idio Does Sophisticated Content Recommendation

Systems in our new Guide to Customer Data Platforms range from B2B data enhancement to campaign managers to audience platforms. This may lead you to wonder whether there’s anything we actually left out.  In fact, there was: although the final choices were admittedly a bit subjective, I tried to ensure the report only included systems that met specific critieria including a persistent database, customer-level data, marketer control, and marketing-related outputs to external systems. In most cases, I could judge whether a system fit before doing a lot of detailed research. But a few systems were so close to the border that I only made the final call after I had evaluated them in depth.

idio was one of those. The company positions itself as a tool to deliver “personalized and relevant multi-channel communications”, which sure sounds like a CDP.  Indeed, it meets almost all the critieria listed above, including the most important one of building and maintaining a persistent customer database. But I ultimately excluded idio because it is tightly focused on identifying the content that customers are most likely to select, a function I felt was too narrow for a proper CDP. The folks at idio didn’t necessarily agree with this judgment, and pointed to planned developments that could indeed change the verdict (more about that later).  But, for now, let’s not worry about CDPs and take idio on its own terms.

The full description on idio's home page reads “idio understands your customer’s interests and intent through the content they consume and uses this to deliver personalized and relevant multi-channel communications” and that pretty much says it all. What idio does is ingest content – typically from a publisher such as ESPN, Virgin Media, Guardian Media, or eConsultancy (all clients) – but also from brands with large content stores such as Diageo, Unilever, and C Spire (also all clients). It uses advanced natural language processing to extract entities and concepts from this content, classifying it with the vendor’s own 23 million item taxonomy.

The system then monitors the content selected by its clients’ customers in emails, Web pages, mobile platforms, and some social platforms and builds an interest profile for each customer.  This in turn lets the system recommend which existing content the customer is most likely to select next. The recommendations are typically fed back to execution systems, such as email generators or Web content managers, which insert links to the recommended content into Web pages, emails, or newsletters.  Reports show selection rates by content, segment, or campaign, and can also show the most common topics published and the most commonly selected. Pricing is based on recommendation volume and starts around $60,000 per year for ten million recommendations.

Describing idio’s basic functions makes it sound similar to other recommendation systems, which doesn’t really do it justice. What sets idio apart are the details and technology.

• Content can include ads, offers and products as well as conventional articles.
• The natural language system classifies content without users tagging each item, a huge labor savings where massive volumes are involved, and can handle most European languages.
• idio's largest client ingests more than 1,000 items per day and stores more than one million items, a scale far beyond the reach of systems designed to choose among a couple hundred offers or products.
• Interest profiles take into account the recency of each selection and give different weights to different types of selections – e.g., more weight to sharing something than just reading it.
• Users can apply rules that limit the set of contents available in a particular situation.
• The system returns recommendations in under 50 milliseconds, which is fast enough to support online advertising selection.
• It stores customer data in a schema-less system that can make any type of input available for segmentation and reporting, although not to help with recommendations.
• It can build a master list of identifiers for each individual, allowing systems to submit any identifier and access a unified customer profile.
• It can return a content abstract, full text, images, or HTML, or simply a pointer to content stored elsewhere.
• It captures responses directly as the content is presented.

Most of these capabilities are exceptional and the combination is almost surely unique. The ultimate goal is to increase engagement by offering content people want, and idio reports it has doubled or even quadrupled selection rates vs. previous choices. All this explains why a small company whose product launched in 2011 has already landed so many large enterprises among its dozen or so clients.

Impressive as it is, I don’t see idio as a CDP because it is primarily limited to interest profiles and  content recommendations. What might yet change my mind is idio’s plan to go beyond recommending content based on likelihood of response, to recommending content based on its impact on reaching future goals such as making a purchase. The vendor promises such goal-driven recommendations in about six months.

Idio is also working on predicting future interests, based on behavior patterns of previous customers.  For example, someone buying a home might start by researching schools, then switch to real estate listings, then to mortgages, then moving companies, and so on. Those predictions could be useful in their own right and also feed predictions of future value, which could support conventional lead scoring applications. Once those features become available, idio may well be of interest to buyers well beyond its current customer base and would probably be flexible enough to serve as as Customer Data Platform.

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How Raab Associates Converted to ZohoCRM In One Weekend: a B2B CRM Success Story

Raab Associates is really two businesses: the technology consulting practice run by Yours Truly, and a marketing agency specializing in children’s books run by my beautiful and brilliant wife Susan. We keep them largely separate, but I am inevitably involved in her technology decisions. So when her ancient Goldmine CRM system finally crashed last week, we both scrambled to pick a replacement.

From my usual lofty perch in enterprise software world, Susan's requirements seem stick-figure simple: accounts, contacts, opportunities, lists, and mass emails. So our first thought was to find a system that offered those plus some cool new things like social media profiling. But a quick scan of the market showed that none of the neat new systems also offered the basic functions with with enough refinement and flexibility to meet Susan's needs.

This pushed us back to the more standard CRM options.  To my dismay, we found ourselves ruling out one after another for various. I even briefly suggested we reconsider Goldmine, an thought that was quickly rejected.  Eventually we took an unhopeful look at ZohoCRM, which I know as a popular small business system but had never considered particularly advanced. Happily, the system has a very thorough online user manual, so I was able to check it out in detail.

Even more happily, the answers all came back positive as I imagined working through Susan’s basic business processes in Zoho. Build contact lists, check. Mass emails, check. Opportunities linked to campaigns, check. Pull-down status list and callback date on opportunities, check. Custom filters across all field types, check. End-user report writer, check. Multi-field search, check. A bunch of other details that I no longer recall, check check check. Reasonable cost, double check: we would have grudgingly paid a couple hundred dollars a month for a solution, but Zoho’s mid-tier Professional edition costs all of $20 per month with no limits on database size (Susan has about 14,000 contact records – well above the minimum for many small business systems). We may even splurge for $35 per month enterprise edition, which provides some advanced automation features but is probably overkill for most small businesses.  Just call me Diamond Jim.

At this point, we were ready to sign up for the free trial account, which was a simple process and didn’t ask for a credit card. Let me point out that I purposely hadn’t signed up sooner because I didn’t want to waste time exploring a system that I wasn’t pretty confident would meet my needs. Diving in too soon is a classic mistake among software buyers – and, in this instance at least, I actually followed my own advice.  (While I'm patting myself on the back, I'll also point out that we evaluated the software against our actual business process, not an arbitrary feature checklist.  That's another best practice that too few buyers follow.)

We now pulled a small set of test records from Goldmine to test the import function. The online manual guided me through the exact steps necessary, complete with a handy checklist of preparatory tasks.  When I went to load the file itself, I got the first of many delightful surprises: Zoho took a guess at mapping the input fields, based on their names, and got about half right. That’s a pretty sophisticated function and a big time-saver. It’s the sort of refinement you don’t see in a new system because it’s not essential to get the product into market, but gets added after enough users request it and the developers have some breathing room. Zoho has actually been around since 1996 (although CRM came later), so they’ve had time to add a lot of those little helpers.

In any event, the test import worked perfectly the first time out, which was a great feeling of accomplishment. Susan and I played with the system a bit more now that we had some real data in it, and found all sorts of nice little options, like being able to rename objects (she calls an opportunity a “pending record”), rearrange the fields on each screen, change the order of sections, and move fields from one section to another.  Again, none of these is cutting edge, but they’re not always available and make a big difference in making the system more usable.  The interface itself was also highly intuitive – lots of nice dragging to move the fields around, for example. There were plenty of other unexpected goodies that I would have otherwise needed to configure or live without, like automatically listing the associated contacts when you view an account record, and listing the associated opportunities – I mean, pending records – when you look at a contact. And, oh yes, you can control which fields are displayed on those related records.

At this point we were feeling pretty good about actually pulling off the conversion, so I spent all day Sunday manually cleansing those 14,000 contact records to ensure the critical data was populated. Even Zoho couldn’t help with that one. I finished around midnight and had a moment of panic when I saw that Zoho would only import 5,000 records at a time.  But it turned out to accept all three batches without waiting for the first batch to finish, so I was able to submit them and get some sleep.

I woke up bright and early (well, actually, late and cranky), feeling pleased that Susan could start using the system without missing a business day.  Alas, we found that somehow there were twice as many account records as expected. A quick call to Zoho support pointed us to a rollback function that should have cleaned up the problem in a few seconds. Sadly, it rolled back one set of records but not the other (remember, there had only been one import).  I spoke again with Zoho support, who promised to look into it but hadn’t accomplished anything several hours later.  At that point, I realized – duh – that it would take about two minutes to delete the records manually (you can only delete 100 at a time, but it’s three keystrokes for each batch, so you can probably do about 50 batches per minute). Once I figured that out, I cleaned out the old records and reimported everything, and we had a clean set of data.

Susan has been working with the system for the past two days, and I’ve been peeking over her shoulder and poking around a bit myself.  ZohoCRM is certainly not perfect – there are bunch of little things she would like to do, such as preview a template-based email with the variables populated. There are also some oddities like two unrelated sets of email templates, a vestige of Zoho's earlier separate systems for CRM and mass mailings. Those quirks take a bit of getting used to but are far from show-stoppers. There are some other tasks that cumbersome at the moment, but I suspect we’ll be able to automate once we have time to explore those functions. And, yes, there are some things it doesn’t do that Susan would like, such as associating multiple email addresses with the same contact. I wouldn’t exactly say they’re trivial – certainly not to Susan – but she can live with them.

We're generally satisfied with customer support: phone calls aren’t always answered immediately, but after about a minute on hold, a very nice lady picks up the line and offers to take a message. I appreciate the human touch, and, more important, the opportunity to get immediate help if something is truly urgent. We do get callbacks in an hour or two and the agents have been pleasant and helpful, which is about all I can ask. There’s a “how’d we do?” email after each interaction, which is a good sign that Zoho is trying to do a good job.

Bottom line: We’re still in the honeymoon period, so I may find Zoho isn’t really as great as I think.  On the other hand, I proposed to Susan almost immediately after meeting her and that's worked out just fine.  So I'd say ZohoCRM is worth a close look for small business CRM, even for people who think it may be too simple for their needs.

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Intuit / Salesforce.com Alliance Is No April Fool's Joke

Am I the only one who missed the April 1 announcement of a strategic alliance between Salesforce.com and Intuit? Given our industry's endless nattering about whether Salesforce.com will move into marketing automation, this should have attracted more attention (or, at least, enough attention that I would hear about it sooner than I did).

In case you too missed the news, it comes down to this: Salesforce.com will be available on Intuit’s App Center and be deployed so that the Intuit and Salesforce.com databases are synchronized. For those of us used to thinking of Salesforce.com as the 900 pound gorilla, it’s disorienting to see Salesforce on the Intuit App Center, rather than the other way around.

But it does make sense. Intuit has more than 4 million customers, compared with 90,000 for Salesforce.com. The revenue differential isn’t as large ($3.5 billion for Intuit vs. $1.7 billion for Salesforce) and Salesforce.com actually has a slightly higher market cap ($17.5 billion for Salesforce.com vs. $16.5 billion for Intuit). But Intuit represents a gateway to the small business market for Salesforce.com, so it’s clear who needs whom.

What has this to do with marketing automation? Pretty much everything, I’d argue, at least for companies like Infusionsoft, OfficeAutoPilot, and Genoo, who target “micro-businesses” at the lowest end of the market. Those vendors base much of their appeal on the convenience of using one system for marketing, Web pages, CRM, and even order processing. The one thing they don’t offer is accounting, in good part because Intuit’s QuickBooks has such a dominant position.

The lack of accounting data is an important gap, because the accounting system is the ultimate source for information on customer identities and transactions. That data is important for effective marketing. Having it automatically available to Salesforce.com makes Salesforce a much more attractive marketing option for small businesses.

I suppose I should backtrack a bit here and acknowledge that I’m talking about marketing to customers – that is, people who have already made a purchase – rather than marketing to prospects or leads. Business-to-consumer marketing automation systems manage relationships with both groups, while B2B marketing automation is concerned primarily with just prospects and leads. The “micro-business” marketing automation vendors are more like B2C systemsbecause they do deal with customers as well as leads and prospects.

In other words, the Intuit / Salesforce.com alliance poses a very large threat to the “micro-business” marketing automation vendors but doesn’t have much impact on the rest of the B2B marketing automation industry, which sells to larger companies. Indeed, those larger firms are typically not QuickBooks clients at all.

But here’s the thing: let’s say that Salesforce.com does succeed in selling to a lot of Intuit clients, and in the process adds marketing automation features to serve them better. Those marketing automation features will be available to all sizes of Salesforce.com clients, including the larger ones who currently purchase marketing automation systems. Even if those firms continue to use marketing automation just to target leads and prospects, they’ll suddenly have a stronger reason to adopt Salesforce.com as their marketing platform. So marketing automation vendors who thought the Salesforce.com / Intuit deal didn’t apply to them, might want to think again.

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Aberdeen Predicts Web Content Systems Will Add Marketing Automation: I Agree, But...

Summary: a new Aberdeen Group report argues that Web content management systems should add customer management features and will ultimately compete with traditional marketing automation products. I agree with one reservation: I doubt large companies will use a single system to manage all customer touchpoints.

I’ve been convinced for some time that Web content management systems (CMS) will become important platforms for marketing automation. The logic is that Web sites are increasingly the primary method of interaction between a company and its customers, and that Web analytics, testing and personalized treatments are better executed within the content management system rather than by external products. See my July 14 post on CMS vendor SiteCore for a more detailed explanation, and the admission that I borrowed much of this thinking from SiteCore VP Marketing Darren Guarnaccia.

(Opposing viewpoint: marketing automation vendors tell me they don’t see CMS systems as competitors, largely because the systems are sold to IT rather than marketing departments. But this could change.)

Aberdeen Group’s report Next Generation Web Content Management makes a convincing case for a similar position. In fact, the study contains any number of pithy summaries of what I see as the fundamental trends driving the industry:

“Supporting prospects throughout the buying cycle requires a dialogue between a company and the prospect, and this dialogue should be highly relevant, timely and personalized to maximize marketing effectiveness and grow top-line revenue.”

“The new paradigm in customer engagement assumes consumers have control over the buying process, not marketers. Marketers now have to embrace the customer centric shift and deliver relevant, timely content when and where the buyer wants to receive it. This demands multi-channel engagement and automated personalized content delivery.”

“By incorporating some of the most valuable components of today’s marketing technologies (like lead scoring, dynamic content, analytics, profiling, and integration), the next generation of WCM [Web content management] tools have the potential to deliver highly personalized online experiences with little or no effort from marketers.”

Exactly.

Author Ian Michiels has been evangelizing integrated marketing platforms for the past year or longer. One section of the paper specifically describes the “battle for the integrated platform.” Michiels writes:

“Niche technology providers are increasingly starting to realize consolidation and integration will be inevitable for marketing technologies. The question is: Which technology will emerge as foundation for integrated capabilities?”

He then offers email marketing, web analytics, web content management and customer relationship management as contenders.

I agree with one major reservation. If I read Michiels correctly, he believes that one integrated system will execute the interactions across all channels. Certainly this is the fond hope of the marketing automation vendors, but I don’t believe that large companies will use the same system for all touchpoints. There are just too many channels, and new options appear too quickly, for any one vendor to satisfy everyone in a large enterprise. It’s more likely that companies will employ multiple touchpoint systems and use a central marketing platform to coordinate them.

More specifically, I see the integrated marketing platform as an underlying technology with three main roles:

- gather data from multiple sources, including touchpoint systems. This will happen in both batch and real time.

- apply analytics and decision rules to select treatments for each customer.

- push the treatment decisions back to the touchpoints for execution.

Products to do this already exist. Major contenders include Chordiant, thinkAnalytics and Infor’s CRM Interaction Advisor.

How important is the distinction having one system execute all interactions and having one system coordinate interactions that are executed by separate systems? Michiels would probably argue it’s a big difference (and I'm wrong) because he sees the difficulty of integrating multiple systems as a major barrier to coordinated treatments, and therefore a primary reason companies will be forced to adopt a single system.

But I feel the main barriers to cross-channel coordination are organizational, not technical. In my view, getting a company to replace all its existing touchpoints with a single central system faces greater organizational and financial barriers than getting it to coordinate its existing separate systems.

Let’s assume I’m right that most companies will deploy a central decision engine with multiple touchpoint systems. Doesn't this contradict my prediction that touchpoints like Web content management and CRM will expand their marketing automation functions, threatening the current marketing automation vendors?

I don’t think so. Even though I expect touchpoint systems to ultimately become delivery channels for central decisions, I doubt the touchpoint vendors will accept this role without a fight. Rather, they will expand their ability to manage interactions, thereby positioning themselves to provide the central decisioning platform itself.

Indeed, there’s a good case for having one touchpoint system make decisions for itself and other touchpoints. This avoids integration hassles between the central decision platform and one execution system, while still allowing coordination across all interactions. The logical candidate for this joint role is a company’s primary touchpoint system, which these days is probably either the Web site or CRM. Hence my prediction.

In fact, if I had to bet, I’d wager that the hybrid model will be the most successful. Financially and organizationally, it's easier to expand a major execution system than to integrate a separate decision engine. Even though an independent decision system may be technically more elegant, the organizational and financial issues are likely to be decisive.

At this point, the “hybrid model” and “one big system” may be sounding pretty similar. After all, both involve central decisions made within a major touchpoint system. But there’s a fundamental difference: “one big system” is designed to avoid integration issues by doing everything internally, while the “hybrid model” uses a primary system designed with external integration in mind. These imply very different technical approaches. Vendors building these systems, and companies looking to buy them, need to choose which philosophy they favor and act accordingly.

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Helmsman Shows How To Serve Small Business Marketers

Summary: Helmsman Marketing offers turnkey marketing campaigns for small business. It's a great way to meet their needs, but probably not the model that will ultimately prevail in small business marketing automation.

I’ve spent a lot of time recently talking to marketing automation vendors hoping to sell to small businesses. They all seem to think this market is under-served and therefore open for them to dominate. In one sense they're right: there are millions of small businesses, few of which use serious marketing technology today. But the very fact that I'm talking to so many vendors means there is no lack of competition.

The entrepreneurs starting these marketing automation firms think they have few competitors because they rarely run into them. But that’s because small businesses rarely look for alternative solutions: if they see a system that seems to meet their needs, they’ll buy it and move on to the next project. Small business people just don’t have the time or expertise for elaborate vendor comparisons.

In the short term, this means that plenty of small business-oriented marketing automation vendors will prosper in isolation. Eventually, though, some will grow larger, market themselves more aggressively, and penetrate the awareness of small businesses beyond their immediate circle. That’s when buyers will recognize they have alternatives and be forced to make choices.

At the moment, though, the market is in that delightful early stage where a new vendor with a unique approach pops up every week. Last week it was Helmsman Marketing, a five-month old company focused on helping small businesses run multi-step, multi-channel, outbound customer relationship campaigns.

Ok, that last sentence is a mouthful. But I think it captures the key components of Helmsman:

- multi-step: the system runs campaigns that deliver a sequence of messages. The precise timing of these is adjusted for maximum response through the life of the campaign as Helmsman reports on results such as email opens. The reports are generated automatically and the adjustments are made manually. A typical Helsmark campaign might include five touches over several weeks.

- multi-channel: Helmsman delivers messages via email, automated voice mail recordings, fax, text message (SMS), and printed postcards. These are all managed by the vendor itself. Helmsman can also arrange to ship promotional products. The company stresses multi-channel campaigns because it has found that email isn’t always delivered and different customers will react to different media. Their use of post cards is particularly intriguing because it’s the second or third time I've recently been told that post cards are especially effective for small business marketers.

- outbound: pretty much all Helmsman does is send messages. Results like email opens are recorded within the system, but actual replies would be directed to a company CRM system or elsewhere. The one big exception is that the vendor can build and host Web landing pages and forms.

- customer relationship campaigns: most Helmsman programs are sent to existing customers to remind them of renewals or to schedule service appointments. The system is also be used for prospecting, such as seminar invitations. But the company warns that multiple contacts without an existing relationship can be annoying – particularly with intrusive media such as phone or SMS.

So that’s what Helmsman does. Integrated multi-channel capabilities are unusual, but otherwise the system offers less than most demand generation or consumer marketing automation products. What actually makes Helmsman special is something other than features: it’s a business model that is tailored to small business needs.

Specifically, Helmsman is sold as part of a service package that relieves marketers of the need to set up and execute their campaigns. According to Helmsman CEO and co-founder Tim Haller, he quickly discovered that small businesses lacked the time and skills to run a system like Helmsman for themselves. So the company meets with each new client for an hour or two to understand their goals and marketing messages, and then does the rest: designing the campaign, creating the marketing materials, sending the messages, and analyzing the results. If the customer list needs some data cleansing, Helmsman will do that too.

This approach avoids the time and skill constraints that – even more than direct cost – are greatest barriers to small business marketing automation. It also allows purely project-based pricing, derived from the numbers and types of contacts. This makes it easy for businesses to compare the costs and results of using the system, so they can judge its practical value. In the case of renewal and reminder programs, Helmsman is often fully justified by the savings from not having company staff make phone calls. Actual costs depend on the project (postage in particular is expensive), but have never exceeded $2 per contact. There’s a project minimum of about $750.

Helmsman released its product in April 2009 and currently has about 20 systems in place.

So where does Helmsman fit in the grand scheme of things? More than anything, it illustrates the importance of vendors helping clients to use their systems. Small businesses are the most extreme example of this need, but it applies to other, more sophisticated businesses as well. Helmsman also shows the importance of tying system cost to specific business value, something that its project-based billing structure does just about perfectly. The point about multi-channel contacts in general and post cards in particular is more tactical but still worth noting.

Yet despite these strengths, I don’t think the Helmsman approach will ultimately dominate in small business marketing automation. Specialized systems can be very attractive but companies don’t want too many of them. While Helmsman itself may succeed as a pure service, I expect that small businesses will ultimately adopt general-purpose marketing systems that support many applications in a single integrated environment. These systems might be sold with prebuilt project templates, similar to newsletter and Web site templates already offered by other types of vendors. Small businesses will then be able to pick and choose the projects they wish to execute without needing a separate vendor for each. Simplicity and support will always be essential for success, but the ultimate victors must combine them with flexible, extensible solutions that can grow and change with the business itself.

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SAS Adds Real Time Decisioning to Its Marketing Systems

I’ve been trying to pull together a post on SAS for some time. It’s not easy because their offerings are so diverse. The Web site lists 13 “Solution Lines” ranging from “Activity-Based Management” to “Web Analytics”. (SAS being SAS, these are indeed listed alphabetically.) The “Customer Relationship Management” Solution Line has 13 subcategories of its own (clearly no triskaidekaphobia here), ranging from “Credit Scoring” to “Web Analytics”.

Yes, you read that right: Web Analytics is listed both as a Solution Line and as a component of the CRM Solution. So is Profitability Management.

This is an accurate reflection of SAS’s fundamental software strategy, which is to leverage generic capabilities by packaging them for specific business areas. The various Solution Lines overlap in ways that are hard to describe but make perfect business sense.

Another reason for overlapping products is that SAS has made many acquisitions as it expands its product scope. Of the 13 products listed under Customer Relationship Managment, I can immediately identify three as based on acquisitions, and believe there are several more. This is not necessarily a problem, but it always raises concerns about integration and standardization.

Sure enough, integration and shared interfaces are two of the major themes that SAS lists for the next round of Customer Intelligence releases, due in December. (“Customer Intelligence” is SAS’s name for the platform underlying its enterprise marketing offerings. Different SAS documents show it including five or seven or nine of the components within the CRM Solution, and sometimes components of other Solution Lines. Confused yet? SAS tells me they're working on clarifying all this in the future.)

Labels aside, the biggest news within this release of Customer Intelligence is the addition of Real-Time Decision Manager (RDM), a system that…well…makes decisions in real time. This is a brand new, SAS-developed module, set for release in December with initial deployments in first quarter 2008. It is not to be confused with SAS Interaction Management, an event-detection system based on SAS's Verbind acquisition in 2002. SAS says it intends to tightly integrate RDM and Interaction Manager during 2008, but hasn’t worked out the details.

Real-Time Decision Manager lets users define the flow of a decision process, applying reusable nodes that can contain both decision rules and predictive models. Flows are then made available to customer touchpoint systems as Web services using J2EE. The predictive models themselves are built outside of RDM using traditional SAS modeling tools. They are then registered with RDM to become available for use as process nodes.

RDM's reliance on externally-built models contrasts with products that automatically create and refresh their own predictive models, notably the Infor CRM Epiphany Inbound Marketing system recently licensed by Teradata (see my post of October 31). SAS says that skilled users could deploy similar self-adjusting models, which use Bayesian techniques, in about half a day in RDM. The larger issue, according to SAS, is that such models are only appropriate in a limited set of situations. SAS argues its approach lets companies deploy whichever techniques are best suited to their needs.

But the whole point of the Infor/Epiphany approach is that many companies will never have the skilled statisticians to build and maintain large numbers of custom models. Self-generating models let these firms benefit from models even if the model performance is suboptimal. They also permit use of models in situations where the cost of building a manual model is prohibitive. Seems to me the best approach is for software to support both skilled users and auto-generated models, and let firms to apply whichever makes sense.

Back to integration. RDM runs on its own server, which is separate from the SAS 9 server used by most Customer Intelligence components. This is probably necessary to ensure adequate real-time performance. RDM does use SAS management utilities to monitor server performance. More important, it shares flow design and administrative clients with SAS Marketing Automation, which is SAS’s primary campaign management software. This saves users from moving between different interfaces and allows sharing of user-built nodes across Customer Intelligence applications.

RDM and other Customer Intelligence components also now access the same contact history and response data. This resides in what SAS calls a “lightweight” reporting schema, in contrast to the detailed, application-specific data models used within the different Customer Intelligence components. Shared contact and response data simplifies coordination of customer treatments across these different systems. Further integration among the component data models would probably be helpful, but I can't say for sure.

The December release also contains major enhancements to SAS’s Marketing Optimization and Digital Marketing (formerly E-mail Marketing) products. Optimization now works faster and does a better job finding the best set of contacts for a group of customers. Digital Marketing now includes mobile messaging, RSS feeds and dynamic Web pages. It also integrates more closely with Marketing Automation, which would generally create lists that are sent to Digital Marketing for transmission. Within Marketing Automation itself, it’s easier to create custom nodes for project flows and to integrate statistical models.

These are some pretty interesting trees, but let’s step back and look at the forest. Loyal readers of this blog know I divide a complete marketing system into five components: planning/budgets, project management, content management, execution, and analytics. SAS is obviously focused on execution and analytics. Limited content management functions are embedded in the various execution modules. There is no separate project management component, although the workflow capabilities of Marketing Automation can be applied to tactical tasks like campaign setup.

Planning and budgeting are more complicated because they are spread among several components. The Customer Intelligence platform includes a Marketing Performance Management module which is based on SAS’s generic Performance Management solutions. This provides forecasting, planning, scorecards, key performance indicators, and so on. Separate Profitability Management and Activity-Based Management modules are similarly based on generic capabilities. (If you’re keeping score at home, Profitability Management is usually listed within Customer Intelligence and Activity-Based Management is not.) Finally, Customer Intelligence also includes Veridiem MRM. Acquired in 2006 and still largely separate from the other products, Veridiem provides marketing reporting, modeling, scenarios and collaborative tools based on marketing mix models.

This is definitely a little scary. Things may not be as bad as they sound: components that SAS has built from scratch or reengineered to work on the standard SAS platforms are probably better integrated than the jumble of product names suggests. Also bear in mind that most marketing activities occur within SAS Marketing Automation, a mature campaign engine with more than 150 installations. Still, users with a broad range of marketing requirements should recognize that while SAS will sell you many pieces of the puzzle, some assembly is definitely required.

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Independent Teradata Makes New Friends

I had a product briefing from Teradata earlier this week after not talking for nearly two years. They are getting ready to release version 6 of their marketing automation software, Teradata Relationship Manager (formerly Teradata CRM). The new version has a revamped user interface and large number of minor refinements such as allowing multiple levels of control groups. But the real change is technical: the system has been entirely rebuilt on a J2EE platform. This was apparently a huge effort – when I checked my notes from two years ago, Teradata was talking about releasing the same version 6 with pretty much the same changes. My contact at Teradata told me the delay was due to difficulties with the migration. She promises the current schedule for releasing version 6 by December will definitely be met.

I’ll get back to v6 in a minute, but did want to mention the other big news out of Teradata recently: alliances Assetlink and Infor for marketing automation enhancements, and with SAS Institute for analytic integration. Each deal has its own justification, but it’s hard not to see them as showing a new interest in cooperation at Teradata, whose proprietary technology has long kept it isolated from the rest of the industry. The new attitude might be related to Teradata’s spin-off from NCR, completed October 1, which presumably frees (or forces) management to consider options it rejected while inside the NCR family. It might also reflect increasing competition from database appliances like Netezza, DATAllegro, and Greenplum. (The Greenplum Web site offers links to useful Gartner and Ventana Research papers if you want to look at the database appliance market in more detail.)

But I digress. Let’s talk first about the alliances and then v6.

The Assetlink deal is probably the more significant yet least surprising new arrangement. Assetlink is one of the most complete marketing resource management suites, so it gives Teradata a quick way to provide a set of features that are now standard in enterprise marketing systems. (Teradata had an earlier alliance in this area with Aprimo, but that never took hold. Teradata mentioned technical incompatibility with Aprimo’s .NET foundation as well as competitive overlap with Aprimo’s own marketing automation software.) In the all-important area of integration, Assetlink and Teradata will both run on the same data structures and coordinate their internal processes, so they should work reasonably seamlessly. Assetlink still has its own user interface and workflow engine, though, so some separation will still be apparent. Teradata stressed that it will be investing to create a version of Assetlink that runs on the Teradata database and will sell that under the Teradata brand.

The Infor arrangement is a little more surprising because Infor also has its own marketing automation products (the old Epiphany system) and because Infor is more oriented to mid-size businesses than the giant retailers, telcos, and others served by Teradata. Perhaps the separate customer bases make the competitive issue less important. In any event, the Infor alliance is limited to Infor’s real time decision engine, currently known as CRM Epiphany Inbound Marketing, which was always Epiphany’s crown jewel. Like Assetlink, Infor gives Teradata a quick way to offer a capability (real time interaction management, including self-adjusting predictive models) that is increasingly requested by clients and offered by competitors. Although Epiphany is also built on J2EE, the initial integration (available today) will still be limited: the software will run on a separate server using SQL Server as its data store. A later release, due in the first quarter of next year, will still have a separate server but connect directly with the Teradata database. Even then, though, real-time interaction flows will be defined outside of Teradata Relationship Manager. Integration will be at the data level: Teradata will provide lists of customers are eligible for different offers and will be notified of interaction results. Teradata will be selling its own branded version of the Infor product too.

The SAS alliance is described as a “strategic partnership” in the firms' joint press release, which sounds jarring from two previous competitors. Basically, it involves running SAS analytic functions inside of the Teradata. This turns out to be part of a larger SAS initiative called “in-database processing” which seeks similar arrangements with other database vendors. Teradata is simply the first partner to be announced, so maybe the relationship isn’t so special after all. On the other hand, the companies’ joint roadmap includes deeper integration of selected SAS “solutions” with Teradata, including mapping of industry-specific SAS logical data models to corresponding Teradata structures. The companies will also create a joint technical “center of excellence” where specialists from both firms will help clients improve performance of SAS and Teradata products. We’ll see whether other database vendors work this closely with SAS. In the specific area of marketing automation, the two vendors will continue to compete head-to-head, at least for the time being.

This brings us back to Teradata Relationship Manager itself. As I already mentioned, v6 makes major changes at the deep technical level and in the user interface, but the 100+ changes in functionality are relatively minor. In other words, the functional structure of the product is the same.

This structure has always been different from other marketing automation systems. What sets Teradata apart is a very systematic approach to the process of customer communications: it’s not simply about matching offers to customers, but about managing all the components that contribute to those offers. For example, communication plans are built up from messages, which contain collateral, channels and response definitions, and the collateral itself may contain personalized components. Campaigns are created by attaching communication plans to segment plans, which are constructed from individual segments. All these elements in turn are subject to cross-campaign constraints on channel capacity, contacts per customer, customer channel preferences, and message priorities. In other words, everything is related to everything else in a very logical, precise fashion – just like a database design. Did I mention that Teradata is a database company?

This approach takes some practice before you understand how the parts are connected – again, like a sophisticated database. It can also make simple tasks seem unnecessarily complicated. But it rewards patient users with a system that handles complex tasks accurately and supports high volumes without collapsing. For example, managing customers across channels is very straightforward because all channels are structurally equivalent.

The functional capabilities of Relationship Manager are not so different from Teradata’s main competitors (SAS Marketing Automation and Unica). But those products have evolved incrementally, often through acquisition, and parts are still sold as separate components. It’s probably fair to say that they not as tightly or logically integrated as Teradata.

This very tight integration also has drawbacks, since any changes to the data structure need careful consideration. Teradata definitely has a tendency to fit new functions into existing structures, such as setting up different types of campaigns (outbound, multi-step, inbound) through a single interface. Sometimes that’s good; sometimes it’s just easier to do different things in different ways.

Teradata has also been something of a laggard at integrating statistical modeling into its system. Even what it calls “optimization” is rule-based rather than the constrained statistical optimization offered by other vendors. I’m actually rather fond of Teradata’s optimization approaches: its ability to allocate leads across channels based on sophisticated capacity rules (e.g., minimum and maximum volumes from different campaigns; automatically sending overflow from one channel to another; automatically reallocating leads based on current work load) has always impressed me and I believe remains unrivaled. But allowing marketers to build and deploy true predictive models is increasingly important and, unless I’ve missed something, is still not offered by Teradata.

This is why the new alliances are so intriguing. Assetlink adds a huge swath of capabilities that Teradata otherwise would have very slowly and painstakingly created by expanding its core data model. Infor and SAS both address the analytical weaknesses of the existing system, while Infor in particular adds another highly desired feature without waiting to build new structures in-house. All these changes suggest a welcome sense of urgency in responding quickly to customer needs. If this new attitude holds true, it seems unlikely that Teradata will accept another two year delay in the release of Relationship Manager version 7.

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Neolane Offers a New Marketing Automation Option

Neolane, a Paris-based marketing automation software vendor, formally announced its entry to the U.S. market last week. I’ve been tracking Neolane for some time but chose not to write about it until they established a U.S. presence. So now the story can be told.

Neolane is important because it’s a full-scale competitor to Unica and the marketing automation suites of SAS and Teradata, which have pretty much had the high-end market to themselves in recent years. (You might add SmartFocus and Alterian to the list, but they sell mostly to service providers rather than end-users.) The company originally specialized in email marketing but has since broadened to incorporate other channels. Its email heritage still shows in strong content management and personalization capabilities. These are supplemented by powerful collaborative workflow, project management and marketing planning. Like many European products, Neolane was designed from the ground up to support trans-national deployments with specialized features such as multiple languages and currencies. The company, founded in 2001, now has over 100 installed clients. These include many very large firms such as Carrefour, DHL International and Virgin Megastores.

In evaluating enterprise marketing systems, I look at the five sets of capabilities: planning/budgeting; project management; content management; execution, and analysis. (Neolane itself offers a different set of five capabilities, although they are pretty similar.) Let’s go through these in turn.

Neolane does quite well in the first three areas, which all draw on its robust workflow management engine. This engine is part of Neolane’s core technology, which allows tight connections with the rest of the system. By contrast, many Neolane competitors have added these three functions at least in part through acquisition. This often results in less-than-perfect integration among the suite components.

Execution is a huge area, so we’ll break it into pieces. Neolane’s roots in email result in a strong email capability, of course. The company also claims particular strength in mobile (phone) marketing, although it’s not clear this involves more than supporting SMS and MMS output formats. Segmentation and selection features are adequate but not overly impressive: when it comes to really complex queries, Neolane users may find themselves relying on hand-coded SQL statements or graphical flow charts that can quickly become unmanageable. Although most of today’s major campaign management systems have deployed special grid-based interfaces to handle selections with hundreds or thousands of cells, I didn’t see that in Neolane.

On the other hand, Neolane might argue that its content personalization features reduce the need for building so many segments in the first place. Personalization works the same across all media: users embed selection rules within templates for email, Web pages and other messages. This is a fairly standard approach, but Neolane offers a particularly broad set of formats. It also provides different ways to build the rules, ranging from a simple scripting language to a point-and-click query builder. Neolane’s flow charts allow an additional level of personalized treatment, supporting sophisticated multi-step programs complete with branching logic. That part of the system seems quite impressive.

Apart from personalization, Neolane doesn’t seem to offer execution features for channels such as Web sites, call centers and sales automation. Nor, so far as I can tell, does it offer real-time interaction management—that is, gathering information about customer behavior during an interaction and determining an appropriate response. This is still a fairly specialized area and one where the major marketing automation vendors are just now delivering real products, after talking about it for years. This still puts them ahead of Neolane.

Execution also includes creation and management of the marketing database itself. Like most of its competitors, Neolane generally connects to a customer database built by an external system. (The exceptions would be enterprise suites like Oracle/Siebel and SAP, which manage the databases themselves. Yet even they tend to extract operational data into separate structures for marketing purposes.) Neolane does provide administrative tools for users to define database columns and tables, so it’s fairly easy to add new data if there’s no place else to store it. This would usually apply to administrative components such as budgets and planning data or to marketing-generated information such as campaign codes.

Analytics is the final function. Neolane does provide standard reporting. But it relies on connections to third-party software including SPSS and KXEN for more advanced analysis and predictive modeling. This is a fairly common approach and nothing to particularly complain about, although you do need to look closely to ensure that the integration is suitably seamless.

Over all, Neolane does provide a broad set of marketing functions, although it may not be quite as strong as its major competitors in some areas of execution and analytics. Still, it’s a viable new choice in a market that has offered few alternatives in recent years. So for companies considering a new system, it’s definitely worth a look.

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Accenture Paper Offers Simplified CRM Planning Approach

As I’ve pointed out many times before, consultants love their 2x2 matrices. Our friends at Accenture have once again illustrated the point with a paper “Surveying and Building Your CRM Future,” whose subtitle promises “a New CRM Software Decision-Making Model”.

Yep, the model is a matrix, dividing users into four categories based on data “density” (volume and update frequency) and business process uniqueness (need for customization). Each combination neatly maps to a different class of CRM software. Specifically:

- High density / low uniqueness is suited to enterprise packages like SAP and Oracle, since there’s a lot of highly integrated data but not too much customization required

- Low density / low uniqueness is suited to Software as a Service (SaaS) products like Salesforce.com since data and customization needs are minimal

- High density / high uniqueness is suited to “composite CRM” suites like Siebel (it’s not clear whether Accenture thinks any other products exist in this group)

- Low density / high uniqueness is suited to specialized “niche” vendors like marketing automation, pricing or analytics systems

In general these are reasonable dimensions, reasonable software classifications and a reasonable mapping of software to user needs. (Of course, some vendors might disagree.) Boundaries in the real world are not quite so distinct, but let's assume that Accenture has knowingly oversimplified for presentation purposes.

A couple of things still bother me. One is the notion that there’s something new here—the paper argues the “old” decision making model was simply based on comparing functions to business requirements, as if this were no longer necessary. Although it’s true that there is something like functional parity in the enterprise and, perhaps, “composite CRM" categories, there are still many significant differences among the SaaS and niche products. More important, business requirements different greatly among companies, and are far from encapsulated by two simple dimensions.

A cynic would point out that companies like Accenture pick one or two tools in each category and have no interest in considering alternatives that might be better suited for a particular client. But am I a cynic?

My other objection is that even though the paper mentions Service Oriented Architectures (SOA) several times, it doesn’t really come to grips with the implications. It relegates SOA to the high density / high latency quadrant: “Essentially, a composite CRM solution is a solution that enables organizations to move toward SOAs.” Then it argues that enterprise packages themselves are migrating in the composite CRM direction. This is rather confusing but seems to imply the two categories will merge.

I think what’s missing here is an acknowledgement that real companies will always have a mix of systems. No firm runs purely on SAP or Oracle enteprise software. Large firms have multiple CRM implementations. Thus there will always be a need to integrate different solutions, regardless of where a company falls on the density and uniqueness dimensions. SOA offers great promise as a way to accomplish this integration. This means it is as likely to break apart the enterprise packages as to become the glue that holds them together.

In short, this paper presents some potentially helpful insights. But there’s still no shortcut around the real work of requirements analysis, vendor evaluation and business planning.

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Accenture Study Underlines Need to Measure Customer Service Technology Impact

Accenture released an intriguing study (registration required) earlier this week contrasting the views of high-tech executives and their customers regarding after-sales support.

Perhaps the most substantive finding was that while 74% of the executives who implemented new customer self-service systems believed they now had higher customer satisfaction, only 14% of their customers rated their experience as “much better”. Twenty two percent actually said service had gotten worse.

This is intriguing for two reasons. First, it shows that customers just don’t find service technology all that helpful. Specifically regarding online self-service, only 11% said it was a priority. (The highest priorities were solving problems completely [69%] and quickly [65%].) Maybe that isn’t really a surprise—plenty of people don’t like self-service tools, particularly for technical issues where a simple FAQ is unlikely to be helpful. I suspect most companies really know this, but implement them anyway to save money.

Which brings us to the second point. That companies think satisfaction has increased even when it hasn’t, suggests they aren’t bothering to measure it. I suppose this isn’t really a surprise either, but the optimist in me never quite wants to accept what a truly miserable job most firms do at customer management and how little they truly care.

The same issue appears in another gap uncovered by the study: 75% of executives feel they provide “above average” service while 78% of customers feel their service is “at or below average”. Yes, humans have a well-known tendency to overestimate themselves, but such delusions can only persist if they don’t bother to measure actual performance. Apparently, the great majority of executives aren’t bothering.

Taken together, these two factors (customer dislike of self-service, and company failure to measure results) hint that investment in self-service systems may actually be value-destroying. If the systems make customers feel service has gotten worse, they will be more likely to leave, and if companies don’t measure this, they’ll never know about it. In addition, self-service systems may not even save money, since people must eventually speak to a human to get their problems resolved anyway. (To the first point: the press release accompanying the study states that 81% of customers who rate their service satisfaction as “below average” plan to purchase from a different supplier in the future. To the second point, the study reports that 64% of customers had to access service channels two or more times to resolve their issue.)

All of this just reinforces the conventional wisdom that you have to measure the impact of a CRM project, and the only measure that matters is the impact on customer behavior (dare I mention…lifetime value?) But since so many people keep ignoring this most basic of principles, I guess it needs repeating.

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