, and one could
discern three major sub-categories of solutions:
1)
marketing operations,
2)
marketing analytics, and
3)
campaign management solutions. Marketing operations software aims at managing
and tracking the costs, resources and goals of multiple marketing programs,
and campaigns across multiple lines of business (LOBs). Marketing
analytics solutions, as the name suggests, were designed to capture customer
data from various channels and data sources, and to analyze (i.e., "slice
and dice") that data in different angles for customer segmentation, profiling
and personalization purposes. Finally, campaign management software attempts
to design, schedule, execute,and measure the effectiveness of multichannel
(including direct mail, telemarketing, customer service centers, computer-telephony-interaction
(CTI), the web pages, e-mail, etc.) marketing campaigns that leverage the
input from marketing analytics.
The
other way to segment these applications would be to discern whether they are
designed to primarily improve the use of marketing resources or to improve the
value proposition to customers, or both. The focus of the first is on designing
and creating a marketing strategy, determining the best allocation of marketing
budgets, managing marketing staff skills, and effectively tracking and supporting
marketing processes. On the other hand, the latter applications define and communicate
the value proposition of the organization to the customer, ensuring the profitable
creation, development and maintenance of the customer relationship. All three
previously identified categories of applications would contribute to both purposes,
particularly marketing analytics, although marketing operations will seemingly
be more associated with the use of marketing resources, and campaign management
would conversely be aligned with customer relationship optimization.
However,
despite cited benefits of the applications, many marketing automation specialists
have, for various reasons, been a far cry from success or, at least, not had
an easy time. Most of pure-play providers have been either acquired or gone
bust during the past few years including Xchange, Prime Response,
BroadBase, Protagona, and MarketFirst,
and those that remain independent (such as Aprimo, SAS,
NCR Teradata, Blue Martini Software, DoubleClick,
and Unica) are apparently creating broader marketing suites to cover all the
above-mentioned bases.
One
reason for this is the ability of large packaged ERP or CRM suite providers
to slow or even stall enterprise applications buying decisions even well before
their serious market entry. As a result, the niche vendors have to battle to
maintain their market dominance despite strong solutions. Meanwhile the large
vendors are still developing astute solutions and market credibility, and attempting
to sell these based primarily on the integration of their limited functionality
with the rest of their suites and a promise of deeper and complete functionality
some time in the future. This category would include the likes Siebel
Systems, Chordiant Software, Pivotal, E.piphany,
Kana, Onyx, Amdocs, PeopleSoft,
SAP, and Oracle.
Incidentally,
Applix, with its recent exit from the CRM market (see Will
A Big Fish's Splash Cause Minnows' Flush Out Of The CRM Pond?), may
exemplify the dark side of the CRM medal nowadays, as droves of smaller pure-play
CRM vendors have been hard pressed to survive owing to the combined effect of
CRM users' disenchantment with the products' hardly ever materialized benefits,
compounded with the tight IT budgets due to the delay of the worldwide economic
recovery and with Microsoft's entry into already crowded place.
Although many mid-market pure-CRM solutions have been maturing and improving,
they must continue to facilitate integration with back-end systems, given the
increasing awareness of this need for full-fledged benefits of CRM. Further,
they must also provide the differentiation through verifiable ROI metrics, and
indispensable features and functions germane to selected industry verticals.
Larger
CRM vendors have, on their side, been weathering the storm by relying on cross-selling
broader CRM application suites to their existing and potential customers, involving
also components such as sales force automation (SFA), employee
relationship management (ERM) or call centers. Marketing automation point
solution providers have also fallen prey to pessimistic investors and diminishing
global corporations' appetites for technology. They have taken the impact of
the slowdown because of a more budding market yet to create the market awareness
of its true value proposition, and because of the slower adoption of information
technology (IT) in marketing departments (such as a cultural resistance
to software automation, which is perceived as restrictive to the art of marketing,
with an oversight that automation might actually eliminate the low-value activity
to release more time for true creative work).
The
fact is that most CRM deployments so far have focused on operational aspects
like automating tasks in processing interactions with customers, whether that
is registering a complaint in call center, closing a sale, or responding to
a customer or prospect's query. The irony is that these transactions are often
left to languish in multiple database islands dispersed around the organization,
and not used to refine marketing campaigns or to improve customer service. Marketing
is possibly the only remaining major business function yet to revise its core
processes so it can take advantage of IT that can cut time, costs, and improve
the quality of its operations.
Moreover,
unlike SFA or customer service, marketing has an effect on customers throughout
the entire relationship tenure, since, for example focus groups, marketing campaigns,
sales collaterals, and even aftermarket activities (such as warranty registration
and service calls) present opportunities for companies to ascertain and control
how their products are perceived in the market. With information being disseminated
and gathered from many diverse sources, a unified marketing platform could be
an instrumental to improve enterprises' demand and revenue management strategies.
Challenges
Yet,
these applications are often perceived either as luxury (a "nice to have" but
not show-stopping) applications in these days of anyone hardly having any customers
at all, or, in cases of customers valuing the proposition, they might be much
more inclined to obtain it only as a part of a broader CRM suite (if not even
from an ERP provider) rather than as a point solution. Thus, the need for providing
a full, comprehensive CRM suite rather than an individual solution or a bundle
of point solutions for each distinct CRM area remains firm, and will urge further
CRM (and overall enterprise applications for that matter) market consolidation.
The
gravity of these narrow product footprint vendors' predicament might be well
illustrated by the Applix' exit, given the vendor had a solid CRM product breadth
and technology foundation, a good implementation track record with nearly 1,000
satisfied customers, and some notable endorsements from ERP vendors that have
been remiss in delivering their own CRM (i.e., SSA GT and Geac
Computers Corporation). Many pure-play CRM players that cannot
even come close to the above traits should do their own math and analyze the
justification of their independent existence within the CRM battleground.
Not
surprisingly, marketing automation-only providers have long been falling away
to the extent of only a few possibly also endangered remaining providers like
Unica, Aprimo, MarketSwitch, and MarketSoft.
PeopleSoft's acquisition of Annuncio (see PeopleSoft
Annuncio-es Continuation Of Its Shopping Spree), Kana and Broadbase
merger (see The
Mid-Market Is Consolidating, Lo And Behold), Pivotal's recent acquisition
of MarketFirst, DoubleClick's acquisition of Protagona, S1 Corporation's
acquisition of Point Information Systems, Vignette
Corporation's acquisition of DataSage, SAS' acquisition
of Intrinsic and Verbind, and Chordiant's
acquisition of Prime Response all should indicate diminishing life expectancy
of independent CRM point solutions providers.
The
good news nevertheless is that there are huge untapped opportunities for business
improvement, given marketing has a unique vantage point in any enterprise to
understand the customer needs, buying behavior, and value perception. Increasingly,
marketing automation solutions are being adopted by large enterprises with multilevel,
multi-LOB marketing departments. Those organizations need to coordinate their
marketing programs and campaigns and are creating increased demand for holistic
marketing-automation suites that include marketing operations, analytics and
management functionality. Thus, we expect to see more marketing-automation suites
that offer marketing analytics and campaign management in a single product offering.
However, the large packaged enterprise suite vendors still have it as a mere
afterthought to the product blueprint rather than a strategic enhancement to
their product offering.
User Recommendations
Prospective marketing
automation customers should start by scrutinizing closely their major motivators
for marketing automation and to determine whether they align with the overall
CRM and corporate strategies. To select the right solution, one must first identify
the marketing automation priorities and match them to a specific solution that
best covers the requirements. Some marketing automation and management solutions
still focus on marketing operations, analytics, or on campaign management, and
only a few cover reasonably well all of these.
While evaluating
the marketing-automation product options, in addition to criteria that are common
to any enterprise application selection, the following few pertinent tough questions
should be asked:
- Can the evaluated
products run our own models and proprietary algorithms?
- Can they integrate
with our back-office data sources to drive effective marketing campaigns?
- Can they integrate
and interface with other systems we might be using for data analytics, data-warehousing,
content-management, and personalization?
- Do they offer
an embedded e-mail server as part of the package, or are they compatible with
commonly accepted e-mail servers like Microsoft Exchange
or IBM Lotus Domino?
- Does the vendor
have implementation experience in our industry, and does it provide an industry-specific
data model and templates?
- Can the product
help us manage and coordinate multiple marketing campaigns across the multiple
LOBs?
- Does the solution
support most common channels of data capture and customer communication?