Next Gen Marketing Automation Platforms: Revenue Impacting

June 7, 2012

It’s time for the next generation of marketing automation – a revenue generating marketing automation system that focuses across new areas of predictability, effectiveness, and a wholistic view of a prospect/customer situation with the right analytics.  As a former high tech CMO that understands SaaS companies and platforms, I’ve implemented multiple instances of marketing automation platforms and more recently started a business digging deep at the marketing automation/CRM ecosystem to get more revenue, quicker.

Here are 4 areas that I think the next generation of marketing automation will solve for:

Predictive:  while the lead scoring models of yester-year are a good start to sorting out the needles from the hay, people are starting to realize that companies cannot ‘set and forget’ to hope the scoring methodology works long term.  Buying behaviors change and a buying committee in B2B is complex.  A predictive element with newer analytic capabilities is emerging in the B2B world, leveraging similar technologies that B2C marketers use (i.e. Amazon and best picks).  A company can then determine what products or solutions are most likely to be purchased based on similar demographic or segmentation sets.

Raise Sales/Marketing Effectiveness:  as I’ve previously posted on my blog, the data element is the single most important area for companies to understand and harvest, yet at the executive level it is often the leastunderstood.  Bad data is like a rifle with its sight off;  if your sight is off by a ¼ inch, you’ll miss your end target by a mile.  If the data is bad, you’ll never reach your target or lose valuable time trying to reach the target.  Newer marketing automation systems that leverage the right SaaS integration will be more sophisticated to go beyond the deduplication at the account, contact, and lead level (like they do today or with other 3rd party tools like CRM Fusion, Dupe Blocker, etc.) by providing real time feedback on phone numbers and contact information to increase the effectiveness of the inside sales organization.  Outsourced data cleansing strategies will become less prevalent as time goes on.

Assist with 360 view of a prospect:  with SaaS environments leveraging CRM (Salesforce.com) and new integration technologies (Dell Boomi, etc), there is a newer way to get intimate understanding of your customer prior to sales reaching out real time.  Billing information, trouble tickets, and other service questions can theoretically be displayed to a sales person so they are not ‘surprised’ calling into a new or existing account trying to up-sell.  With a 360 view, coupled with the predictive element, there will be new ways to get more revenue for companies that are savvy. Customer marketing (up-sell, cross-sell) is the hardest type of marketing to do and measure, this 360 view will help complete that circle. The single most important aspect is to make it easy for sales rep to get access to it from their current system.

Analytics that are meaningful:  the first generation SaaS marketing automation vendors have made an attempt at analytics, either licensing 3rd party software (Micromuse, Good) or attempting to build on their own.  The next generation analytic dashboards will be visible by anyone that has CRM access, not just marketing users with marketing data.  These analytics will show the areas above – marketing influenced revenue, 360 viewpoint, and data quality.  While some of this can be reported in systems today, it’s challenging at best.

What do you think, what are you seeing for future marketing automation environments to get more revenue, quicker?  Where are the pain points and shortcomings in your environment?


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B2B Freemiums

June 30, 2011

Recently, I had a dialogue with a colleague in Silicon Valley who asked me about my experiences with B2B Freemiums as she thought through new distribution models for her product.  It made me reflect for a moment about some of my more recent experiences about giving away an aspect of my product in the hope of getting more revenue.

Let’s assume we can tie the Freemium to actual revenue production – meaning the systems are built to track and trend that soon to be customer activity from download of software to close of revenue.  With no systems in place, you may as well nix a Freemium strategy in terms of measuring its success!

In my experience, a large majority of my inbound unqualified inquiries (meaning people with interest in my product offer) came from the Freemium offer, although the product offer itself had more B2C characteristics than a traditional B2B sale.  My conversion rate was in line with industry rates that appear to range from 1% to 13% depending on the source.  Here are 5 examples I dug up that could be considered a B2B benchmark for Freemiums:

  • Evernote 5.6% conversion rate on their two year user cohort, but note that the conversion rate on new users is much lower, likely SMB or consumer users.
  • Logmein 3.8% conversion rate, likely SMB users.
  • Heroku 1-2% ratio of paid-to-free users when it was about 50,000 apps in size
  • MailChimp –13% of users paying.  Having competed against MailChimp, their users are likely SMB and consumers.

So let’s say you had 2,000 inquiries/month, of which 2.5% used a Freemium at an average sales price of $10k/month – $500k/month revenue = $6M/yr on a very reduced customer acquisition cost if customers are able to buy via the web.

So that’s pure math…but let’s ask 4 key questions as you develop your B2B Freemium strategy:

1.  Will your buying entity see value in a freemium?

Companies are not as price sensitive as individuals. How large is your average selling price and your buying entity?  In the examples above, I do not have clear average revenue metrics, but by experience, an upper limit of value was in the $30k/yr range or lower – which may be in line with many cloud based applications.

2.  Can you get away with low acquisition and support costs?  Meaning, no support!

3.  Can you use the freemium as a low cost inquiry or cost of acquisition vs. traditional means?  If one were to look at customer acquisition costs, sales cold calling is very expensive/ineffective, targeted marketing less expensive, freemium is the least expensive.

4.   Companies do not virally spread a freemium offering and word of mouth is key.  How will you get others to talk about your freemium outside your community?  Freemium is all about scale, so you’ll need to assess the potential customer segment size for such an offer.

I think it is definitely worth testing the Freemium concept in a B2B environment.

What has your B2B Freemium experience been?