Marketing Automation. Gleansight Benchmark Report. Content. Sidebars

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1 2014 Content Part 1: Topic Overview Part 2: Reasons to Implement Part 3: Value Drivers Part 4: Challenges Part 5: Performance Metrics Part 6: Success Story Part 7: Vendor Landscape Sidebars Survey Stats Benchmark KPIs Core Technologies Gleanster Numbers Vendor Quick Reference Guide Gleansight Benchmark Report Marketing Automation Business marketing has never been easy, but at least it used to be simple: the job was to find good leads and hand them over to sales. Today, marketers stay involved with potential buyers throughout the purchase process and beyond. The main reason for the change is that buyers themselves now control the flow of information, using the Internet to research potential vendors on company sites, search engines, and social networks. Marketers, not sales people, are primarily responsible for managing these channels and using them to build successful relationships with prospects and customers. This broader scope of involvement has been accompanied by higher investment in marketing technology, greater demands for proof of the value created by marketing investments, and closer integration between marketing and sales activities. Marketing Automation systems are designed to meet the needs of this new, more demanding environment. Specifically, Marketing Automation systems provide a unified view of the entire revenue cycle, from initial lead generation through customer growth and retention. This distinguishes them from earlier marketing automation products, which were primarily limited to lead acquisition and nurture. The unified view lets marketers measure the net impact of each marketing program on final results. They can use this information to calculate the value of marketing investments and ultimately to optimize spending across both marketing and sales departments.

2 Gleansight: Marketing Automation 2 Survey Stats The research findings featured in this Gleansight benchmark report are derived from the Q Gleanster survey on B2B marketing and the Q Marketing Automation survey. Total survey responses: 251 Qualified survey responses: 206 Part 1: Topic Overview Marketing Automation systems help optimize the end-to-end revenue performance management (RPM) lifecycle which is largely defined as the process of tracking and optimizing all marketing and sales contacts through the customer life cycle. Your goal, simply put, is to optimize revenue across customer interactions, regardless of their stage in the customer lifecycle. Company size: <$1M (5%); $1-10M (22%); $10-100M (36%); $100M - $1B (28%); >$1B (11%) Geography: North America (90%); Europe (8%); Other (2%) Industries: Software and Technology (33%); Business Services (15%); Financial Services (9%); Education (5%); Entertainment (4%); Other (34%) Job levels: C-level (10%); SVP/ VP (31%); Director (22%); Manager & Staff (37%) Sample survey respondents: Director, Logitech Manager, EMC Director, Comcast VP of Marketing, Cardinal Health Manager, Intertek VP of Marketing, Sony Manager, Success Factors CMO, Sesame Software Director, Aptara SVP, Ez Systems The system features specifically associated with Marketing Automation include: Deep integration with CRM data. A typical marketing automation system captures profile data about leads and contacts, such as name and address. Marketing Automation also captures interaction history, such as campaign membership and messages sent. This is used to build a complete picture of marketing and sales treatments. Tracking customer stages through the entire relationship with the company. Compared with a traditional sales funnel, the revenue performance lifecycle stages begin earlier (with the first marketing interactions) and extend further (past the initial sale to additional purchases and service). The RPM model may also include stages for people who fall off the purchase path, such as prospects with no immediate purchase intent and lapsed customers. A history database that stores snapshots of each relationship over time. This is different from standard marketing automation and sales databases, which keep only current data about each customer. The history database allows analysis of when an individual moved from one RPM stage to another. These movements will be correlated with marketing and sales treatments to assess the impact of those treatments. Enhanced reporting and analytics to measure the impact of marketing and sales treatments. Specific enhancements may include more sophisticated testing, better measurement of incremental impact of treatment changes, advanced attribution that shares credit among multiple treatments, and value calculations to calculate the full contribution of marketing investments. Marketing Automation systems also provide dashboards and forecasting to project the size and timing of revenues expected from the current set of prospects and customers. This improved forecasting is sometimes considered almost as important as optimizing the marketing and sales programs. Marketing Automation systems may also provide additional execution capabilities, such as social media messaging and sales access to marketing automation features and data. These are valuable features but not specifically required for RPM itself. Sales access to the Marketing Automation database is probably the most important execution feature for long-term success, since optimized treatments often require closer coordination of sales and marketing activities.

3 Gleansight: Marketing Automation 3 Part 2: Reasons to Implement What are Reasons to Implement? Reasons to Implement are the reasons Top Performers invested, or plan to invest, in a technology. These also represent the most common ways to justify the investment. Benchmark KPIs Gleanster uses 2-3 key performance indicators (KPIs) to distinguish Top Performers from all other companies ( Everyone Else ) within a given data set, thereby establishing a basis for benchmarking best practices. By definition, Top Performers are comprised of the top quartile of qualified survey respondents (QSRs). The KPIs used for distinguishing Top Performers focus on performance metrics that speak to year-over-year improvement in relevant, measurable areas. Not all KPIs are weighted equally. The KPIs used for this Gleansight are: Year-over-year increase in revenue Increase in customer acquisition rate Volume of marketing qualified leads To learn more about Gleanster s research methodology, please click here or research@gleanster.com. Marketing Automation solves one of marketers oldest challenges: proving the value of their efforts. The challenge has existed because, until recently, it was often impossible to know which customers had received which marketing treatments. Online marketing methods largely solve that problem because they track interactions with each individual. For outbound treatments, such as , the system keeps a record of each recipient and how she responded. For inbound treatments, such as banner ads or social media posts, the system can t identify everyone who saw the message but does capture the messages seen by responders. This information can be combined with data from the CRM system about sales treatments and purchases, also tied to individuals. The resulting database provides a foundation for testing and analysis to estimate the ultimate revenue impact of each marketing effort. But Marketing Automation does more than simply measure the value of marketing efforts. Marketing Automation systems break the buying process into stages and track customers movement through those stages. This allows marketers to identify bottlenecks in the process, determine which stages are affected by specific marketing programs, and calculate the cost of moving customers from one stage to the next. Marketers can then start to optimize their efforts by focusing on poorlyperforming stages and by moving funds to the most effective programs within each stage. Depending on business goals, this optimization can either create more revenue with the same marketing budget or allow a smaller budget to generate the same revenue. The same methods can also achieve more refined goals, such as improving lead quality or increasing penetration of targeted customer segments. The process model also allows Marketing Automation systems to estimate future revenue more precisely, by projecting movement of current customers and prospects through remaining process stages. These projections rely on historical data that shows how many people move from each stage to the next and how long these movements take. They also take into account delays when some people move into holding stages such as nurture programs. The resulting projections show anticipated results by time period, giving marketers a clear picture of expected over- or under-production and allowing other departments to plan for future volumes. Reports that compare actual to expected performance also give a clear picture of trends in results, showing whether marketing programs are becoming more or less effective. Some Marketing Automation systems go even further to show the expected results from scenarios such as adding or removing marketing programs or changes in program effectiveness.

4 Gleansight: Marketing Automation 4 MOST COMPELLING REASONS TO IMPLEMENT MARKETING AUTOMATION FOR TOP PERFORMERS* 97% Say: Increase revenue. 69% Say: Measuring marketing ROI. 67% Say: More insight into marketing and sales activities. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers Increase Revenue. Marketing Automation systems enable marketers to increase revenue without adding more budget. For each marketing program, the system captures both immediate impact, such as response rates, and long-term impact on revenue. The long-term view is critical because short term results can be misleading: some promotions may increase response but only add non-buyers; in extreme cases, a high-responding promotion may actually reduce future revenue by annoying prospects or attracting the wrong types of people. In practice, it can be difficult to directly measure the revenue impact of specific marketing programs because many other factors affect the final result. Marketing Automation systems address this difficulty by letting marketers measure the impact of the programs on movements from one stage to another within the larger process. These movements are more easily tied to specific marketing programs because they occur soon after the program touches an individual prospect. Although marketers still need to check for long-term impacts as well, stage movements provide an alternative measure for identifying the most productive marketing expenditures. Measure marketing ROI. Marketing Automation systems provide a repository for marketing program costs as well as results. These can be combined in Return on Investment calculations to show the relative performance of each marketing expense. Accurate ROI calculations require measuring the incremental impact of each program. This is difficult, since some responses would often have been received through another program or channel if the original program had not existed. The best way to measure incremental impact is formal split testing, which divides a set of customers into two

5 Gleansight: Marketing Automation 5 similar groups, includes only one group in the program being tested, and compares the two groups results. Any difference in performance is attributed to the test program. Marketing Automation systems include features to support this sort of testing, although it can still be difficult to execute and track. At most companies, the amount of testing is limited by the number of prospects available: test groups must be large enough to produce statistically significant results. Tests are also limited by the amount of staff effort available to create and analyze them More insight into marketing and sales activities. The history databases that Marketing Automation systems use to track customer behavior also provide a history of the company s own activities: it s a matter of taking the same data and organizing it differently. Reports can show the profiles of prospects who were selected for each campaign and received each message, contacts made by sales people, products offered, and prices charged. This data can be used to understand the number of messages received per prospect at different stages in the buying process, how often the same treatment was repeated, which groups are receiving too many or too few contacts, and which types of messages work best in different situations. This information can provide operational reporting to ensure that campaigns are executing as intended as well as strategic insights into customer behaviors. The combination of marketing and sales information assembled in the Marketing Automation database allows correlations that are not possible in systems that contain information from only one source or the other.. Better alignment with sales. Marketing Automation creates a shared database, process view, and reporting system that gives marketing COMPELLING REASONS TO IMPLEMENT MARKETING AUTOMATION FOR TOP PERFORMERS* 47% Say: Better alignment with sales. 42% Say: Optimize marketing spend across channels. 35% Say: Unified view of marketing and sales pipeline. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers

6 Gleansight: Marketing Automation 6 and sales a common set of reference points. Setting up in the process model often drives alignment because both groups must agree on the list of stages and the criteria that define each stage. In addition, marketing and sales need to agree when new leads will be sent from marketing to the sales department, whether and how leads will be distributed to individual sales people, what actions the sales person will take after receiving a new lead, when the marketing system will alert sales people to lead activities such as Web site visits, and what access sales people will have to information about their leads in the Marketing Automation database. Both groups must also coordinate their programs so prospects and customers receive consistent treatments during all interactions with the company. This may include coordinating the campaigns in the RPM and CRM systems, having sales people assign leads to Marketing Automation campaigns, and having salespeople send communications through the Marketing Automation system s engine. Optimize marketing spend across channels. The Marketing Automation system provides a detailed understanding of the shortand long-term impact of individual marketing and sales programs. This helps marketers to understand the types of prospects to target, the most effective treatments within each stage of the buying process, and where prospects drop out of the process before completing a purchase. Armed with this information and with program costs, marketers can shift funds towards the most productive programs within each stage. They can also shift funds from one stage to another based on a clear understanding of how this will probably change final results. Simulation features, if available, allow LESS COMPELLING REASONS TO IMPLEMENT MARKETING AUTOMATION FOR TOP PERFORMERS* 23% Say: Adjust to changes in consumer behavior. 15% Say: Justify marketing budget. 8% Say: More accurate revenue forecasts. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers

7 Gleansight: Marketing Automation 7 detailed projections of the impact of such changes. Even when simulation is not built in, marketers can make their own informal calculations using models and data taken from the Marketing Automation system. System reports also allow marketers to check the actual results of their changes, comparing them to expectations, measuring the value of improvements, and identifying any unexpected consequences. Unified view of marketing and sales pipeline. The RPM system gathers data from both marketing and sales and combines information relating the same individual. It then classifies the current stage of each individual, using a set of stages that both marketing and sales have agreed upon. This unified view of the marketing and sales pipeline helps the departments to communicate with each other and with the rest of the company. This makes it easier to build a shared understanding of current problems and opportunities, expected results, and the relative performance of different programs. Based on this understanding, marketing and sales can move more quickly towards agreement on appropriate next actions. Adjust to changes in consumer behavior. Marketing Automation systems are built on a foundation of tracking the activities of individual prospects and customers. This allows them to uncover patterns of behavior for specific individuals and to find patterns shared by larger groups. Marketing programs are based on these patterns, which determine the approach that is most effective on average. But behavior patterns can change, sometimes quickly. The change may be consequence of a marketer s own actions, such as alterations in message contents. Or it may be due to external factors, such as a swing in consumer attitudes or competitive offerings. Historical data in the Marketing Automation system captures earlier behaviors, which can then be compared with current patterns to identify significant deviations. These may be reflected in metrics such as Web pages visited, click rates, stage-to-stage conversion rates, or speed of movement through the buying process. Marketing Automation systems often compare behavior of prospects after the same amount of time in the system say, six months after their initial contact to see if newer groups are behaving any different from previous groups. This type of reporting can give early warning that existing programs are not working as well as before, allowing marketers to look for reasons and make appropriate adjustments. Justify marketing budget. The tracking, process modeling, and reporting features of Marketing Automation allow marketers to show the connection between their programs and company revenue. Cost reporting allows a comparison between marketing expenses and business results. Split testing illustrates the incremental impact of specific programs, helping to illustrate the value they create. More accurate revenue forecasts. Marketing Automation systems provide a map of the buying process, an inventory of prospects and customers currently in each process stage, and historical data on movement from one stage to the next. These can be combined to project future revenues with greater accuracy and further into the future than forecasts based on sales department data alone. The models can also be extended to include repeat purchases by existing customers, incremental (cross sell) purchases, and customer attrition. The company expects these more complex programs will be more effective, so it will receive higher revenue for the same cost.

8 Gleansight: Marketing Automation 8 Part 3: Value Drivers What are Value Drivers? Value Drivers represent the processes, organizational considerations, and tactics that help Top Performers maximize the return on investment in a technology initiative. These are the things Top Performers would attribute to the successful implementation and use of a technology. Today the B2B customer lifecycle is based on a comprehensive view of the entire revenue cycle. But creating the view is just a beginning: Marketing Automation will only add value if the view is used to improve business results. This requires changes in business processes and attitudes that allow marketing and sales departments to take advantage of what the view reveals. The first step in building out the customer lifecycle view is integrating sales and marketing data. The features for this are built into the Marketing Automation system, but configuration details must still be resolved for each implementation. Marketers must then define their process stages. Marketing Automation systems can support nearly any set of stage definitions and relationships, but need not invent their own: most marketers will start with a generic or industry-specific model provided by their vendor or consultant. Similarly, most marketers will base their metrics on a standard framework they then adapt as necessary to fit their own situation. Key factors in success of these steps include the chosen system s own features, access to data in the CRM system and any other required sources, and the ability of sales and marketing users to agree on a reasonable process model. Once the Marketing Automation system is in place, success depends on the much greater challenges of execution. For the marketing automation features of the system, key factors are ease of use, effective program design, ability to create adequate content, staff training, redesigned marketing processes, and cooperation with sales on lead scoring and transfer procedures. For the Marketing Automation components themselves, additional value drivers include even closer cooperation with sales, careful measurement of results, and acceptance of the system across departments. Marketing Automation will only reach its full potential when companies actively use its findings to adjust their marketing and sales programs. This optimization will come slowly as marketers refine their process models, improve their testing and analytical methods, learn how to interpret reports, and build confidence in the system s predictions. Once they trust that changes based on system analysis will actually yield the expected results, they will enter a period of continuous refinement, slowly increasing the efficiency of existing marketing and sales programs and seamlessly integrating new programs and channels as opportunities present themselves.

9 Gleansight: Marketing Automation 9 MOST IMPORTANT VALUE DRIVERS FOR MARKETING AUTOMATION ROI ACCORDING TO TOP PERFORMERS* Destination... MAX ROI! 100% 50% 92% Sales and marketing cooperation. 77% Easy to use system. 63% Set measurable objectives for each campaign. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers Sales and marketing cooperation. Basic marketing automation is itself highly dependent on cooperation between sales and marketing, including agreement on lead scoring rules, on lead transfer procedures, and sales access to lead behaviors stored in the marketing automation database. Marketing Automation requires additional effort by sales people to record the details of their interactions with leads in ways that allow the Marketing Automation system to import and analyze them. This may involve extra work that sales people see little value in performing. Marketing Automation also relies on the willingness of sales management to accept the validity of RPM value calculations, which may attribute more value to marketing programs than sales has previously recognized. Without this agreement, Marketing Automation users will not be able to freely shift resources between marketing and sales programs based on the findings. These shifts are needed to achieve the full optimization promised by Marketing Automation. But even modest shifts, limited to redistributing funds within the marketing budget, can provide considerable value at the start. Sales acceptance of the Marketing Automation value calculations can also help marketers use Marketing Automation to justify their budgets, although the key audiences for those arguments are really CEOs and CFOs. Easy to use system. Marketing Automation systems combine the execution functions of marketing automation with the analytical functions of revenue optimization. Ease of use is important to both, but especially for the marketing automation features that must be used every day to run the marketing programs. Systems that require a steep learning curve may never be adopted or be used inefficiently; systems that are hard to run will hamper employee productivity, limiting the amount of work that gets done. Ease of use is a relative

10 Gleansight: Marketing Automation 10 term, since simple systems may not be able to handle complex programs. Many Marketing Automation-specific features, such as snapshot database configuration, process stage definition, and program value calculations, are often used primarily during set-up and then rarely changed. Ease of use is somewhat less critical in those cases than for features that are used frequently, such as dashboards and reports. Set measurable objectives for each campaign. Basic marketing management requires that each campaign have measurable objectives, including targets that are assigned in advance and compared with actual results. These targets may be based on past performance, business plans, or external benchmarks. Some objectives may be standard across all programs, such as return on investment. Other goals may relate to the specific program, such as a targeted number of social media shares or new prospect names. Marketing Automation doesn t change the need for measurable objectives, except to increase the importance of standard measures that can be compared across programs directly. Marketing Automation does capture additional data that may make it easier to produce the measurements. Incorporate social media. Marketing and sales departments are both finding that social media plays an increasing role in their efforts. For marketing departments, social media is a way to build awareness, influence attitudes, and, to a lesser degree, identify new prospects. Sales departments find that social media is sometimes a preferred channel for direct communications as well as a way to gain insight into an individual prospect. Marketing Automation systems, like other marketing automation products, are adding a variety of social media monitoring, posting, tracking, and interaction features to meet these needs. The analytical portion of the IMPORTANT VALUE DRIVERS FOR MARKETING AUTOMATION ROI ACCORDING TO TOP PERFORMERS* Destination... MAX ROI! 100% 50% 52% Incorporate social media. 35% Integrate data and activities across multiple systems. 25% Adoption of system across departments. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers

11 Gleansight: Marketing Automation 11 Marketing Automation system must be able to use social media profiles and interactions along with other data in assessing the influence of different marketing programs on prospect behaviors. This can pose special challenges because social media data is often unstructured or semi-structured, and because new forms of social media data appear almost daily. This is an area where Marketing Automation capabilities continue to evolve quickly. Integrate with existing systems. The Marketing Automation system relies heavily on CRM to gather information about sales activities. It may also pull in data from social media monitoring, analytics and posting systems; from Web banner ad and search ad systems; and from order processing and accounting. This integration will typically pull the data through existing connectors or Application Program Interface calls but may sometimes on batch file transfers. Batch-based imports mean the data will not be completely current. This can cause inconsistencies when the Marketing Automation system is attempting to coordinate treatments across systems, since the Marketing Automation system may contain some out of date information. But most RPM functions will not be affected because they are related to analyzing past results for groups of customers, not guiding individual interactions as they occur. Adoption of system across departments. Marketing Automation is inherently cross-departmental. Marketing and sales groups must contribute data to the system, monitor its results, and execute changes based on its findings. In particular, they need to follow the processes set out for handling marketing-generated leads and for ensuring that the source of those leads is retained when they are entered into the CRM system. Sales users must also follow procedures designed to save them effort by using marketing automation such as reassigning leads LEAST IMPORTANT VALUE DRIVERS FOR MARKETING AUTOMATION ROI ACCORDING TO TOP PERFORMERS* Destination... MAX ROI! 100% 50% 30% Integration with existing systems. 17% Create unified customer view across channels and systems. 15% Define and measure pipeline stages. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers

12 Gleansight: Marketing Automation 12 to nurture campaigns if they are not yet ready to buy and using materials created in the marketing automation system rather than crafting messages of their own. Integrate data and activities across multiple systems. The Marketing Automation system is both a central data hub and the primary execution system for marketing. However, it must still integrate with other execution systems in marketing and with CRM, the primary execution system for sales. Data held in the Marketing Automation system should be accessible to other execution systems so they can deliver the most appropriate treatments, ensure that customers are treated consistently, and to avoid asking redundant questions. This data should include customer profiles, treatment history, behavior history, and recommended treatments. The Marketing Automation system should make this data available through an API for real-time access and should include identity resolution features to find the proper individual using whatever information the external system has available. This might be an address, phone number, cookie ID, name and postal address, or other channel-specific identifier. The Marketing Automation system should also capture information from the external system about the interaction, so it can keep the central database as current as possible. Create unified customer view across channels and systems. RPM must not merely import data from multiple systems but integrate that data so interactions of the same individual are combined even when they took place in different channels. This is a critical capability since all revenue lifecycle analysis is based on this unified customer view. As with basic marketing automation systems, integration of CRM data is usually based on matching addresses. Some systems can handle more complex cases such as multiple addresses for the same person and matching based on other elements such as name, address, or phone number. Integration of Web behavior usually relies on cookies dropped by the Marketing Automation system; the tags to drop these cookies can be embedded in external Web pages as well as pages built by the Marketing Automation system itself. Data from other sources, such as accounting or order processing systems, can be even harder to integrate since it will often be matched at the account level rather than to a specific individual. The Marketing Automation system may require external processing to handle this properly. Define and measure pipeline stages. Tracking prospects through buying process stages is another essential Marketing Automation function. Stages are defined with a combination of mostly static profile information, such as company size and job role, and dynamic behavioral information such as s opened and Web pages visited. The stage definitions are similar to lead scoring rules although they are usually kept separate. Stages have additional uses revenue optimization. They can be applied to marketing automation campaigns, either at the start to select campaign members or during execution to tailor treatments to prospect needs. Prospects in different stages are often sent different pieces of marketing content, reflecting their different situations. The system may assign individuals to process stages on a regular schedule, when the assignment is needed during campaign execution, or when an event occurs that could trigger a stage change. The Marketing Automation database will retain a history of stage assignments, storing snapshots of the current assignment at regular intervals and also recording the date of the each stage change.

13 Gleansight: Marketing Automation 13 Predefined metrics for measuring ongoing success. Marketing Automation systems rely on complicated databases, process models, and analytics. Predefined success metrics hide this complexity by presenting standard measures for comparing program results. Typical measures include revenue created and return on investment. These are usually supplemented by other, situationspecific metrics related to the purpose of a particular program, such as new customer acquisition or movement from one process stage to the next. This allows more meaningful comparison among programs with the same goal. Other standard metrics may relate to cost savings or staff productivity, such as percentage reduction in execution costs. The Marketing Automation system may also report overall measures such as average cost per new customer or average return on investment across all programs. These are useful for summary reports but must be accompanied by access to their underlying components. of a company s own results depends greatly on the company s customer base, products, and program design, so deviation from industry standards isn t necessarily an indicator of good or bad performance. Compare results to industry benchmarks. Marketing results must be placed in context to make sense. The proper context depends on the purpose. Reports that show progress towards the company business plan use goals derived from that plan. Reports that show trends use comparisons with past performance. Reports that compare to industry performance use benchmarks of industry averages. Such benchmarks are available from sources including consulting firms, industry surveys, and Marketing Automation vendors who aggregate data across their own customers. Comparisons with industry benchmarks must be treated carefully, since the benchmarks are usually averages of figures that vary greatly from company to company and from program to program. (Some benchmarks indicate the distribution of values, such as the top and bottom 25% as well as the median.) The values

14 Gleansight: Marketing Automation 14 Challenges Challenges represent the various roadblocks to watch out for before, during and after a technology implementation. These are the things that prevent Top Performers from maximizing the return on technology investments. Part 4: Challenges Marketing Automation faces a mix of technical and organizational challenges. It requires extensive data about customer demographics, marketing treatments, and sales results, which may not always be available, accurate, or stored in formats the system can easily process. Web data and sales activities are especially likely to be difficult to gather and understand. The system must tie together data for the same customer even when it comes from different systems using different identifiers. And it must try to maintain continuity even when identifiers themselves change, through lost cookies, conversions of CRM leads to CRM contacts, or people using multiple devices in the same channel. These challenges are further multiplied by the continued appearance of new marketing channels and methods, such as social and mobile. Simply exploring these channels competes with the marketer s time and attention. But they also make Marketing Automation success more difficult to achieve because they are often executed in single-purpose systems separate from marketing automation features. This means special efforts are needed to import their results and match them with existing customer identifiers. Marketers must also develop new skills to take advantage of the Marketing Automation data. Testing can be especially difficult, since data quantities may be limited and the most important tests, of long-term treatment strategies, are difficult to set up and execute over time. Tests may also require coordination across multiple systems and between marketing and sales, further increasing the effort and the risk of execution errors. Similarly, marketers may need new techniques for assessing the results of marketing and sales treatments, especially when multiple treatments were applied to the same person. Even when these techniques are built into Marketing Automation system reports, marketers must learn to interpret the results correctly. Marketers may also need to adopt other new metrics, such as stage conversion rates and incremental value, that allow optimization across the revenue cycle. The organization itself presents a final set of challenges. Marketers must justify funding for the Marketing Automation project, which may require them to promise revenue increases they cannot prove will occur. They must acquire senior management support, especially to overcome typical departmental reluctance to share data and surrender some autonomy. Finally, the organizational culture itself may need to shift to a more analytical, fact-based approach in marketing to result in actual changes needed to produce results.

15 Gleansight: Marketing Automation 15 MOST CHALLENGING ASPECTS OF MARKETING AUTOMATION FOR TOP PERFORMERS* 100% 50% 77% 65% 56% Sharing data across departments and systems. Selecting marketing metrics Sharing data across. Organizational culture. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers Sharing data across departments and systems. Marketing Automation systems rely on data from multiple sources as inputs and send data to multiple systems and departments as outputs. This sharing is not always easy: data created for a source system s original purpose may not be suited for use in Marketing Automation. Similarly, data and reports created in Marketing Automation may not be useful to the intended recipients. For example, sales systems may not be able to use data about Web visits if it is not associated with a specific individual, even if it is linked to a company. There may also be delays in sending or receiving data that limit its utility for purposes such as real-time reactions to Web or phone queries. In some cases, inadequate data can be salvaged by changing its format or enhancing it with external information. If not, a seemingly valuable source may turn out to be unusual. Happily, these issues are rarely a critical obstacle to Marketing Automation success. The most important data is created within the Marketing Automation system s own components or in well-known CRM features. Selecting marketing metrics. The central metric of Marketing Automation is Return on Investment. This is derived from a combination of cost and value measures, which are also important by themselves. But ROI alone can be misleading. It must be viewed in the context of other considerations such as the role a particular marketing program plays in moving prospects through the buying process. In addition, marketers need more specific information to measure the details of program operation, such as open, click, and bounce rates for . These and many other metrics are readily available in an established Marketing Automation implementation. The real challenge is selecting which ones to highlight in system dashboards and management reports. These should focus on a few key measures to avoid confusion and to ensure that important information is not lost in a forest of details. The appropriate items to highlight will depend on marketing

16 Gleansight: Marketing Automation 16 CHALLENGING ASPECTS OF MARKETING AUTOMATION FOR TOP PERFORMERS* 100% 50% 48% 35% 23% Lack of senior management supports. Lack of funding. Growth in channels and devices. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers strategies and will change over time as the business evolves. To ensure the metrics remain appropriate, marketers need to revisit their selections on a regular schedule. Organizational culture. Marketing Automation requires sharing of information and treatment decisions between marketing and sales, as well as a willingness to reallocate funds based on objective analysis. For many organizations, such behavior would require a substantial cultural change. In particular, marketing and sales often have a traditionally antagonistic relationship, or at least a mutually cherished autonomy. Convincing the two groups to cooperate requires senior management support, backed by training, process re engineering, results monitoring, and compensation incentives. Even with full corporate commitment, cultural change will come slowly as employees wait to see whether Marketing Automation is a permanent addition. If culture is an obstacle and full management support is not available, Marketing Automation deployment must move incrementally, beginning with steps that fall within a single department and providing information without requiring action. As these steps build credibility and show positive results, the organization will become more willing to make revenue-driven changes in exchange for the benefits Marketing Automation provides. Lack of senior management support. The cross-department cooperation and organizational change required by Marketing Automation makes senior management support essential in many companies. This support must include funding, appointing a project champion, tracking results, and building incentives for project success. Senior management support is less critical if Marketing Automation is deployed primarily within the marketing department, as with traditional marketing automation. In that case, support from senior marketing managers is typically sufficient. Even senior marketing support might not be needed if the system is used largely for a single marketing task, such as campaigns or marketing operations

17 Gleansight: Marketing Automation 17 LEAST CHALLENGING ASPECTS OF MARKETING AUTOMATION FOR TOP PERFORMERS* 100% 50% 23% 18% 16% Adequate systems and technology. Identifying an attribution methodology. Capture accurate customer data. * According to Top Performers, based on 206 Qualified Survey Responses to the Q survey on B2B Marketing. **According to Everyone Else shown only when a notable disparity occurs relative to Top Performers management. However, such a narrow deployment achieves only a fraction of potential In most cases, even basic marketing automation deployment includes lead scoring and sales person alerts, which require at least some support from senior managers in both marketing and sales. Lack of funding. Securing funds for Marketing Automation depends largely on gaining senior management support and building an effective business case. The cost of an Marketing Automation system can be substantial but is generally a small fraction of a company s total marketing budget and an even smaller fraction of combined sales and marketing budgets. The challenge in securing funds is less likely to be the absolute amount than competition with other marketing projects for funding and management attention. Marketing Automation must be seen as more profitable and less risky than alternative investments. The scale of the Marketing Automation can be adjusted to some degree to match the available funding. This usually involves reducing the number of users and the set of functions deployed. Most Marketing Automation vendors make this possible by offering their projects in modules, so clients can begin with a set of core functions and add others over time. However, the degree of modularity varies considerably, so buyers who want to deploy in stages needed to explore vendor policies in detail. The fundamental nature of Marketing Automation also limits how much it can be scaled back: many benefits depend on the system being shared by multiple users and across departments. A very limited deployment might not be worthwhile. Growth in channels and devices. Marketers and sales people are continually expanding their programs to reach buyers in new ways. Marketing Automation systems don t always cover all the latest options, so most marketers use external systems to fill in the gaps. This introduces several challenges: loading the external data into marketing database; matching individual identities across systems to build a comprehensive profile and interaction

18 Gleansight: Marketing Automation 18 history; assessing the impact of the new channel on prospect behaviors; and coordinating treatments with the external systems to ensure consistency. The new channels and devices also take time to manage, adding to marketers existing challenge of finding time for revenue optimization projects. Marketing Automation vendors provide some help with these challenges. Most Marketing Automation systems can import data through API calls, assuming the external system offers a data extract API. These APIs are not always available, so marketers who want to import external data should check the APIs when selecting the external products. Identity matching may be available within the Marketing Automation system or, more likely, in other products that integrate with RPM. The Marketing Automation vendors frequently add support for new channels and devices, so marketers should keep alert for opportunities to do more within their Marketing Automation system and thereby reduce the need for external products. Adequate systems and technology. Marketers may have problems with both the systems that feed Marketing Automation and with the Marketing Automation system itself. Feeder systems may pose challenges with data quality and data access. Older systems in particular may not have been designed for easy integration. Data access issues could include undocumented or inconsistent formats, lack of an API to extract data, inability to read the data in real-time for interaction management, long processing times for batch extracts, and inability to extract only recent changes. Problems with the Marketing Automation system might include: too hard to set up or to use; does not support realistically complex process models; unable to process unstructured data from Web or CRM interactions; or lack desired reporting and analysis capabilities. These issues might not surface until well after the start of the initial deployment. To avoid this, marketers need to identify risks that pose fundamental threats to Marketing Automation success and be sure to explore them fully before deployment begins. Identifying an attribution methodology. Marketing Automation is based on the promise of allocating sales and marketing resources to their most effective use. This presumes the most effective use can be identified, which requires that the impact of each treatment can be measured. Because most buyer behaviors are the result of multiple treatments, Marketing Automation systems need an effective attribution methodology to assess the incremental impact of each treatment on the final result. Attribution methods must account for acquisition programs, which identify new prospects, and nurture programs, which increasing the likelihood that existing prospects will eventually become customers. They may also need to measure retention, cross-sell and up-sell programs, which increase the value earned from existing customers. Except for acquisition programs, the goal is to measure incremental impact rather than the absolute value of the affected customers. In fact, even acquisition programs should be measured incrementally, since some of the prospects they attract would probably have appeared even if the program had not run. The most reliable way to measure incremental impact is split testing, which creates two sets of similar customers, applies the test treatment to one group, compares the groups performance, and assumes that any difference is due to the test. When split tests are not possible, marketers can use statistical models or more-orless arbitrary fractional attribution methods to give each treatment partial

19 Gleansight: Marketing Automation 19 credit for the final result. Marketers must check that their chosen attribution method comes reasonably close to measuring the true incremental impact. A poor attribution method may actually lead to resource allocations that decrease marketing effectiveness. Capture accurate customer data. Marketing Automation always uses data from multi-channel engagement captured in the system, CRM, and may also import data from , Web advertising, social media, events, accounting, and other systems. The quality of this data will vary in completeness and accuracy. In some cases, it may not provide enough detail to allow identification of the same individuals across sources. Although perfection is not required, the data must meet fairly high standards to allow acceptably accurate analysis. Below this level, the Marketing Automation system may produce misleading results that lead to worse rather than better decisions about which marketing and sales treatments are most valuable. Marketers do have tools available to assess data quality. These range from simple reports that identify missing or invalid values to external databases that can actually make corrections, supply missing data, and match identifiers across channels. These tools are rarely built into the Marketing Automation system itself but they may have prebuilt connectors with Marketing Automation products or be designed for simple integration. Marketers will need to carefully assess their data to determine what improvements are needed and then test alternative tools to see how much help they provide Reliable testing. Marketing Automation systems use tests to measure many things in addition to incremental value. Each type of promotion has its own performance characteristics that can be tested in the quest for improvement. Although the basic technique is always to compare performance of a test vs. control group, the details will vary. For example, tests use groups that are created in advance, when the list is selected, while banner ad tests use groups that can only be assigned when the ad is served. Tests may involve one interaction or a sequence over time; they may contain one or multiple variables; they may run in one channel or across several. Marketing Automation systems vary greatly in the types of tests they support, how easy it is to set up each type of test, and how they report test results. Test groups must be large enough to yield reliable results. This means that most B2B marketers can run a limited number of tests during any period because they have a limited number of prospects to work with. Marketers are also constrained by the amount of time available to set up and analyze tests and the costs of creating test materials. Faced with these limits, marketers must choose their tests carefully to ensure they select the options that will yield the most valuable results. Often this means taking a portfolio approach, creating a mix of low risk / low reward tactical tests and high risk / high reward strategic tests. Justifying the investment. The cost of an Marketing Automation system may be justified in terms of higher revenue, lower marketing program costs, or reduced sales and marketing staff. The challenge with any of these measures is that the benefits are not certain. A few marketers will be able to make estimates based on previous personal experience but most will need to rely on published information prepared by vendors or industry analysts. Fortunately, these are widely available and range from broad comparisons of company financial measures to case studies of improvements in specific programs. A typical justification starts with a

20 Gleansight: Marketing Automation 20 baseline of key parameters, such as number of leads per year, cost per lead, lead-to-sales ratio, and value per sale. Users then estimate how these will change after the Marketing Automation system is deployed. The estimates might be based on industry averages, expected changes in specific programs, or other expectations the user finds reasonable. Another common approach is to focus on labor savings, estimating the number of projects per year and the time saved per project. These are combined to estimate total savings in labor hours and labor cost. This method is often convincing even though the labor savings are applied to working on more projects rather than actually reducing staff. If the Marketing Automation system is treated as a capital investment, the corporate finance department is usually involved in preparing or reviewing the justification. They may apply corporate standards for a minimum required return on investment. Marketers sometimes avoid this process by funding the system from the departmental operating budget. This is often possible with softwareas-a-service products, which are billed as a monthly subscription. Regardless of how the software cost is funded, a proper analysis includes additional costs such as training and implementation services, which are also often paid from the operating budget.