When was the last time you received an email newsletter or a cold call that was relevant and personalized? Right – never. Well, read on, for change is afoot and a new wave of companies in the older category of Marketing Automation who are taking advantage of our digital footprints on the web to better tailor their marketing and sales pitch.
“Marketing Automation” is certainly not a new category. There are lots of existing resources on the web today that outline the latest trends and companies. (for instance, one of Trinity Ventures portfolio companies I’m involved with, Tippit, offers this comprehensive resource center.) But, in a nutshell, here is a quick recap of the evolution of this category and where we are today:
1. The first wave was automating email campaigns. Vendors provided templates and workflow to push large volumes of email out and offered the ability to track opens and click throughs. This wave started gathering steam in 2003/2004. Companies like ConstantContact got public on this wave.
2. The second wave was to track website visits. By tracking visitors to your corporate website and watching what those visitors (and likely potentialy buyers) are pausing and clicking on started to yield a deeper view on a possible lead. This wave started to grow in 2005 and 2006. Companies like LeadLander and DemandBase are players here.
3. We are currently in the midst of watching the third wave roll out. This wave offers capability to take email campaigns and website visitors and to score those prospects into various tiers of qualified leads and activity. These scored leads are fed in a more automated fashion from marketing to the sales department. The field and/or inside sales team can then view these leads in a dashboard on an account by account basis and see which ones are showing real activity. While the scoring algorithm is important, the real innovation of this wave is getting sales and marketing to work together as opposed to going off in opposite directions. This is a good thing which ultimately results in what matters: increased revenue. According to analyst Ian Michiels at Aberdeen, about 1500 companies worldwide today deploy these types of solutions from private companies like Eloqua, Marketo, Genius, SilverPop, and NeoLane among others. Even in the current downturn, there is healthy growth here and we’re likely to see some interesting exits down the road as folks like SalesForce, Microsoft, SAP and Oracle/Siebel look to add to their existing sales automation suites.
So, what’s next?
My bet is that the fourth wave will focus on how b2b marketers and sales teams can tap into the social web for lead generation, lead nurturing and lead monetization. We are already starting to see this in companies like HootSuite and CoTweet (offers brands a streamlined capability to engage users on Twitter), Gist (on demand rich context around a lead or prospect) and TechValidate (customer-sourced marketing collateral). Some of the third wave players are starting to make noise about this too. These thought leaders are productizing what recent studies and books have shown – that is, that a greater personal connection between seller and buyer can leader to increased sales and the social web is making this connection easier to establish (see good synopsis of The FaceBook Era here by recent Trinity Ventures EIR, Sachin Rekhi).
The opportunity and challenge for the new entrants trying to surf this fourth wave will be to execute aggressively enough to establish a great product and a beachhead of customers such that they stay ahead of incumbents who will inevitably want to add similar functionality over time (as SF.com just demonstrated). It will be exciting to watch how this fourth wave breaks, feel free to drop in a comment below to share any thoughts or opinions.
couldn’t agree more Jim- we are working on integrated solutions to drive sales using the new “social telephone” model. It is really exciting as it includes sales process leverage to show net revenue growth! All components are based on existing investment (eg SF.com) require little to no CapEx and are cloud based for rapid deployment. SME’s will have a level playing field in 2010. Lanching later this month from our end. Would be pleased to review with you next week for an inside look and would welcome your coverage.
Thx for stopping by and the comment Craig. Looks like you guys provide a useful service based on what I see so far on your website.
Great post Jim!
Definitely agree that we are going to see new opportunities created through the merging of the social web with business apps. In my mind, marketing automation is one important part of it, but as you mention, lead nurturing, sales productivity, and strengthening relationships are also great new possibilities for Social CRM.
Thx Sachin. Looking forward to seeing some of your ideas in this space.
Bang on, Jim.
I agree with your argument that tapping into the social web will unlock a tremendous opportunity for b2b marketers in the future.
Where’s the value today?
If you’re a b2b marketer, you might ask yourself: how does the social web fit into your existing marketing objectives, and how and when do you pick and choose which tactics to pull out to get you there?
As Ken suggests, b2b marketers need to ensure that whatever they focus on today, doesn’t affect the bigger opportunity.
This is where, I believe, executing on your marketing objectives, particularly, acquisition and monetization, gets tricky. If you push for too hard a sell, you’ll ultimately kill the goose. This is the reason why most b2b marketing programs have low conversion rates and/or high churn.
The short term greatest opportunity is relationship building, or as you called it, lead nurturing.
My feeling is that platforms likes Facebook and Twitter are powerful channels to build and develop real relationships with customers that can lead to monetization and acquistion (of new leads via existing ones) down the road.
And as a marketer it’s key to understand that developing these relationships is a long-term program, not a campaign-driven one that begins and ends in 3 months (or 3 weeks!).
Where should all efforts begin?
Your existing fans and followers. They’re the ones with their hands up saying “pick me!”
Thx Rahim. Another way to break it down for larger brands is to frame using social media for “customer acquistion” vs “customer retention”. Lead nurturing among followers and fans falls into customer acquisition and could be just the start of a new relationship started in the realm of social media. It will be interesting to see what the analogy to “drip feed” marketing will be within social media. I think the key will be for brands to preserve their authenticity by using their good content as a pseudo ad or campaign vs succumbing to the easy route of just spamming that fan/ follower with a bunch of meaningless offers.
Great post Jim. It’s amazing the such an important function has had relatively little innovation.
Thx Speiser, time for us to fund some innovators in this category. Key for entrepreneurs around social media will be to find a business model that is defenseable and scales without too much manual intervention. Often times, I’ve seen startups in this space get pulled by brands and ad agencies to essentially be their outsourced arm for custom campaign development. You can make some solid revenue with such a model for sure but I’ve struggled so far to find ones that scale beyond $10m and can sustain high gross margin dollars.
Jim, good first post. I like how you break down the evolution of marketing automation. It is a category that is top of mind for most marketers to which I speak.
I think that wave 3 and wave 4 players/offerings may ultimately be highly complementary. In my view, wave 4 is about content automation to create and personalize the information and then distribute it that through social media channels to generate leads/nurture prospects. My two cents. Look forward to your next post.
Steve, thx
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I like the concept of content automation, you guys are certainly pioneers and innovators on that dimension.
Good post. I agree that social media is hugely important (see http://bit.ly/3fN3r ). But I think the fourth wave will be (re)integration of b2b marketing automation with sales automation and CRM. Social will be one part of that.
Also — at the risk of being crotchety — marketing automation really dates back to the 1990′s and earlier, when b2c marketers began using campaign management systems to generate snail mail.
David, thx for the comment. Great blog you have too, looks quite comprehensive and worth a look. It will be interesting to see if startups can build a beachhead of customer traction and real revenue such that their “social” capabilities (and customer bases) are acquired or merely copied by incumbents. I think there is a window of time for startups to build real value here and the social medium is changing quickly enough that nimble startups can stay on the innovation forefront.
Great point on the even earlier incarnation of marketing automation, I guess I drew the line around completely digital efforts vs ones that were hybrid digital/physical (e.g. snail mail) or even completely physical (we all know and hate those telesales calls during dinner and junk mail flyers flooding our mailboxes!) Hopefully this fourth wave of marketing automation that leverages our social footprints will result in more targeted, relevant, symbiotic relationships between customers and brands, instead of just more spam.
Nice post Jim. I think that this is all about lowering friction of info exchange between buyers and sellers. However, from my observation, of the 1500 organizations deploying third wave, I’ll bet less than 300 of them are doing it well. Maturity definitely lags adoption, and most of the companies I’ve seen are just scratching the surface here.
As far as the 4th wave, agree with you hypothesis. I think though we risk losing focus on the core value, which I really think is evolving products and their value props to better meet customer needs. The closer the relationship and the better the info flow, the faster and better we can do this. Who needs market research if you have x-ray vision…
Cheers
Ken
Thx Ken. Hopefully some of the social oriented startups will find a way to provide xray vision (like that concept) for brands/companies to understand their end customers better. As I mention in some comments above, the key will be to avoid looking like more spam when it comes to customer acquistion efforts and to be authentic and responsive when it comes to customer retention efforts.