Stagnant email service providers becoming irrelevant? (see conclusion)
In a previous post there was a lively discussion about the terms Demand Generation and Lead Management Automation (LMA) systems. The consensus was that Lead Management System is part of the demand generation process, and focuses on managing leads you already have in your database (and capturing/importing new leads). Some example features:
- building landing pages and registration forms
- tracking the source of leads
- collecting as much information as possible (web & data analytics)
- nurturing via email and other channels
- calculating a lead score until the prospect is sales-ready
But how does that compare to email marketing, web analytics and landing page optimization tools? In talking to several marketing managers, they often asked: “How do LMA systems compare to {fill in any other marketing software}”. In the next paragraphs I compare LMA systems with other popular marketing systems, and I hope to go more in-depth in future posts.
Email Marketing
Lead Management Systems can send out batch emails to a list, similar to Email Services Providers (ESPs) like VerticalResponse, ExactTarget and Constant Contact. Interesting enough, I’ve heard of several companies that still use ESPs in addition to their Lead Management System, not sure why. Let me know if you have ideas.
Lead Management Systems also provide lots of advanced email features, such as drip-marketing, event-based emails, heavily segmented and personalized emails (e.g. sent from the account of the responsible sales person), and event reminder emails. However, ESPs are also moving forward, and for example ExactTarget now also offers drip-marketing support.
Data Management
Some demandgen vendors provide data management features for deduplication and normalization. My personal opinion is that these features are usually somewhat limited, and that they’re not mature enough to replace specialized data cleaning solutions (Ringlead, DemandTools). But that may change soon, as LMA vendors keep expanding their offerings.
Web Analytics
All Lead Management Systems offer some kind of web analytics, mostly focused on marketing metrics. Only LMA systems aimed at smaller companies tend to offer generic web analytics (page views, referrers, etc.). In all other cases, you would still need a general-purpose Web Analytics systems, such Google Analytics, Coremetrics, Omniture or WebTrends.
There are also some specialized Web Analytics vendors that identify the company name of anonymous leads (Leadlander) or website activity for known leads (Genius.com). However, more and more LMA systems include this functionality. It ranges from fairly basic (Market2lead) to more comprehensive (Marketo, Genius Enterprise, ActiveConversion, LeadGenesys, Pardot).
Web Content Management
Lead Management Systems also do not replace Web Content Management systems, although it may be more common to have WCM features in Demand Generation in the future (earlier post). The only web pages they currently manage are landing pages or microsites. Those are usually hosted on a subdomain such as http://marketing.company.com. There are some exceptions: both Marketbright and Marqui include a full WCM system.
Landing page optimization & Website Personalization
An area where many Lead Management Systems can still improve is landing page optimization. In my opinion they should offer more features to optimize landing page conversion, which critical for Search Marketing efforts. There are dedicated vendors with a superior feature set, such as ion interactive, magnify360 and Sitebrand.
I’ve heard some vendors thinking about personalizing offers based on behavior of anonymous visitors to make it more likely that they register for an offer. Currently I’m not aware of any LMA vendors that offer this functionality: let me know if you know more about this…
Search Marketing
Search Engine Optimization and Pay-per-Click management are usually not included in Lead Management Systems. At most, LMA systems provide reporting on the lead source (which keywords, and organic search or PPC). It looks like SEO and PPC management will stay separate from Lead Management for the short to medium term. Personally I expect this will be integrated in the long term, as lead acquisition and lead management naturally complement each other, and cover the entire demand generation cycle.
Conclusion
Lead Management Automation vendors are rapidly expanding their functionality, but will not replace all specialized tools any time soon. I think we’ll see a consolidation of the industry of the next couple of years. Specialized vendors need to keep innovating, otherwise they will falter. Some categories are there to stay, such as Web Content Management and Web Analytics, but each will also expand their marketing automation features.
I’m not sure about Email Service Providers: In my opinion they either need to move towards lead management or become irrelevant. ExactTarget, Lyris and Silverpop are on the move, but VerticalResponse is at risk: even for small companies there are more effective lead management solutions (such as InfusionSoft).
What do you think: is there a future for pure-play ESPs?
I think the pure ESP’s will survive soley on the simplistic nature of the application and most importatnly, the price. The cost difference between a Constant Contact like service and the lowest cost lead management/ marketing automation solution is still well over 10X. Really small companies and those on shoestring budgets that want to be able to send out newseltters or keep clients and prospects engaged via email will opt for the $20-$50/ month price tag.
At Act-On we provide our customers with either option, through a Pro Edition (as low as $15/month) that offers basic email and forms capabilites so companies can get started. When they need more advanced lead management/ automation they can upgrade to the Enterprise version and get lead scoring, website visitor tracking, crm integration, and behavioral filtering etc without having to learn a new system.
Jep,
Based on what I’ve learned from a couple of my clients, they use the ESPs because they are also using the ESPs for everything else (non-lead management related).
Also it appears that using a Tier One ESP gives you the advantage of deliverability of your email by a company that has a team of people working to keep the email channel open with ISPs, corporate gateways and email hosts like gmail, hotmail, etc.
For example, Eloqua’s emails wind up getting blocked by my ISPs spam filter. Emails from ExactTarget’s customers don’t.
Regards,
Mac McIntosh
mcintosh@sales-lead-experts.com
Jep,
I expect that there will be a big consolidation in the ESP and lead management business.
The big ones will gobble up lots of the little ones, like Silverpop did with Vtrenz (Now Silverpop’s Engage B2B).
Many of the little ones, especially those that never reached profitabilty, won’t survive the economic downturn. Investors for additional rounds are harder to find these days.
Regards,
Mac McIntosh
mcintosh@sales-lead-experts.com
Shawn: good point about price, but I also feel that we (as an industry) need to work on a better ROI calculation for marketing automation. I think that any B2B company with a dedicated marketing person could benefit from it, even though it’s more pricey than bare-bones ESPs.
Mac: I know that several lead management vendors have dedicated people for deliverability. I wonder where the difference in deliverability comes from. Totally agree with your thoughts about consolidation!
Hi Jep,
Just found this post and had to comment as it is something we understand well. Both Shawn and Mac are correct in my opinion. And I would like to add a third point.
1) Price matters and ESPs have the best price/support model. In addition to low per email costs, support includes help that lead management vendors typically would need to bill extra for. This can be 5-10x from a LMV and still not be as good.
2) Deliverability matters and even larger vendors like Eloqua have a hard time keeping up to a dedicated ESP that have dozens of people who are expert in this. ESPs also have long-time relationships with ISPs and resolve email issues quickly. I also agree with Mac, that ESPs are being used in other ways (eg messaging and PR), and dislodging them means disruption to other email activities as well.
3) ESPs have developed great loyalty and retention strategies. Even though it’s not technically difficult to switch to a LMV, tell that to someone who loves their ESP.
Although I certainly agree LMVs add a lot of value to email, and is much better than plain email there is a conundrum there, which is why we work with ESPs instead of against them.
As for consolidation, there certainly will be, especially for those who do not have a path to profitability as Mac states, but notsomuch based on whether you’re an ESP or LMV in my opinion.
Vertical Response claims 40,000 customers now. Also they can easily add lead management functionality for customers by adding ActiveConversion, so there is no functionality (or ROI) gap for their B2B customers. This negates the argument that customers need to ‘upgrade’ to Marketo, Eloqua etc.
Hope that helps. Fred.
Hi Jep,
You are right about the industry consolidation, it is only a matter of time. I can speak for my company, Sitebrand, that we both provide a tool for marketers to personalize their website experiences for their visitors as well as use quite a number of tools you have listed ourselves, especially personalization, CRM, email and lead automation.
To me, it is a natural extension that customer experience is going to be become the adoption driver when your relationship with your prospect starts when you don’t even know anything about them. A combination of personalization with lead management enables marketers to dynamically change emails, landing pages and even the whole corporate website into a personal conversion between your prospect and your company. That is not to say it will happen soon, I do not foresee the general adoption of personalization/lead management software until marketers believe there is a clear ROI and it is a proven technology. Until the big boys such as Saleforce, Unica etc. build/partner or acquire the smaller vendors like Marketo, MarketBright, Sitebrand etc this is not going make it to main street to borrow a “Crossing the Chasm” metaphor.
Regards,
Eric Hollebone
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