by Paul Wiefels (Guest Contributor)
Marketing technology (aka “Martech”) has now become the Frankenstein of technology – a category made up of thousands of parts, both big and small. Driving demand, Martech applications were created to automate the last sizable business function – marketing – and in so doing, provide a set of more granular metrics that marketers could use to show the ROI associated with their numerous efforts. Beleaguered CMOs, sometimes regarded by their executive staff peers, notably in B2B companies, as conference organizers, party planners, or the brand police, now could transform both their function and themselves by delivering more direct contributions to revenue. They could connect spend to return, lead nurturing to lead scoring, determine the true cost of customer acquisition, and so on. Early technologies and applications soon revealed the need to digitize a lot of other stuff to augment, complement, or simply enable a process that was growing in complexity. The venture community was quick to recognize that CMOs had budgets, so they jumped en masse and enjoyed some early wins via IPOs (e.g. Marketo, Hubspot); or through acquisitions at significant premiums (e.g. Eloqua, Pardot). Over the past five years, we have seen play out what many regard as an axiom in both the software and venture industry: what’s worth doing is worth overdoing.
FOMO, fear of missing out, now characterizes Martech, on both the supply and demand side. The folks at Martech Today feature an infographic (“The Martech 5000”) that now is comprised of more than 7000 entrants; while BCG reports that in 2017 CMOs spent more on technologies than CIOs did. Marketers now boast of their “marketing stacks.” The MarTech Conference sponsors the Stackie Awards where contestants vie for industry accolades via submitting “a single slide that illustrates their marketing stack in some conceptual way.” Cisco was a winner in 2017 with 39 different technologies.
All good I guess if such efforts really deliver. But doesn’t it also sound, well, excessive? Think about it. A contract negotiation for each application after much shopping, sales meetings, and POCs. A service level agreement (SLA) to manage for each. Myriad overhead issues associated with onboarding, integration, training, and getting it all to work together. And the potential for a less than salutary effect on the cost of sales. Some of this is overhead that the VP Marketing may not have to deal with directly but many others in the company do. Now, if you’re Cisco, it might be classified a necessary nuisance – small beer in pursuit of customers that can be extremely valuable individually and collectively. But if you’re not?
More importantly, can a function that now relies on all this be sustained? Can an industry which spawned all this be sustainable? Supply-sider’s argue that there are effectively zero barriers to entry in software today, thanks to open source projects, relatively cheap infrastructure-as-a-service (IaaS), global talent markets that are accessible, and, ironically, low cost digital marketing channels and capacity. On the demand side, marketers must continue to expand their scope and scale to meet evolving buyer expectations, new marketing innovations, and the need to differentiate themselves from a multitude of global competitors.
It sounds good when you say it fast but look deeper. Such arguments belie the evidence of every major consolidation of IT infrastructure, typically initiated by economic slowdowns, over the past 30 years. The world discovers that it does not need and will not pay for 7000+ software companies – for marketing or anything else. Things go slowly at first then go very fast. “Me too” becomes “me dead.”
All of which brings us back to the fact that poorly conceived ideas, equivocal value propositions, overly complicated segment targeting and so on does not get better by automation alone. The actual craft of bringing customers into your orbit or better still, bringing yourself into theirs, must improve.
Amazon, Apple, LinkedIn, Netflix, Airbnb, Zara, Stitchfix, GEICO, and others have helped us realize that as consumers we can be very influential, very powerful. These companies are benchmarks by which we set our expectations of how it should be to interact with a company and a brand. The strength of each of their brands is deeply rooted in simple, highly compelling ideas that create significant and/or new value for their customers. Their marketing efforts cause us to think, feel, and act. It looks effortless. It’s not.
In contrast, we still see enterprises that operate their marketing as a one-dimensional, second fiddle function designed primarily to support engineering, development or manufacturing by ridding the enterprise of the inventory created by those organizations. Marketing is tasked with “creating demand” but in practice, the strategy for doing so comes in later – an afterthought to the product development process. Nowhere is this more apparent, stubbornly so, than in technology-based companies. If we can build it, a priori it has merit. And if we build it, they will come. Now, automate the process by adding multiple layers of technology in service to “getting close to our customer.” Finally, yoke these efforts to a sales model whereby whatever distribution mechanism we employ, we do so because we have it. Our revenue engine is now biased to what serves our interests, functions, and skill sets; and not the wants, needs, and predilections of the customer. This is a recipe for sameness, not differentiation.
Is Martech tremendously important? In the digital age, the answer is obvious. But, we also need better marketing, and that should not be limited to or by, technology. We return inevitably to the dictum that competitive advantage is created by people, not technology. We buy ideas and satisfy purpose before we buy products. If you’re a Martech provider that has found yourself with lots of company, how should you navigate these very crowded waters?
First, consider your category. A company cannot be more powerful than the category it’s in or assigned to. Categories that never evolve beyond simple tools are inherently less important than categories able evolve to business-driving or business-supporting applications or even platforms. When faced with category issues – too crowded, poorly defined, or lacking significant investment versus other categories – executive teams and marketing organizations specifically must lead the charge to define the challenges they address both differently and more importantly, such that they might be considered as a new or default choice. And you must have technology, scale, or other advantages directly relevant to the newly defined approach that can’t be easily matched. The result should be a refreshed, more competitive strategy, not a new marketing campaign.
Next, consider the markets and segments that you serve. Are you a specialist in a few or a generalist in many? For many B2B marketers, these are mutually exclusive approaches past initial customer adoption. If you provide value that can be used by many, can you scale your efforts to support them and still extract a profit? Or do you provide much deeper value to fewer but highly valuable segments who will reward you for your devotion? If your answer to this is both, it is likely neither.
Finally, consider your offer. An offer is not synonymous with your product. A complete offer is comprised not only of what you provide, but how you provide it. An offer should be differentiated from a customer’s relevant alternatives less on the features of the product, and more on the “features” of the customer. How do you fit in to the customer’s world? How do you add outsized value? How do you become core to that customer’s needs, purpose or interests? These are questions often overlooked or taken for granted. You do so at your peril.
We turn to Kotler once more. “Marketing is not the art of finding clever ways to dispose of what you make. Marketing is the art of creating genuine customer value. It is the art of helping your customers become better off.”
Paul Wiefels is Managing Director at Chasm Group LLC.