An Act-On Conversation
Editor’s Note: This is Part II of an Act-On Conversation between David Raab, author of The Marketing Performance Measurement Toolkit and Atri Chatterjee, Chief Marketing Officer of Zscaler.* You can read Part I of the transcript, What Do You Need in a Core System? here. You can also listen to the entire podcast on the player below.
[powerpress]
ATRI: What are your recommendations for how can marketers be successful with their automation efforts?
DAVID: We’re just analyzing a very interesting survey on the topic that’s not published yet. But we saw some really intriguing and some unexpected results. One of the questions we asked very directly was: On a scale of 1 to 5, how did your marketing system meet expectations and make money?
Preparation is the key to success
DAVID: We explicitly asked people: Are you happy or not, in their own terms. And then we saw what the people who were happier did, versus the people who weren’t happy. We looked at a lot of different dimensions, how many systems did you consider, how long did you look, how long did it take you to deploy, all these different things that boil down to: “How well did you prepare yourself?” The ones who prepared well succeeded. It didn’t matter if they were big companies or little companies. Didn’t matter what industry they’re in. A lot of the other things that you might think of as predictors of success really were not so much.
But the people who didn’t figure out in advance what they were getting into, the people who didn’t look carefully and find a system that they understood before they bought it, were the people who were not happy.
Two types of obstacles
DAVID: We also asked questions about obstacles, what were the problems you ran into. And the interesting thing is, we got a list of obstacles and the most common are what you might expect. “It costs too much,” “it didn’t run right,” “it didn’t have the features I needed.”
Some obstacles are things like generating content. That’s not the system’s fault. The people who had those kinds of obstacles – such as designing campaigns – they knew that’s not the system’s fault, campaigns are complicated. Those people were happy. “Yeah, this was hard, but we knew what we were getting into, it wasn’t the system’s fault, and we have high satisfaction.”
The people who raised obstacles like “didn’t have the features I needed,” “too hard to use,” those are the people who were really unhappy. I think we can legitimately say they were in some sense a failure. Those were things that should not have been surprises. If you buy a system that doesn’t have the features you need, it’s because you bought the wrong system. You didn’t do your homework to figure out what’s the right system for you. And again there are lots and lots of different things throughout the survey that all come back to supporting that central point, which in some ways is a really boring point: Do your homework. But we see so many people who don’t do their homework, who select a system in less than a month. The single biggest predictor of dissatisfaction was they looked for less than a month in buying their system. They just didn’t focus on it. They just didn’t spend enough time prepping.
So if there’s one thing that I can say, it is: Do your homework. Figure out what you need – but don’t look at a million systems. Interestingly, people who looked at six systems weren’t any happier than those who looked at two, but were much happier than those who looked at one. My theory is looking at two systems required people to define their requirements so they could make an intelligent comparison, and the value came from that definition. Looking more than two systems didn’t add that much value. What matters is taking your time and understanding what you’re getting into and doing an intelligent search, not just looking at a million different things superficially. Now I’ll get off my soapbox.
ATRI: No, this is interesting. Because there’s also a tendency for us in the technology world to say, oh there’s the biggest brand, I’ll just go and get that. [“Nobody ever got fired for buying IBM.”] That’s a great insight. Your research, when is this coming out?
DAVID: Early May, I think is the target date. It’ll be launched on the VentureBeat site.
ATRI: This is interesting because this is all about spend, how much should people be spending on their overall marketing budget in this day and age. Because now we’ve got so many more things that we can look at and measure on the digital world.
There have been reports – Gartner has talked about how the CMO is going to be spending more on technology than the CIO. And there’s another recent Gartner report that referenced how marketing is re-appropriating some of the sales budget.
Do you have advice you can give heads of marketing about their marketing spend, how they should be planning for this, and how they should be dividing out that spend?
Budget allocation and technology
DAVID: Well my first and most pressing advice honestly is: if you’re really spending more than the CIO and you’re the CMO, you’d better go get that CIO and get him to give you some help here. Because he knows more about technology than you do. And you know more about marketing than he does. But technology’s tricky. It’s not just “Oh, let’s plug this thing in and log into a website and it’ll all start magically happening.” You [vendors] make it as simple as you can, but at the end of the day this stuff is still tough.
It gets back to what I was saying about doing your homework and understanding what your requirements are. There are requirements that are more technical requirements than functional requirements. Like reliability, compatibility, and integration; those are things for which you need some technical skill. Whether you’re controlling the budget as a marketer or not, cozy up to those tech guys and get them to give you a hand. And the bigger the budget you have, I suppose the more eager they will be to cooperate. That’s one thing that always makes me nervous when I hear about CMOs spending more than CIOs.
Is the technology share of the marketing budget growing? I suppose so. I haven’t seen any numbers on it. But it’s hard to imagine that it wouldn’t be. It should be, because as we get better at things like segmentation, we can send out fewer, more targeted messages, which means that we’re spending more on the targeting, which is a technology spend, and less on the messaging, the actual media buy, or email cost, or whatever the media cost is. That should certainly be pushing us into having a higher percentage of our total budget on tech. Are total marketing budgets increasing? It depends on the company.
ATRI: I think people can use different metrics. In a fast-growing company that is still young, the proportion that you’ll spend on marketing as a percentage of revenue will be proportionally a lot higher than in a more mature company. I’ve seen mature companies spending between 3 or 7 percent of revenue as pure marketing. In a fast-growing company it could be as much as 10 to 15 percent or sometimes even higher.
I’ve been a marketer for 20 years, and I’ve noticed that you’ve got three categories that you spend on. You’ve got your people expenses, the bodies that you need, the employees that you have in marketing. You’ve got the program expenses which are sort of broken up into two pieces, which is the brand building types of activities, and then the more direct response and demand generation types of activities which are more measurable. The brand building is a necessary thing, you need to get your name out there.
So you’ve got these three categories of things. You’ve got your people, you’ve got your projecting your brand, then you’ve got the demand side of things that helps bring qualified leads in to sales and helps the sales process. I’m wondering if you’ve seen any trends on sort of how that mix is changing and if there have been any changes? Because now, obviously, there’s a lot more that can be done on the demand side that’s a lot more measurable. Do you see any of that with some of the companies that you talk to?
DAVID: I can’t say that I see a lot of hard data published on this. I guess among my own clients, people hire me who are making a marketing technology investment, so they’re generally increasing their budgets. But that’s somewhat of an unfair sample of the world. We know certainly that marketing automation industry revenue is growing vastly faster than the economy, or the marketing budgets, or the media spend, which is something that does get tracked at the gross level. So yeah, it’s a safe bet that the technology spend is increasing as a proportion.
Again, it’s more about what’s right for your company, for your position in, as you say, the company’s growth cycle and your strategies and all those things. That’s what’s going to drive it. At the end of the day you should spend what you need to spend to get the results you need to get and that you can afford. I guess one point is to match the sophistication level of your company. There are really cool things that I as a marketer would love to play with. But if I don’t have the resources to do those things or if doing those things is going to suck up resources that prevent me from doing other simpler but more important, then that’s a bad investment.
It’s not that you can just sit down and calculate an ROI for every penny you spend in marketing. You have to think about things at a somewhat simpler level to say, “What are the really important things I need to get done, what’s the best way to get those things done, and then let me look beyond that, what are some sort of cool things that might be investments for the future?”
So maybe I’ll buy or preferably rent some technology that lets me do a cool new thing without taking a huge risk. That’s a nice thing about cloud-based and SaaS: we can do so many things without making such large financial or technical investments. We can try things and if they work we can grow them, and if they don’t work we haven’t lost all that much. Which of course gets us right back to measurement because that’s how you know they work.
ATRI: You’re absolutely right. The other thing I got from your last answer was the whole concept of people and the importance of people. Investing in technology without the right people to work it is a recipe for failure also. I think people should not compromise on hiring the right talent to be able to run a marketing automation system. If it’s a part-time job for someone who happens to be doing five other things, they’ll never get really good. And they’ll never really become successful with this particular aspect of things.
DAVID: You don’t necessarily have to hire new people. You probably have some pretty smart people working with you already. But they need to learn a tool both from the mechanics of using the tool and from the higher marketing theory. Because marketing today has changed. So people who are classically trained marketers do have to learn some new tricks. They can learn them but you do have to invest to make that happen.
One of the interesting things we found in the survey was about two thirds of the people end up at least adding some human resource, whether consultants or permanent staff to do deployment. And that was a good idea. The most satisfied people didn’t have to hire anybody. But I think otherwise most of them probably do, and that’s okay.
ATRI: The good news is there are a lot more people today than a couple years ago who have skills in this area. That talent pool is growing, which is good news for all of us in the field of marketing.
DAVID: Absolutely. And there’s a better understanding of best practices. There are courses and different kinds of training and lessons available and conferences and all those things. So there are lots of ways for people to learn how to do it, other than just the trial and error that the pioneers had no choice but to do.
ATRI: Wonderful. Thank you very much, David. This has been a very enjoyable conversation and very illuminating also. I’m looking forward to the new research that is coming out from you and the folks at VentureBeat. And of course there’s lots of great information on your site. [customerexperiencematrix.com] I always go there to see your reviews of technology, as well as strategies and how the market is evolving. Thank you for a very informative site, and thank you for joining us here today.
DAVID: It’s been a pleasure. Thank you.
Did you miss Part I of this Conversation? Here it is: “David Raab and Atri Chatterjee Talk About Marketing Automation, Part I: What Do You Need in a Core System?”
*At the time of this conversation, Atri was Act-On’s CMO.