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What's Driving Marketing's Renaissance?

What's Driving Marketing's Renaissance?

When the going gets tough, the tough double down on marketing. If demand has thinned out thanks to the economy, then the smart companies spend more on talking up their existing CRM products. They don't put more sales people out on the road. How else to explain major companies going on marketing solution shopping sprees, or a few marketing tech startups' wild growth rates? The need for marketing analytics -- in other words, technology -- is fueling the CRM engine right now.

By Denis Pombriant
04/08/13 5:00 AM PT

Marketing is taking CRM by storm. While we've all been fixated on social media, many companies -- both vendors and end customers -- have been acting more broadly by acquiring and extending marketing solutions.

At the recent Microsoft Convergence 2013 held in New Orleans in March, the company put a lot of emphasis on marketing. Microsoft presented sessions on Marketing Pilot, a recently acquired and renovated marketing campaign company, and during the show announced its acquisition of Netbreeze, a marketing analytics company.

By the end of last year Oracle had bought Eloqua, and Salesforce has introduced its third cloud dedicated to -- what else? -- marketing. There are other examples of free standing marketing companies like HubSpot, Marketo and InsideView -- a marketing intelligence company -- growing like weeds.

What's going on here?

It would be a natural conclusion to say that marketing had been the final CRM frontier, and that companies had reached stable points in their sales and service solution rollouts, so they simply embarked on marketing. However, that's rather simplistic and it violates a cardinal rule of business: spend money to make money or to save it, but don't spend money just to spend it.

To appreciate what's going on, you have to step back and take a more nuanced view of the marketplace and the economy at large.

Where's the Demand?

When the economy tanked nearly five years ago, it took with it a lot of jobs and capital. That resulted in slackening demand, which is still with us. Advances in technology are eating up even white collar jobs today, and all of this has a depressing effect on demand.

Interest rates continue to test the zero lower bound, as Paul Krugman might say, in part because corporations are flush with cash, and because consumer borrowing is still lackluster. There isn't enough demand for capital, so rates luff like a sail in a headwind. Not enough people have jobs, and banks, especially today, won't lend to people who don't have the means to repay the way they did in, say, 2005.

This is a long-winded way of saying that demand is slack, and that customers are the rate-limiting reactant in the economic formula. When demand is slack, companies without a clue hire more sales people, and savvy companies step up their marketing games to help identify likely customers without spending the expensive resources involved in putting a sales person on the road.

Marketing is hitting its stride because demand is slack.

It's Marketing Time

You could argue that in other times and circumstances -- like when there is no demand such as at the beginning of a new market, niche or category -- it makes sense to do missionary selling, and marketing is a bare bones affair dedicated to generating PR and brochures.

This is not one of those times.

Today, most markets are not new. Customers have already bought version one or two and are smart about what the next edition ought to deliver. They're also happy to not spend their money if they can't get the deal they want.

Oh, and by the way, there's a lot of competition today, so forget about those 65 percent gross margins that version one delivered; that's not on the table. Smaller margins have little room for expensive and risky approaches to the market.

For all these reasons, and some others, marketing has become the hottest ticket in town. Most of the CRM vendors have demonstrated an understanding of this reality and are acting accordingly. Consequently, marketing vendors are having a field day.

This won't last forever. Nothing does. At some point the wheel will turn, and there will be new fields to conquer with some new idea. The need for the elaborate, scientific and statistically based marketing that we are now constructing will fade away.

We'll probably hear some company talk about expensive and over-engineered marketing approaches in favor of sleek new ideas about the relative importance of sales over marketing, like it just invented the wheel.

For now, however, demand is down, margins are under pressure and competition is tough, tough, tough. Marketers are getting their day in the sun.


Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and Web site. He is the author of Hello, Ladies! Dispatches from the Social CRM Frontier and can be reached at denis.pombriant@beagleresearch.com.


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