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Navigating the marketing automation software market must still focus on the customer

Marketing automation can help a department, with information housed in a central location, but it's a complicated technology.

The marketing automation software market can be overwhelming, encompassing components of traditional CRM suites or being segmented into smaller, distinct components of marketing technology and confusing buyers with buzzwords like “customer intelligence” and “customer centricity.”

At its heart, marketing automation is the use of software to automate marketing processes such as customer segmentation, customer data integration (CDI), and campaign management. It helps marketing teams design, deliver and track campaigns and customer behavior, sometimes using analytics to predict outcomes and help deploy event-triggered offers. The core idea is to use software to make manual marketing processes more efficient, if not automate them -- and at the same time, possibly create innovative new marketing actions that can easily work with thousands or even millions of customers when manual efforts would be too costly or even impossible.

For example, multi-channel campaign management (MCCM) has become a popular segment in marketing automation as marketers shift investments from mass-marketed, one-channel, one-way, company-driven campaigns to multichannel, measurable, interaction-driven campaigns. But there's more to marketing automation than campaign management.

All of the different approaches to marketing automation come back to the desire to understand the needs and wants of customers and anticipate the future needs and wants of customers in a profitable way, according to Adam Sarner, research director for Stamford, Conn.-based Gartner Inc.

For example, offer management is helping marketers understand who the right people are to market to and which campaigns drive the greatest propensity to buy. “[It's] what offer, what combination of offers, looking at social monitoring and trying to discover what the new black is next season," Sarner said. "It's still under the same umbrella."

And while there are individual components, marketers must also think of marketing automation as part of a greater whole.

"We look at marketing automation as one of several important components of CRM solutions," said Warren Wilson, research director for Ovum, a London-based research firm. "Others include sales- and field-force automation, campaign management, customer service, analytics, [and] support for multiple languages and currencies. In marketing automation itself, we assess maturity on the basis of things like integration across multiple channels, support for email and online marketing, campaign and event management, and marketing via the Web."

When marketing teams are looking for an automation solution, one good starting place is the enterprise's existing CRM or even ERP solution suite. Even if an ERP provider doesn't produce its own marketing automation application, it may have business partners that offer well-integrated components that are worth evaluating.

"Partners often specialize in a particular industry," Wilson said. "They may specialize in integrating CRM -- or a module within CRM, such as marketing automation -- with other key business management apps such as financials, supply-chain management, or inventory and warehouse management."

Marketers, who are often familiar with the shifting buzzwords and strategies in their own markets, must take that into consideration when searching for their own software.

"Some vendors are trying to raise the bar and define a new flavor of CRM called 'customer experience management' that is even more comprehensive, sophisticated and personalized than traditional CRM," Wilson said. "This, too, involves tailoring and sophisticated control in order to manage business processes more closely than ever, from initial marketing campaigns through acquisition, service, satisfaction and retention."

According to Ray Wang, partner of Enterprise Strategy for San Mateo, Calif.-based Altimeter Group, the different types of marketing automation solutions can be simplified into seven core components. The components don't have to be present in an all-inclusive suite, of course, but they give marketing teams a good starting point for evaluating the components they want to automate:

•  Interactive marketing -- for example, Web-based engagement tools.

•  Outbound marketing -- traditional mailers, flyers, etc.

•  Inbound marketing -- customer experience at touch-points.

•  Social marketing -- managing not only the social channel but the social experience.

•  Real-time decisions -- event-based triggers created with prediction algorithms to suggest the right solution for up-selling or cross-selling opportunities. 

•  Marketing operations -- the core automation component for all marketing operations.

•  Lead/contact management -- pushing high-quality leads to the right salesperson.

These components can also take into account all the different channels, from print to e-marketing opportunities like marketing on mobile devices or search.

Delivery from the cloud

In addition to the different kinds of marketing automation tools, there are three core software deployment options: traditional licensed software that's installed into an enterprise data center; hosted solutions that are deployed and managed offsite; and pure on-demand SaaS services delivered straight from the cloud.

"Right now, there's a big interest in on-demand marketing automation -- putting it in the cloud," Sarner said. "But the expectation is that it's cheaper, and cheaper is not necessarily true depending on where you are in terms of complexity. There are some quick wins -- and they are generally cheaper at first -- but as soon as you put in complexity, like tying into different databases, tying into transactional data, integrating with data from different departments, the costs go up."

By the third year of a deployment, Sarner said, the total cost of ownership is very much like that for traditional licensed marketing software.

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