The Real Cost of Marketing Automation (Pizza Anyone?)

We had a good number of conversations this week on online marketing and the merits of marketing automation. Within the teams here in Europe and the US, but also with our marketing agency, our through-channel marketing agency, and – last but not least – our marketing automation agency. The latter started with a quote from Forrester Research: “[We] found that most companies cited as great case studies by vendors are still at Level 1 Level 2 of Forrester‘s Marketing Automation Maturity Model.” Some quote.

Expensive email blasters
In a November 2010 blog post, Forrester’s Jeff Ernst – the principal analyst responsible for this particular piece of research – states that “too many companies have invested in marketing automation platforms, only to use them as expensive email blasters.” In the April 2011 report B2B marketers must better prepare for marketing automation, he cautions that “Small businesses with simple requirements can receive a lot of value within days by implementing basic features and may not ever need to do more. But for larger companies that serve sophisticated buyer needs, it takes time to build a revenue engine that produces a steady supply of qualified sales opportunities, and getting an email campaign out the door in three days does not ensure that you are on a path to achieving that bigger vision.”

Amen
Without having access to the actual Marketing Automation Maturity Model – with Sinterklaas and Christmas just around the corner, spending $499 on aging research papers may not be the most opportunistic of choices – one can guess that it’ll start with manually sending emails into low quality, poorly segmented databases, with zero business impact, and end up with nurturing, scoring, integrated communications based on deep knowledge of your buyer’s journey, with all the targeted segmenting, nurturing, scoring and integration between marketing automation and sales CRM that you can wish for – where the marketing system unilaterally sets the business strategy, aligns sales and marketing once and for all, and wins marketing prizes. Amen.

3 Traps
Ernst identifies 3 traps, around process, content, and skills, which keep companies from getting beyond this “batch ‘n’ blast” level of maturity. They’ll never reap the true benefits of marketing automation, but get stuck in the middle between a great vision, sophisticated platform and expert vendor support on the one side, and bloated budgets, frustrated marketers and low quality databases on the other. And the quality of leads generated and qualified by marketing is – and will be – questioned by sales.

KSFs
Ernst indeed warns CMOs (ordinary marketers should pay attention, too) that the following success factors are critical, if they expect ROI from their investment in marketing automation (source: Christine Thompson, Success Factors for Marketing Automation):

• A defined lead management process (agreed to by sales and marketing);
• A content strategy that supports buyers’ needs (not the marketer’s convenience), throughout the buyer’s journey — for each buyer role;
• Access to good contact data (up-to-date contact info for the buyer roles most likely to respond favourably);
• Access to the skills and budget needed to keep the marketing automation platform running smoothly.

Medieval cobblestones
My take: Without these factors in place, buying an advanced marketing automation platform and expect the ill-prepared marketing manager to benefit from it, is like buying a brand new Ferrari F1 race car, give it to a pizza delivery guy in Rome (with fuel and a full, retained pit crew of course), and tell him he’ll deliver pizza’s across town a 1,000 times faster (and much hotter too). All technical reports, all sports analysts, and all Ferrari fans would agree that that’s a terrific investment, because pizza’s are usually cold on delivery, there simply isn’t a better F1 race car around, and the mechanics will make sure it runs to its full capacity. Of course some of the preconditions to use the car proficiently – like a F1 Super License, access to the Autodrome Nationale Monza race track, some level of racing expertise, and a very wealthy sponsor – wouldn’t have made it into the purchase decision conversation. And hence our poor pizza delivery guy races the streets of Rome at 500+ mph, crashes his racehorse into the Fontane di Trevi, all hot pizza’s drown, and the good people of Rome starve, yet again. Stuck in the middle between a great vision and lots of medieval cobblestones.

Must be a hard game
Forrester’s Marketing Automation Maturity Model was first introduced in 2008. 3 years later, even great case study type companies still haven’t been able to make it past levels 1 and 2. You figure it out.

Pizza, anyone?

Mapping the Buyer’s Journey

B2B marketers these days attach their strategies to the buyer’s journey, a concept to describe the process of a prospect becoming a customer and – ultimo – a brand advocate. The traditional linear sales funnel (explore, consider, purchase) proves to be more of a circle, where brand advocates influence prospective customers. In planning, the buyer’s journey helps to prioritise investment, align marketing, sales and channel target setting, time activities, and report on marketing impact.

Once the buyer’s journey has been outlined, content strategies are put in place to serve the right message, to the right audience, through the right channels of communication, at the right time in the cycle. Superior data quality allows marketers to constantly refine audience targeting.

Economic essence
Multinational companies however have always been struggling to meet really local market requirements.  Because of lack of resources, not because of the data being unavailable. In global business, the world has to be simplified, stripped of culture variance, and countries boiled down to their economic essence, the rawest of cliches. By definition, content strategy mapped against the buyer’s journey can only magnify the lack of cultural sophistication in the “Global Rollout Marketing” approach.

So what’s the whole product?
In IT, vendors create products, solutions, and in many cases services, too. Value added resellers re-sell these products, solutions, services and some value adding substance on top of it all to end-users. By default, most VARs will sell whatever brings in most cash; vendor margin into the left pocket, sales margin into the right. It’s the way of the B2B world.

In fact many times, a combination of vendor A’s product, vendor B’s solutions and vendor C’s service would result in the highest margin. So it’s really quite hard to predict what the VAR will actually come up with as a sales pitch.

Own the touch points
Nevertheless vendors like to think they know their prospects in and out, offer the perfect portfolio to keep them satisfied, control the buyer’s journey end-to-end, and the touch points that matter along this sequence of engagements – even the ones owned by resellers.

Most really don’t.

The α and ω of Internal Communications

I
Imagine an international company of 2000 employees with no intranet (or wiki’s, or Yammer), no employee newsletter in print or email, no bulletin boards, no narrow casting screens, no regular employee all hands meeting. Basically, this company doesn’t have an internal communications function, wouldn’t you agree?

Then imagine I gave you – brilliant marketing and communications strategist – EUR100,000 of my budget, and asked you to establish a channel for internal communications, and maintain it for one year. It’s an open brief, and the executive team is fully behind you.

What would you do?

II
Every 6 months, I run an event for all European employees of the company. We use it to look back, recognise the most valuable contributors to the company’s success, and look forward to what’s ahead of us. Since our VP EMEA said he wouldn’t have his workforce travel to a central location for the event (“It doesn’t generate direct revenue, so let’s find a cost efficient format”), we were forced to come up with something special.

With our partner Quadia, we created a live and interactive television show, broadcasted to all offices across EMEA. A state-of-the-art event, with professional host (the eminent Ronnie Overgoor), director, rehearsals, floor manager, TV crew, make-up – the whole shabang. We pre-record video items, ask employees to create content, and give them the opportunity to send in their questions and concerns.

Usually, the employee feedback on the event is 10 out of 10. The next edition will be in June. It’s a big thing.

III
But how does one calculate the ROI of internal communications?

Social Media ROI. Rubbish. It’s free!

It’s hard to be in social media these days and avoid tweets, blog posts and webinars on the Return on Investment of “Social Media”. Apparently, marketers have to be taught how to sell the importance of “Social Media” to their CEOs. And research after research shows that marketers are allocating more and more of their dollars to “Social Media”. They would love to be accountable for that investment.

And that’s a good thing, but let’s be very clear here. Social Media do not take incremental budget. They’re essentially free. That is exactly why so many people, business and civilian, have embrased Social Media wholeheartedly. It doesn’t cost any money.

It’s free to create Twitter and Facebook accounts, launch blogs, build a LinkedIn profile, and attract followers. There is no marketing money involved in browsing the web for relevant communities to contribute to. I won’t raise a Purchase Order to ask a question during a free online seminar, would I?

You just need knowledgeable staff, with some time on their hands, great content for them to share and discuss, and a seasoned community manager with a content strategy in his back pocket.

“Hold on! Stop! Wait a second there! You said it was free, and now you tell me to go hire a seasoned – seasoned! – community manager, for the love of Christ?! And that guy will probably consult with an expensive agency, wouldn’t he? And he will be telling knowledgeable staff on how to behave online, at the risk of distracting them from their real day job?!? You don’t fool me: There is a cost to Social Media after all, and a sizeable one, if you ask me!”

Indeed, that does represent a considerable cost. But can’t you free up that money by sizing down your paid media staff, and investment? You know very well that social media will bring deeper brand connections, more engaged customers, and higher return on sales. Wouldn’t it be a great thing to have the whole company involved in external communications ?

O, and by the way: When was the last time you really, honestly calculated the ROI of your corporate website? Your customer event? Your email newsletter? Your Google AdWords campaign? Admit it: There is a whole host of things that are being taken for granted in marketing and communications, where nobody ever asks for ROI. We do it, because we do it, and don’t think twice about the money we spend.

As to Social Media: You need money to create great content, not to get it out to your target audiences.

It’s true, in marketing and communications, ROI is about the only metric we can bring forth to prove our raison d’etre. If you can’t produce it, you’re being earmarked as just another cost center, a parasite sucking the life out of sales operations and profitability – and you will probably face budget cut after budget cut for the rest of your career in marketing (if you’ll even have any). In Marketing, and even more so in Social Marketing, we need to show the ROI of every step we take.

But you know what: I bet your CEO isn’t even subscribed to your email newsletter, and she hasn’t set foot inside your corporate website for ages, either. So don’t worry about selling Social Media to your executive staff. And please don’t tell the researchers that you’re allocating 250% more budget to Social Media in this calendar year. You’re not. You’re investing in great content. The rest of it is free.

And there really isn’t a better Marketing ROI around, is there?

Rant on Marketing while boarding an airplane

- “So, tell me, do we have any cool new marketing campaigns upcoming?”, a fellow European colleague asked me, while we were getting ready to board our ride from San Francisco back to Amsterdam earlier today. He is one of our best technical sales engineers.

- “What do you mean when you say ‘marketing campaign’?”, I asked in return.

- “Well, you know,” he replied, “with solid price promotions, lots of advertising, events, online banners, emails, that kind of stuff – marketing campaigns!”

- “I don’t think we’ll have those types of marketing campaigns ever again,” I said.

- He: “Are you serious? So what’s marketing doing to get new customers signed up, and develop them into loyal, frequently spending accounts – if not by running cool campaigns?”

- I: “Well for one, we’ll stop shouting at them, pushing them around, pulling them in by the hair kicking and screaming. We’ll be talking to them where they are, when they’re ready to engage, delivering the right messages for that very specific person, place, time, business challenge, and conversation. To show them we understand their world, and that we’re the ones best suited to help them solve their problems.”

- “Okay! But how will they ever know that you’re the one to talk to about their pains and itches? You’d still need a conversation starter, wouldn’t you? Something to get the engagement going, like an event, email, or telephone call? Isn’t that what marketing is?

- “No, that’s not what marketing is, that’s what marketing has been turned into by people who think customers are cash cows with short memory spans. Marketing proper represents markets, customers and prospects within the company, making sure the right products and services are created, delivered, supported, and constantly improved in order to create maximum customer value and brand equity.”

- “…”

- “You see, Marketing proper drives and advocates business focus, high quality content and engagements, two way communications, and actual listening to customers and prospects. That has little to do with fancy events, bulky billboards, and unsollicited emails, don’t you agree?”

- “Uh, yeah sure, if you say so. But I bet the sales guys would disagree. They love fancy events!”

- “By no means. They’re sales guys, so this is core to their everyday reality. They grasp the value of a good conversation. They understand that high quality engagements eventually result in extended customer life cycles, deeper investment, and greater customer loyalty. They know this approach will pay off. And apropos: The days that high value conversations where taking place at industry events, have long gone. Event marketing in the B2B segment has become a business in and of its own, one which is delivering ever lower show rates and returns on investment. It’s an old school, zero conversion marketing tactic, and smart sales guys know this. Even they stopped showing up to man our stand!”

This is where we boarded our plane, and I started writing this entry.

What do you think Marketing should aspire to?

2011: Estimating the Likelihood of Conversion

All marketing blogs that matter agree that 2011 will be about prospect and customer targeting. The Million Dollar Question: How to serve the right content to the right audience at the right time through the right communication channels? Many call the discipline focused on answering this question Content Marketing.

Why? Costs go down, conversion rates go up, and on average, customer life cycles will be extended, which will have a positive impact on overall revenue. A million dollar question, indeed!

In their 2006 Harvard Business Review Article “Knowing what to sell, when, and to whom”, Kumar et al state that “despite the abundance of data that many companies collect, most do a poor job predicting the behaviour of their customers.” They go on to present a rather crazy mathematical function to estimate the likelihood (Li) that a given customer or household (i) will purchase a given product at a given time.

Applying this formula to customer data “ups the odds of successfully predicting a specific purchase by a specific customer at a specific time to about 80 per cent, a number that will have a major impact on any company’s marketing ROI.” You can buy the full article for a mere $6.95 here.

However sophisticated this thinking, it applies strictly to customers. What about prospects? How can we estimate the likelihood of a prospect converting into a customer? By delivering on the promise of Content Marketing.

In 2011, paid, owned and earned media models will be refined to enable companies to move from 1-to-many to 1-to-few communication strategies. Push and pull tactics will have to be re-articulated in the new social marketing paradigm. Marketing Automation systems are designed to gather digital body language and help marketers identify response patterns in order to predict future audience behavior. Lead nurturing and scoring mechanisms will help us understand which prospects are ready to engage. Integration with Sales CRM systems and Customer Data Warehouses will close the loop between marketing and sales and eventually bring a higher return on marketing and sales investments.

Eventually, the content marketing strategist will be able to calculate and predict the likelihood of  a given prospect converting in to a customer. Let’s use 2011 to work on the statistical function to come with it!

Relationship branding (2): Content Marketing, Social Media & Advertising

NetApp, Cisco en VMware promoten hun onderlinge samenwerking onder het thema ‘Imagine Virtually Anything’. Market Awareness en Channel Enablement vormen de twee primaire doelstellingen. Een geintegreerde content marketingstrategie draagt bij aan beide doelen.

— terzijde — Ik schrijf dit op weg naar Kopenhagen voor VMworld Europe 2010, VMware’s jaarlijkse evenement voor eindgebruikers. Een van de demostations in de NetApp-stand is volledig gewijd aan Imagine Virtually Anything, en er staat een aantal interessante ontmoetingen met de EMEA-marketingteams van VMware en Cisco op het programma. Daarover later meer. —

Content marketing is een relatief jonge marcomdiscipline die opgang maakt sinds de brede acceptatie van sociale media, zowel in de zakelijke als in de privesfeer. De combinatie van sociale media, traditionele online marketing en advertising, en geavanceerde database- en e-marketingsystemen levert een nieuwe, sterk geconcentreerde vorm van marketingcommunicatie op.

Mits goed ingezet koppelt deze vorm een lagere investering aan hogere conversieratio’s en gestegen herhaalbezoek.

Definitie Content Marketing
Een rake boodschap op precies het goede moment aan exact de juiste ontvanger, dat is in wezen het doel van elke vorm van communicatie. Ontvangers worden ingedeeld in doelgroepen zodra communicatie-instrumenten de verfijning missen om op individuen in te zoomen. Voor deze doelgroepen wordt vervolgens een meer generieke boodschap ontwikkeld, waardoor de respons daalt.

Content Marketing zet database- en marktresearch, nieuwe media, advertising, syndication, en CRM- en marketingsystemen in om doelgroepen net zo lang te verkleinen totdat zuivere communicatie ontstaat: 1-op-1, dus gericht en relevant.

Content voor elke fase
Ik schreef in een eerdere bijdrage over betaalde (paid), eigen (owned) en verdiende (earned) media. In een content marketingstrategie worden deze drie vormen van media-inzet gekoppeld aan een specifieke ontvanger en diens aankoopproces (informatie vergaren, afwegen, selecteren, aankopen, implementeren en uitbreiden).

• In elke fase van de sales cycle heeft de ontvanger de beschikking over op maat gesneden content. Dat kan een persbericht zijn, een dynamische landing page, een uitgewerkte klantreferentie, een e-mailnieuwsbrief, een onderzoeksrapport, een e-book, een live webinar, een blogbijdrage, een brochure, een online ROI calculator, et cetera.
• Belangrijke voorwaarde is, dat de content in elke fase van de verkoopcyclus zo relevant mogelijk is: in de eigen taal, op basis van de juiste branche, bedrijfsomvang, en andere doelgroepspecifieke aspecten.
• Met CRM- en e-marketingsystemen worden profiel, interesse en gedrag van de ontvanger op de voet gevolgd, waardoor opvolgboodschappen, telefonisch contact en gerichte uitnodigingen op het juiste ogenblik op diens deurmat kunnen vallen.
• E-mail, sociale media, search, corporate website, telemarketing, en meer traditionele vormen van paid media worden ingezet om de boodschap te publiceren of zenden.

Communicatiefunnel
Bij aanvang kan deze strategie niet anders dan vrij ongericht zijn. We weten nog niet veel van de individuele ontvangers in onze doelgroep, onze klant- en prospectdatabases zijn onvolledig, gedateerd en ongenuanceerd, en inzicht in historisch gedrag ontbreekt. Maar naarmate meer content beschikbaar komt en de systemen hun geautomatiseerde werk verrichten, gaat de machine draaien en ontstaat een communicatiefunnel die een steeds gedetailleerder beeld van de doelgroep laat zien. Dit stelt ons in staat scherper te richten, wat de relevantie ten goede komt. De respons stijgt, waardoor we meer informatie over onze doelgroep verzamelen, kortom: we zijn in een opwaartse spiraal terecht gekomen, die uitkomt bij 1-op-1-communicatie. Steeds minder contacten stromen van de communicatie- door in de verkoopfunnel, maar de kwaliteit stijgt, de feedback van sales wordt positiever en de Marketing ROI verbetert.

Vervolgens komt het aan op meten, bijsturen, verfijnen en rapporteren.

ON24 Virtual Events – Investering met een lange staart

Gister in Schiphol-Rijk gesproken met iemand van ON24, die een nieuw concept introduceerde: Virtual Event. Het is een eenvoudig idee. Mensen hebben geen budget meer om naar grote evenementen te reizen. Bedrijven aarzelen om in dergelijke activiteiten te investeren, waardoor sponsorbijdragen niet meer vanzelf spreken. Online marketing daarentegen levert steeds meer, steeds betere leads op. Marketers vergaren prospectdata, begrijpen het belang van permissie, proberen hun boodschap steeds relevanter te maken, en boeken meetbare vooruitgang – waar organisatoren van offline evenementen dikwijls worstelen om de tribunes gevuld te krijgen.

Een virtual event is daarom een logische volgende stap (overigens niet nieuw, maar door voortschrijdende techniek wint de gebruikerservaring aan kwaliteit): een online evenement, waarbij de content wordt gepresenteerd in een interactieve, virtuele omgeving (soort SecondLife, maar dan overzichtelijk), met informatiestands, auditorium, netwerkruimte, et cetera. De bezoeker logt in wanneer dat uitkomt, loopt rond van stand naar stand, bekijkt key note speeches (vodcasts), neemt deel aan chatsessies (live chat), stopt pdf-brochures in het virtuele tasje (o, o, net echt, ja), netwerkt met andere bezoekers, kortom: hij doet alles wat hij tijdens een offline evenement doet (behalve laffe broodjes eten), maar dan vanuit de luie stoel, onder het genot van een pilsje.

De cynicus zegt: “Zo’n virtueel evenement is gewoon een sjiek archief voor allerlei content die toch al voorhanden was, en een excuus de database nog eens aan te schrijven erbij.” Touché.

Maar goed: best een duur archief, want de kosten bedragen circa EUR25,000, afhankelijk van het aantal beursstands, de hoeveelheid content, de aanpassing van het basisontwerp, de gevraagde interactieve features. Een eerste bijkomend voordeel is dat je voordeliger sponsorpakketten voor partners kunt aanbieden, bestaande uit een stand, een key note, wat pdf’s. Daarnaast kun je het evenement langer aanhouden dan bij offline evenementen het geval is. En door van tijd tot tijd nieuwe content toe te voegen, creëer je steeds nieuwe mogelijkheden voor communicatie en interactie. De doelgroep kwalificeert zich door minder of meer te bekijken, te downloaden en aan te vragen. Een forse initiële investering dus, maar een met mogelijkheden en een lange staart. Partijen in IT, Pharma, Financials gingen ons voor…

Als je EUR100 per lead wilt neertellen, wat voor online events aan de hoge kant is, voor offline events een schijntje – dan kon deze vorm de moeite van het testen best waard zijn. Samen met je partners moet het toch mogelijk zijn 250 gekwalificeerde leads uit een dergelijke opzet te halen?

Ideeën? Ervaringen?

Verhoudingen

Ist – allocatie 10 euro marketingbudget: 4 euro voor pr (waarvan 3 retainer fees), 3 euro evenementen, 1 euro telemarketing, 1 euro vertalingen en 1 euro executie campagnes en programma’s. Gemiddelde ROI: 25x. Gevolg: veel pr (persberichten, hier en daar een interview), veel tijd besteed aan event management en veel tamelijk ongerichte installed base marketing. Acquisitie van nieuwe klanten is laag, net als de ROI – al liggen adequate benchmarks niet voor het oprapen.

Soll – 10 euro marketingbudget: 4 euro voor pr (waarvan 3 retainer fees), 5 euro online programs, 1 euro telemarketing. De business units in Californië laten betalen voor vertalingen als onderdeel van hun globaliseringplan, voortdurend content lokaal laten schrijven. En hoe beter de kwaliteit van de online programma’s (lokaal, gesegmenteerd, nauwgezette gedrags- en systeemanalyse), des te hoger de kwaliteit van de leads, en des te lager de kosten voor telemarketing.

Pas daarna nadenken over een nieuwe vorm voor offline evenementen, als logische voortzetting van de online interactie. Bingo.