Where is E.piphany in its evolution?
E.piphany is in the middle of what I would call a second chapter of our history. A few years ago we came up with the idea that what was wrong with first-generation CRM was what I call the three 'R's: rip, replace and replicate. And the value proposition for any of the entrenched players was all about rip out everything you have, replace it with my big monolithic thing and replicate the data you had in other siloed systems into my system to make it effective. I'm not saying this is bad. I think it's table stakes. But [this process] really didn't take advantage of the concept of insight to interaction. When you're in the middle of an interaction, make it intelligent, know something about the customer. [Also], if the value proposition in a new emerged economy is rip, replace and replicate, you've got a big challenge with the CIO. People want to leverage the systems that they already have.
That's a long answer because that's a long vision. It's a vision we will accomplish over the second decade of CRM. In the first decade, we were a marketing company. In the second decade, we're trying to leverage that marketing franchise into providing this intelligent interaction platform -- not only as a monolithic provider, but sometimes in the plug-in-and-augment scenarios. At a time when the ERP providers are taking CRM seriously, wouldn't it make more sense to really emphasize your marketing roots?
You're right, we do have a suite and as a small company that's a challenge. So what are we doing to focus? First things: geography and verticals. The big step we made last year was focusing down on specific verticals, all in the consumer space. Secondly, geography -- Western Europe and North America. Specifically, our focus is with integrators. We narrowed down our integrator partnerships dramatically so that we could get repeatable success in the verticals and geographies. You asked, 'why don't we better leverage our marketing analytics heritage?' Good point. We need to do it. We talked less about that the last couple of years than we should have. At the end of the day, what are my two distinct advantages: one of them is this new [J2EE-based] architecture and the other one is that always at our core is the fact we handle a company's inbound and outbound marketing challenges very elegantly with this rich analytic tool. In fact, I think that is something you'll see a lot more dialogue on. You didn't put much spin on E.piphany's Q1 results. You called them 'disappointing.' What went wrong?
I don't know how you could have a quarter where you miss guidance in this economy and not mention the word 'disappointed.' Come on! You miss a quarter, you're disappointed, the stock's down, investors are bummed out. It's terrible. I would imagine people would be disappointed in me if I didn't say these were not the results that we expected and it's not acceptable to miss your targets. But it happens.
You have to think that the current regulatory crackdown on outbound marketing would benefit a provider like E.piphany.
I am optimistic about a couple of things. First of all, there's no debate any more that when you interact with a customer in a branch or a call center or when the customer is sitting there on the IVR [interactive voice response] that it's a time to do smart marketing. The concept of regulation affecting your outbound marketing -- such that you need to be a good inbound marketer -- [is] a great trend for E.piphany. You advocate using the IVR to sell. Give me an example of how that works.
So you're in [a bank's] IVR. You're punching through, but they've run a real-time analytic on you because you've entered your account number. So they know it's Jon and they can interrupt and offer you something specific for you. Doesn't that drive customers crazy?
No. They've gotten great results. Banks have resisted doing the same thing at ATMs because they don't want the queue to grow. But if it's something of value like 'there's a special offer that'll save customers $50 if they are also mortgage holders. Push 2.' Think about it. Do you mind being sold if it's something good for you? What do you make of this recent Forrester Research report that says marketing should own the contact center?
What I see in the market is there are always two buyers now in every deal for enterprise software. It used to be you could go in and sell marketing to marketing business buyers out of their own budget. That's really changed. Marketing needs to get a buy-in from IT, and IT has a hand in the decision. Call center managers used to do the procurement, run the [request for proposal], and they might involve IT. Now that the call center has become a place to sell and not just service, the [chief marketing officer] is involved. Now you have CMOs, IT and call center people all coming together to make a decision. That's excellent for E.piphany. I'll tell you the only down side to it: It does lengthen the decision-making process.