Who's Afraid of the Big, Bad Wolf?

With each new release, Salesforce.com adds an increasing amount of marketing functionality. Does this present a threat to marketing automation firms such as Eloqua, Marketo, and Market2Lead? Wouldn't customers prefer getting all the functionality they need from one vendor in a one-stop-shop solution? Not necessarily.

CRM has its roots in pulling together customer information from multiple departments, including sales, marketing, customer service and support (CSS), and others. In the past, the goal of having one source of truth meant putting all relevant customer data into a single database. This required sales, marketing, and customer service to utilize the functionality and interfaces offered to them by the CRM vendor, regardless of how well those interfaces met--or didn't meet--each department's individual needs. The perceived benefits of having one source of truth outweighed the benefits of having interfaces and databases that best served each of these departments individually.

Such a single vendor solution continues to present the strongest economic argument in two segments of the market. At the low end of the market, one CRM vendor might well be able to economically meet all marketing, sales, and customer service needs of the company. At the very high end, global corporations in different industries require so much business process-related customization that the economic argument for getting it all from one vendor, that has discrete applications tailored for each department and perhaps for each industry, becomes stronger again.

There remains a large midmarket, however, where businesses have unique requirements for each department. This segment doesn't tend to require heavy customization of the application to its business processes and instead looks for best of breed solutions in each functional area. Midmarket firms recognize that they can adopt the business processes that are built into software-as-a-solution (SaaS) tools they buy and that, thanks to common interfaces, they don't need a single database solution to achieve a single view of their data.

Recall that the all-in-one stereo system -- with its CD player, amplifier, receiver, and speakers--still finds a market at the low end of the music market. But the introduction of common interfaces--be it RCA plugs or HDMI--made connecting components from different vendors easy, affordable, and for many, preferable. Likewise, Salesforce.com promotes its open API to encourage third party innovation and addition of new components to its CRM. This has helped foster the marketing automation industry. The business ecosystem rewards open interfaces that promote multiple vendors to innovate and push the industry forward even faster.

As long as the benefits of having multiple vendors outweigh the task of integrating the systems, the market will opt for more choice. The drivers for midmarket CRM decisions are embodied in the following questions:

• Will the technology keep up with the latest capabilities?
• Does it have open interfaces so you can connect to other online and offline data easily?
• Does each component meet the business needs of the department it serves?
• Can you easily replace any one of the components without disrupting the others?
• Do they meet your data integrity, security, and application availability needs?

By encouraging many vendors to innovate and create products that connect with its CRM solution, Salesforce.com ensures that there will be many marketing automation vendors in the midmarket. So what do the next two years hold for marketing automation vendors?

The most likely technologies to become commoditized and be fully absorbed by midmarket CRMs are:

• all salesperson-related functions, such as notifications, alerts, outlook integration, etc.;
• lead scoring from the sales perspective;
• data quality tools and data enrichment;
• technologies related to social media tracking (knowledge management extension);
• telesales and tele-qualification functionality;
• pay-per-click tracking;
• email marketing; and
  
• channel management functionality.

Least likely to be absorbed within the next two years include technologies such as:

• Web analytics;
• asset and content management;
• marketing calendars and project management;
• marketing planning, budgeting, and financials;
• production management;
• campaign automation;
• response management (dynamic profiling with forms, landing pages, microsites, etc.);
• PR-related technologies; and
  
• marketing data warehouse.

Salesforce.com is a mile wide and when it comes to marketing, a few inches deep. After all, it is not MarketingForce.com, yet! Gradually, the company will likely absorb functionality that has wide appeal to its installed base. So the lowend marketing automation vendors and email marketing firms will need to keep an eye out for the wolf. The remaining marketing automation vendors (i.e., high-end and midmarket) will be in friendly cooperation with the CRM vendors as long as they continue to outrun the wolf!

About the Author

Kevin Joyce (kjoyce@market2lead.com) is the chief marketing officer at Market2Lead and a marketing executive with 26 years of experience in high tech. In the past seven years Joyce has worked with many companies on their demand generation strategies and on marketing automation solution selection and deployment. With a unique combination of marketing skills and sales experience, he helps bridge the gap between sales and marketing. Joyce has successfully launched numerous products and services as a director of product marketing at Sequent, as a director of sales at IBM, as vice president of marketing at Unicru, and as chief executive officer of Rubicon Marketing Group. He holds a BS in engineering from the University of Limerick, Ireland, and an MBA in marketing from the University of Portland.

Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. You may leave a public comment regarding this article by clicking on "Comments" at the top.
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For the rest of the November 2009 issue of CRM magazine please click here.

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