Marketing Automation Deconstructed

Marketing has emerged over the last two years as the final piece of the puzzle in the business world's push towards realizing the ideal of effective customer relationship management. In addition to its role in customer acquisition, marketing plays the central role in developing strategies for fostering ongoing relationships with customers. Marketing is responsible for researching and segmenting the market and for developing targeting and positioning strategies for each segment. It defines and launches new products that will meet customer requirements, develops pricing and distribution channels for those products, and creates and implements communication strategies to build brand awareness and interest.

Early marketing automation tools mostly addressed promotional campaign management functions. However, with the increasing ubiquity of the Web, suppliers are introducing Internet-centric tools and services that empower marketers across the full range of their responsibilities. Marketing automation has become more than simply promotion automation.

The following are some of the categories in today's marketing automation landscape, along with some key trends that are shaping the marketing automation market.

Campaign Mangement
Campaign management tools were among the first to be labeled "marketing automation." They allow you to segment customer lists into distinct benefit groups and develop a promotional campaign to market to one or more of the identified segments. Some of the key questions to ask when investing in campaign management software include:

  • Is the software sold on a licensed basis or via an application service provider (ASP) model, or both? If you opt for hosting, look for a solution that was originally built to support an ASP model. Those that were adapted to the hosted model may be less scalable.

  • Is the tool focused only on online promotions or does it seek to manage offline promotions as well?

  • Does the tool integrate with best-of-breed e-mail marketing, personalization and data-mining tools; or does it attempt to offer all of these functions in one, tightly integrated package?

  • Is the tool optimized for B2B applications? Is it marketed primarily to Fortune 1000 firms, or to small and medium sized enterprises? B2B-oriented tools should have specific provisions for lead management and distribution, and interface well with SFA and partner management automation applications.

  • Is the tool optimized for use within a particular CRM environment (e.g., Siebel), or is it typically sold stand-alone? Annuncio, BroadBase, E.piphany, MarketFirst, NCR, Pivotal, Prime Response, Revenio, Siebel and YouCentric are among the many suppliers of campaign management tools.

    E-mail Marketing
    E-mail marketing has emerged as the "killer app" of Internet-based marketing automation. Well-executed, permission-based e-mail marketing campaigns have been shown to generate 10 to 20 times the response rates of direct mail promotions at one-tenth the cost. When tied to personalization capabilities, e-mail marketing provides rich opportunities for offer and message optimization research and one-to-one marketing. Some suppliers focus on out-bound e-mail marketing tools and services, while others deal with both in-bound and out-bound e-mail. Still other suppliers deliver point tools, such as rich media e-mail capabilities, and seek to partner with suppliers of e-mail marketing services.

    Suppliers of comprehensive e-mail marketing tools and services include Digital Impact, eDialog, eGain, Kana Systems, MessageMedia and Responsys.

    Personalization Engines
    This category encompasses a range of applications that track Web clicks, volunteered customer profile information and/or purchase behaviors, and, based on pre-defined business rules or various matching algorithms, use this information in real-time to present relevant Web content, e-mail offers or contact center representative sales scripts tailored to the interests of the recipient. More sophisticated offerings support self-learning and self-adjusting customer targeting that discovers patterns in customer behavior and automatically adjusts to them in real time.

    Personalization has become a critical component of successful e-business Web-site, contact center and e-mail marketing solutions and has attracted substantial new venture capital over the last year. Moreover, recent months have seen a high rate of merger and acquisition activity among personalization software vendors as campaign management and e-mail marketing tool suppliers integrate backward (such as Annuncio's acquisition of BrightInfo) and personalization and data mining software vendors integrate forward (such as E.piphany's acquisitions of RightPoint, eClass Direct and Octane).

    Some of the leading providers of personalization software include Customer Analytics, E.piphany, Manna, NetGenesis, NetPerceptions, Personify and Spacetime. In addition, most of the campaign management and e-mail marketing suppliers offer some degree of personalization functionality in their tools.

    Data extraction, data warehousing and data mining software allow the extraction, warehousing and deep analysis of data obtained from the full range of customer touch points (including back-office ERP systems, front-office CRM solutions and eCommerce sites). Unlike personalization tools that typically support real-time categorization and targeting of customers, data mining solutions are used offline to uncover and characterize customer segments using such techniques as decision trees, clustering and scoring. Many of the suppliers in this space are repositioning themselves as personalization/customer analytics suppliers with their own or acquired personalization solutions.

    The leading suppliers of data mining software include Broadbase, Business Objects, Data Distilleries, Epiphany, NCR, SAS and SPSS.

    Marketing/sales collaboration and collateral systems are variously called marketing or sales extranets, strategic relationship portals and collateral management systems. These systems are Web-based B2B applications enabling marketing and sales personnel to launch or access collaborative information portals. These tools facilitate a variety of functions including:

    Efficient large-scale communications and information exchange between marketing and sales and distribution partners. For example, product launches involving simultaneous distribution of new product information to sales and channel partner offices worldwide, or corporate marketing's efforts to manage brand image consistency across globally distributed local marketing departments are difficult challenges vendors like CoVia and Promptu have tried to address.

    Rapid and cost-effective generation of context-specific sales collateral such as presentations, brochures and proposals, targeted to the needs and competitive situation of specific sales situations. For example, MarketTouch is a leading supplier of a Web-centric solution targeting this need.

    Management of complex, team-driven, strategic B2B relationships where mechanisms for managing and tracking bi-directional communications, information exchanges and collaborative efforts is at once difficult and yet critical to the success of the relationship. The ASP-based solutions offered by CoVia and Kovair are examples of applications addressing this problem.

    New Product Planning
    To date, marketing automation solutions have promoted and sold existing products. However, in an era when product life cycles of 9 to 18 months are common, a slip of a few months in introducing the right product to market can make the difference between a profitable product and one that is a net loss to the firm. Accordingly, Productmarketing.com launched in 1999 facilitates the product marketer's role in identifying, defining, developing and launching new products.

    To date, Productmarketing.com has introduced software applications for gathering customer needs information into marketing requirements documents and for managing team communications and development progress against an online product specification. The company has also launched a vertical resources portal for product managers. Another firm, Recipio, offers tools and services for product managers to collaborate with customers and prospects in defining their needs concerning new product concepts and performance requirements.

    Other Web-based software applications and services might legitimately be included in the "marketing automation" market, although most will be used by specialists rather than by the typical product manager or director of marketing. For example, online advertising creation tools and advertising placement services, Web site traffic tracking and usability analysis tools and online market research services all provide solutions to problems faced by marketers and are contributing to bringing the marketing function up to "Internet speed."

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