Sunday, June 18, 2017

Amazon Buys Whole Foods: It's Not About Groceries

Most of the comments I’ve seen about Amazon’s acquisition of Whole Foods have described it as Amazon (a) expanding into a new industry (b) continuing to disrupt conventional retail and (c) moving more commerce from offline to online channels. Those are all true, I suppose, but I felt they missed the real story: this is another step in Amazon building a self-contained universe that its customers never have to leave.

That sounds a bit more paranoid than it should. This has nothing to do with Amazon being evil. It’s just that I see the over-arching story of the current economy as creation of closed universes by Amazon, Facebook, Google, Apple, and maybe a couple of others. The owners of those universes control the information their occupants receive, and, through that, control what they buy, who they meet, and ultimately what they think. The main players all realize this and are quite consciously competing with each other to expand the scope of their services so consumers have less reason to look outside of their borders. So Amazon buys a grocery chain to give its customers one less reason to visit a retail store (because Amazon’s long-term goal is surely for customers to order online for same-day delivery). And, hedging its bets a bit, Amazon also wants to control the physical environment if customers do make a visit.

I’ve written about this trend many times before, but still haven’t seen much on the topic from other observers. This puzzles me a bit because it’s such an obviously powerful force with such profound implications. Indeed, a great deal of what we worry about in the near future will become irrelevant if things unfold as I expect.

Let me step back and give a summary of my analysis. The starting point is that people increasingly interact with the world through their online identities in general and their mobile phones in particular. The second point is a handful of companies control an increasing portion of consumers’ experiences through those devices: this is Facebook taking most of their screen time, Google or Apple owning the physical device and primary user interface, and Amazon managing most of their purchases.

At present, Facebook, Apple, Google, and Amazon still occupy largely separate spheres, so most people live in more than one universe. But each of the major players is entering the turf of the others. Facebook and Google compete to provide information via social and search. Both offer buying services that compete with Amazon. Amazon and Apple are using voice appliances to intercept queries that would otherwise go through to the others.

Each vendor’s goal is to expand the range of services it provides. This sets up a virtuous cycle where consumers find it’s increasingly convenient to do everything through one vendor. Instead of a conventional “social network effect” where the value of a network grows with the number of users, this is a “personal network effect” where the value of a vendor relationship grows with the number of services the vendor provides to the same individual.

While a social network effect pulls everyone onto a single universal network, the personal network effect allows different individuals to congregate in separate networks. That means the different network universes can thrive side by side, competing at the margins for new members while making it very difficult for members to switch from one network to the other.

There’s still some value to network scale, however. Bigger networks will be able to create more appealing services and attract more partners, The network owners will also provide sharing services that make it easy for members to communicate with each other (see: Apple Facetime) but harder to interact with anyone else. So the likely outcome is a handful of large networks, each with members who are increasingly isolated from members of other networks. Think of it as a collection of tribes.

Even without any intentional effort by the network owners, members of each network will have shared experiences that separate them from outsiders: try asking an Android user for help with your iPhone. The separation will become even more pronounced if the network owners more actively control the information their members receive – something that’s already happening in the name of blocking terrorists, bullies, and other genuinely bad actors. Of course, people who prefer a particular world view will be able to form their own networks, which will be economically viable because the personal network effect with outweigh the social network effect. These splinter networks might be owned independently (it’s easy to imagine a Fox News tribe) or owned by a bigger network that just gives each tribe what it wants. Either way, you have a society whose tribes that are mutually unaware at best and actively hostile at worst.

Let’s put aside the deeper social implications of all this, in the best tradition of “other than that, how did you like the play, Mrs. Lincoln?” My immediate point is that marketers and technologists should be aware of these trends because they help to explain much of what’s happening today in our industry and help to prepare for what might happen tomorrow. Here are some things to keep an eye on:

- Growth of Voice. As I’ve already mentioned, voice interactions are an alternative to conventional screen interactions. What’s important is the voice interaction often happens first: it’s easier to ask Alexa or Siri to do something than to type that same request into Google, Facebook, or Amazon. This means whoever owns the voice interaction can intercept customer behaviors before anyone else. So pay close attention to voice-based systems: far from a gimmick, they could be keys to the kingdom.

- Owning the Pipes. Network owners want above all to keep their customers’ data to themselves. This will make them increasingly interested in owning the pipes that carry that data and in blocking anyone else from tapping those pipes. Don’t be surprised to see the network owners take an interest in physical networks (cable and phone companies) and alternative connections (community wifi). Also expect them to argue that physical network owners shouldn’t be allowed to use the data they carry (an argument they just lost in Congress but will likely resurrect on privacy grounds) and that they should be able to buy preferential access (the “network neutrality” debate they are now winning in that same Congress). Could a pipe owner grow its own network? The folks at Verizon apparently think so: that’s why they bought AOL and Yahoo!

- Data Motels. It goes pretty much without saying that network owners are eager to take data from other companies, but stingy about sharing their own. So they’re happy to import other companies’ customer lists and serve them ads, conveniently getting paid while gaining new information. But they’re less interested in exporting data about those same common customers. It’s the information version of a roach motel: data checks in but it can’t check out.

- Expanding Services. We’ve already covered this but it’s so important that it bears repeating: network vendors will continue to extend the services they offer, tightly integrating them to increase the “personal network value” of their relationships. Watch carefully and you’ll notice each new service gives customers a reason to share more data, gives the network owners still more information to better personalize customer services. Everybody wins, although the networks win more.

- The AIs Have It. The networks’ ultimate goal is to handle all their members’ purchases. The best way to do this is to have members delegate as many decisions to the network as possible, starting with things like subscriptions for restocking groceries and on-demand transportation. This saves the effort of making individual sales and, more important, eliminates opportunities for members to leak out of the system. Delegation requires the members to trust the network to make the right decisions on their behalf. Gathering more data is one key to this; artificial intelligence to make good decisions with that data is another. So if you’re thinking the networks are investing in AI only because they’re nerds who like science projects, think again.

- Trust. Arguably, trust is the result of experience, so making good decisions for members should be enough to earn permission to make more decisions. But in practice it will be impossible for consumers to know if the network is really making the best possible choices. So building trust through conventional branding and relationship management will be critical skills for the network marketers, especially when it comes to recruiting new members. (Of course, with network usage starting somewhere around age 2, membership is likely to be more hereditary than anything else.) Data and AI systems will help network marketers know the best way to build trust with each individual, but human marketing skills will also be needed – at least for now.

- Marketing to Networks. If the networks really do take control of their members’ commercial lives, the role of marketers at non-network companies is much diminished. This is already happening: every dollar spent on pay-per-click search or social advertising is essentially a dollar the network spends on the owner’s behalf, based on data only the network possesses. Today, non-network marketers still set budgets, write copy, and select keywords. But those tasks are well on their way to being automated and it won’t matter much whether the automation runs on a machine at the network or the non-network company. The role of the non-network marketer in this world is to market to the network itself. This is already a reality: search engine optimization is really marketing to network search algorithms. It will be even more important when the member isn’t directly involved in the purchase process. No doubt there will be a certain amount of “incentivizing” of the network to pick a particular product, some of it under the table. But there will also be competition to build products and services that best meet member needs and to create brands that members are pleased to have chosen on their behalf.

- Whither MarTech? Marketers at non-network companies will still have jobs whether or not they sell directly to their customers. But martech vendors could face a threat to their existence. Simply put, if the networks capture all direct customer interactions and don’t share their data with outsiders, the market for customer data platforms, journey orchestration engines, predictive analytics, content management systems, and other martech mainstays will vanish. This probably overstates the problem: presumably companies will still interact directly with people after have made a purchase, even if the purchase itself is managed by the network. But the majority of marketing technology is used for customer acquisition, and much of that could become obsolete.

- Alternate Routes. Like Dickens’ Ghost of Christmas Future, I’m only showing you what might be. Non-network marketers have a strong incentive to preserve direct access to their current and future customers and many suppliers have ways to help. Non-network advertising media are first in line, of course, although they’ve been losing ground at an alarming rate. But many other companies are finding creative ways to capture customer data and attract customers’ attention. Location data and mobile apps are especially contested territory because they let firms reach customers directly in ways that customers find highly valuable. The lowly mobile wallet, if it remains outside the networks’ control, could be an alternative channel for reaching a mass audience. Telecommunication providers, with their deep pockets, broad reach, physical access to mobile devices, and vast government relationships, are probably a better bet. Of course, the telcos would probably rather join the network oligopoly than break it. But the broader point is there are still many players in the game and the outcome is far from decided. I hope this helps you make a little more sense of what's happening on the field.


Saturday, June 10, 2017

Cheetah Digital Debuts in Las Vegas

I spent the latter part of last week still in Las Vegas, switching to the client conference for Cheetah Digital, the newly-renamed spinoff of Experian’s Cross Channel Marketing division. Mercifully, this was at a relatively humane venue, the big advantage being I could get from my hotel room to the conference sessions without walking through the casino floor or a massive shopping mall. But it was still definitely Vegas.

The conference offered a mix of continuity and change. Nearly every client and employee I met had been with Cheetah / Experian for at least several years, so there was a definite feeling of old friends reconnecting. Less pleasantly, Cheetah’s systems have also been largely unchanged for years, something that company leaders could admit openly since they are now free to make new investments. Change was provided by the company’s new name and ownership: the main investor is now Vector Capital, whose other prominent martech investments include Sizmek, Emarsys, and Meltwater. There’s also some participation from ExactTarget co-founder Peter McCormick and Experian itself, which retained 25% ownership. The Cheetah Digital name reflects the company’s origins as CheetahMail, which Experian bought in 2004 and later renamed, although many people never stopped calling it Cheetah.

Looking ahead, newly-named Cheetah CEO Sameer Kazi, another ExactTarget veteran, said the company’s immediate priorities are to consolidate and modernize its technology. In particular, they want to move all clients from the original CheetahMail platform to Marketing Suite, which was launched in 2014. Marketing Suite is based on the Conversen, a cross-channel messaging system that Experian acquired in 2012. Kazi said about one third of the company’s revenue already comes from Marketing Suite and that the migration from the old platform will take four or five years to complete.

Longer term, Kazi said Cheetah’s goal is to become the world’s leading independent marketing technology company, distinguishing Cheetah from systems that are part of larger enterprise platforms. Part of the technical strategy to do this is to separate business logic from applications, using APIs to connect the two layers. This will make it easier for marketers to integrate external systems, taking advantage of industry innovation without requiring Cheetah to extend its own products.

Cheetah will also continue to provide services and build customer databases for its clients. Products based on third party data, such as credit information and identity management, have remained with the old Experian organization.

With $300 million in revenue and 1,600 employees, Cheetah Digital is already one of the largest martech companies. It is also one of the few that can handle enterprise-scale email. This makes it uniquely appealing to companies that are uncomfortable with the big marketing cloud vendors. The company still faces a major challenge in upgrading its technology to optimize customer treatments in real time across inbound as well as outbound channels.  It's a roll of the dice.

Wednesday, June 07, 2017

Pega Does Vegas

I spent the first part of this week at Pegasystems’ PegaWorld conference in Las Vegas, a place which totally creeps me out.* Ironically or appropriately, Las Vegas’ skill at profit-optimized people-herding is exactly what Pega offers its own clients, if in a more genteel fashion.

Pega sells software that improves the efficiency of company operations such as claims processing and customer service. It places a strong emphasis on meeting customer needs, both through predictive analytics to anticipate what each person wants and through interfaces that make service agents’ jobs easier. The conference highlighted Pega and Pega clients’ achievements in both areas. Although Pega also offers some conventional marketing systems, they were not a major focus. In fact, while conference materials included a press release announcing a new Paid Media solution, I don’t recall it being mentioned on the main stage.**

What we did hear about was artificial intelligence. Pega founder and CEO Alan Trefler opened with a blast of criticism of other companies’ over-hyping of AI but wasn’t shy about promoting his own company’s “real” AI achievements. These include varying types of machine learning, recommendations, natural language processing, and, of course, chatbots. The key point was that Pega integrates its bots with all of a company’s systems, hiding much of the complexity in assembling and using information from both customers and workers. In Pega’s view, this distinguishes their approach from firms that deploy scores of disconnected bots to do individual tasks.

Pega Vice President for Decision Management and Analytics Rob Walker gave a separate keynote that addressed fears of AI hurting humans. He didn’t fully reject the possibility, but made clear that Pega’s official position is it’s adequate to let users understand what an AI is doing and then choose whether to accept its recommendations. Trefler reinforced the point in a subsequent press briefing, arguing that Pega has no reason to limit how clients can use AI or to warn them when something could be illegal, unethical, dangerous, or just plain stupid.

Apart from AI, there was an interesting stream of discussion at the conference about “robotic process automation”. This doesn’t come up much in the world of marketing technology, which is where I mostly live outside of Vegas. But apparently it’s a huge thing in customer service, where agents often have to toggle among many systems to get tasks done. RPA, as its known to its friends, is basically a stored series of keystrokes, which in simpler times was called a macro. But it’s managed centrally and runs across systems. We heard amazing tales of the effort saved by RPA, which doesn’t require changes to existing systems and is therefore very easy to deploy. But, as one roundtable participant pointed out, companies still need change management to ensure workers take advantage of it.

Beyond the keynotes, the conference featured several customer stories. Coca Cola and General Motors both presented visions of a connected future where soda machines and automobiles try to sell you things. Interesting but we’ve heard those stories before, if not necessarily from those firms. But Scotiabank gave an unusually detailed look at its in-process digital transformation project and Transavia airlines showed how it has connected customer, flight, and employee information to give everyone in the company a complete view of pretty much everything. This allows Transavia to be genuinely helpful to customers, for example by letting cabin crews see passenger information and resolve service issues inflight. Given the customer-hostile approach of most airlines, it was nice to glimpse an alternate reality.

The common thread of all the client stories (beyond using Pega) was a top-down, culture-deep commitment to customer-centricity. Of course, every company says it’s customer centric but most stop there.  The speakers’ organizations had really built or rebuilt themselves around it.  Come to think of it, Las Vegas has that same customer focus at its core. As in Las Vegas, the result can be a bit creepy but gives a lot people what they want.  Maybe that's a good trade-off after all.

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* On the other hand, I had never seen the corrugated hot cup they had in the hotel food court. So maybe Vegas is really Wonderland after all.

** The solution calculates the value a company should bid to reach individual customers on Facebook, Google, or other ad networks.  Although the press release talks extensively about real time, Pega staff told me it's basically pushing lists of customers and bid values out to the networks.  It's real time in the sense that bid values can be recalculated within Pega as new information is received, and revised bids could be pushed to the networks. 



Saturday, June 03, 2017

SessionM Expands from Loyalty to Full Customer Engagement Management

SessionM launched in 2012 as a platform that increased user engagement by adding gamification and loyalty rewards to mobile apps. The system has since expanded to support more channels and message types. This puts it in competition with dozens of other customer engagement and personalization systems. Compared with these vendors, SessionM’s loyalty features are probably its most unusual feature.  But it would be misleading to pigeonhole SessionM as a system for loyalty marketers. Instead, consider it a personalized messaging* product that offers loyalty as a bonus option for marketers who need it.



In that spirit, let’s break down SessionM’s capabilities by the usual categories of data, message selection, and delivery.

Data: SessionM can gather customer behaviors on Web and mobile apps from its own tags or using feeds from standard Web analytics tools. It can also ingest data from other sources such as a Customer Data Platform or CRM system. Customer data is organized into profiles and events, which lets the system store nearly any type of information without a complex data model.  SessionM can also accommodate non-customer data such as lists of products and retail stores. It can apply multiple keys to link data related to the same customer, but requires exact matches. This works well when dealing with known customers, who usually identify themselves when they start using a sytem. Finding connections among records belonging to anonymous visitors would require additional types of matching.

Message Selection: SessionM is organized around campaigns.  Each campaign has a target audience, goal (defined by a query), outcome (such as adding points to an account or tagging a customer profile), message, and “execution” (the channel-specific experience that includes the message). SessionM describes the outcome as primary and the message as following it: think of notification after you've earned an award. Non-loyalty marketers might think of the message as coming first with the outcome as secondary. In practice, the order doesn’t matter.

What does matter is that campaigns can include multiple messages, each having its own selection rules. Message delivery can be scheduled or triggered by variables such as time, frequency, and customer behaviors. This means a SessionM campaign could deliver a sequence of messages over time, even though the system doesn’t have a multi-step campaign builder.  Rules can draw on machine learning models that predict content affinity, churn, lifetime value, near-time purchase, and engagement. Clients can use the standard models or tweak them to fit special needs. Automated product recommendations are due later this year.  Messages are built from templates that can include dynamic elements selected by rules or models.


Delivery: Campaign messages are delivered through widgets installed in a Web page or mobile app, through lists sent to email providers or advertising Data Management Platforms (DMPs), or through API calls from other systems such as chatbots. Multiple campaigns can connect through the same widget, which raises the possibility of conflicts.  At present, users have to control this manually through campaign and message rules. SessionM is working on a governance module to manage campaign precedence and limit the total number of messages.

The system can generate presentation-ready messages or send data elements for the delivery system to transform into the published format. It supports real time response by loading customer profiles into memory, limiting itself to information required by active campaigns. External systems can access the customer profiles directly through JSON API calls or file extracts, but not through SQL queries.

About that loyalty system: it’s sold as a separate module, so only people who need it have to pay for it. It includes the features you’d expect: points, promotions, awards, status tiers, reward redemption, and so on.  SessionM added the ability to deliver and redeem personalized coupons through retail Point of Sale systems when it bought LoyaltyTree inDecember 2016,

SessionM has about 70 clients. The company originally sold to large enterprises, which are still about half its customer base. It is now pursuing mid-market clients more actively. The company has raised $73.5 million in funding.


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* You’ll note that I’m using “customer engagement”, “personalization”, “messaging”, and other system categories interchangeably. It’s probably possible to distinguish among them, but, in practice, all assemble a customer profile, use rules to select messages for individuals, and deliver those messages through execution systems such as Web sites. Most marketers will want to pick just one system to do this sort of thing, so they’ll evaluate vendors from all those classes against each other. This makes distinguishing between them largely an academic exercise.

Wednesday, May 24, 2017

Coherent Path Auto-Optimizes Promotions for Long Term Value

One of the grand challenges facing marketing technology today is having a computer find the best messages to send each customer over time, instead of making marketers schedule the messages in advance.  One roadblock has been that automated design requires predicting the long-term impact of each message: just selecting the message with the highest immediate value can reduce future income. This clearly requires optimizing against a metric like lifetime value. But that's really hard to predict.

Coherent Path offers what may be a solution. Using advanced math that I won’t pretend to understand*, they identify offers that lead customers towards higher long-term values. In concrete terms, this often means cross-selling into product categories the customer hasn’t yet purchased.  While this isn’t a new tactic, Coherent Path improves it by identifying intermediary products (on the "path" to the target) that the customer is most likely to buy now.  It can also optimize other variables such as the time between messages, price discounts, and the balance between long- and short-term results

Coherent Path clients usually start by optimizing their email programs, which offer a good mix of high volume and easy measurability. The approach is to define a promotion calendar, pick product themes for each promotion, and then select the best offers within each theme for each customer. “Themes” are important because they’re what Coherent Path calculates different customers might be interested in. The system relies on marketers to tell it what themes are associated with each product and message (that is, the system has no semantic analytics to do that automatically). But because Coherent Path can predict which customers might buy in which themes, it can suggest themes to include in future promotions.

Lest this seem like the blackest of magic, rest assured that Coherent Path bases its decisions on data.  It starts with about two years’ of interactions for most clients, so it can see good sample of customers who have already completed a journey to high value status. Clients need at least several hundred products and preferably thousands. These products need to be grouped into categories so the system can find common patterns among the customer paths. Coherent Path automatically runs tests within promotions to further refine its ability to predict customer behaviors. Most clients also set aside a control group to compare Coherent Path results against customers managed outside the system. Coherent Path reports results such as 22% increase in email revenue and 10:1 return on investment – although of course your mileage may vary.

The system can manage other channels than email. Coherent Path says most of its clients move on to display ads, which are also relatively easy to target and measure. Web site offers usually come next.

Coherent Path was founded in 2012 and has been offering its current product for more than two years. Clients are mostly mid-size and large retailers, including Neiman Marcus, L.L. Bean, and Staples. Pricing starts around $10,000 per month.

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* Download their marketing explanation here or read an academic discussion here.

Saturday, May 20, 2017

Dynamic Yield Offers Flexible Omni-Channel Personalization

There are dozens of Web personalization tools available. All do roughly the same thing: look at data about a visitor, pick messages based on that data, and deploy those messages. So how do you tell them apart?

The differences fall along several dimensions. These include what data is available, how messages are chosen, which channels are supported, and how the system is implemented. Let’s look at how Dynamic Yield stacks up.

Data: Dynamic Yield can install its own Javascript tag to identify visitors and gather their information, or it can accept an API call with a visitor ID. It can also build profiles by ingesting data from email, CRM, mobile apps, or third party sources. It will stitch data together when the same personal identifier is used in different source systems, but it doesn’t do fuzzy or probabilistic cross-device matching. Data is ingested in real time, allowing the system to react to customer behaviors as they happen.

Message selection: this is probably where personalization systems vary the most. Dynamic Yield largely relies on users to define selection rules. Specifically, users create “experiences” that usually relate to a single position on a Web page or single message in another channel.  Each experience has a list of associated promotions and each promotion has its own target audience, content, and related settings. When a visitor engages with an experience, the system finds the first promotion audience the visitor matches and delivers the related content.

This is a pretty basic approach and doesn’t necessarily deliver the best message to visitors who qualify for several audiences. But dynamic content rules, machine-learning, and automated recommendations can improve results by tailoring the final message to each individual. In addition, the system can test different messages within each promotion and optimize the results against a user-specified goal.  This lets it send different messages to different segments within the audience.

Product recommendations are especially powerful.  Dynamic Yield supports multiple recommendation rules, including similarity, bought together, most popular, user affinity, and recently viewed.  One experience can return multiple products, with different products selected by different rules.  In other words, the system present a combination of recommendations including some that are similar to the current product, some that are often purchased with it, and some that are most popular over all. 

Channels: this is a particular strength for Dynamic Yield, which can personalize Web pages, emails, landing pages, mobile apps, mobile push, display ads, and offline channels. Most personalization options are available in most channels, although there are some exceptions: you can’t do multi-product recommendations within a display ad and system-hosted landing pages can’t include dynamic content.

Implementation: this also varies by channel. Web site personalization is especially flexible: the Javascript tag can read an existing Web page and either replace it entirely or create a version with a Dynamic Yield object inserted, without changing the page code itself. Users who do control the page code can insert a call the Dynamic Yield API.  Email personalization can also be done by inserting an API call, which lets Dynamic Yield reselect the message each time the email is rendered. The system has direct integration with major ad servers and networks, letting it send targeting rules with different ad versions for each target.

Dynamic Yield’s multi-channel scope and easy deployment options will be appealing to many marketers. The company has more than 100 customers, primarily in ecommerce and media. Pricing is based on the number of unique user profiles managed and on system components. A small client might pay as little as $25,000 per year, although larger companies can pay much more.

Sunday, May 14, 2017

Will Privacy Regulations Favor Internet Giants?

Last week’s MarTech Conference in San Francisco came and went in the usual blur of excellent presentations, interesting vendors, and private conversations. I’m sure each attendee had their own experience based on their particular interests. The two themes that appeared the most in my own world were:

- data activation. This reflects recognition that customer data delivers most of its value when it is used to personalize customer treatments. In other words, it’s not enough to simply assemble a complete customer view and use it for analytics.  “Activation” means taking the next step of making the data available to use during customer interactions, ideally in real time and across all channels. It’s one of the advantages of a Customer Data Platform, which by definition makes unified customer data available to other systems. This is a big differentiator compared with conventional data warehouses, which are designed primarily to support analytical projects through batch updates and extracts.  Conventional data warehouse architectures load data into a separate structure called an “operational data store” when real-time access is needed. Many CDP systems use a similar technical approach but it’s part of the core design rather than an afterthought. This is part of the CDPs’ advantage of providing a packaged system rather than a set of components that users assemble for themselves. CDP vendors exhibiting at the show included Treasure Data, Tealium, and Lytics.

- orchestration. This is creating a unified customer experience by coordinating contacts across all channels. It’s not a new goal but is standing out more clearly from approaches that manage just one channel. More precisely, orchestration requires a decision system that uses activated customer data to find best messages and then distributes them to customer-facing systems for delivery. Some Customer Data Platforms include orchestration features and others don’t; conversely, some orchestration systems are Customer Data Platforms and some are not. (Only orchestration systems that assemble a unified customer view and expose it to other systems qualify as CDPs.) Current frontiers for orchestration systems are journey orchestration, which is managing the entire customer experience as a single journey (rather than disconnected campaigns), and adaptive orchestration, which is using automated processes to find and deliver the optimal message content, timing, and channels for each customer. Orchestration vendors at the show included UserMind, Pointillist, Thunderhead, and Amplero.

Of course, it wouldn’t be MarTech if the conference didn’t also provoke Deeper Thoughts. For me, the conference highlighted three long-term trends:

- continued martech growth. The highlight of the opening keynote was unveiling of martech Uber-guru Scott Brinker’s latest industry landscape, which clocked in at 5,300 products compared with 3,500 the year before. You can read Brinker’s in-depth analysis here, so I’ll just say that industry growth shows no signs of slowing down.

- primacy of data. Only a few presentations or vendors at the conference were devoted specifically to data, but nearly everything there depends on customer data in one way or another. And, as you know from my last blog post, the main story in customer data today is the increasing control exerted by Google and Facebook, and to a lesser degree Amazon, Apple, and Microsoft. If those firms succeed in monopolizing access to customer information, then many martech systems won’t have the inputs they need to work their magic. That could be the pin that bursts the martech bubble.

- new privacy regulations. As Doc Searles (co-author of The Cluetrain Manifesto) pointed out in the second-day keynote , new privacy regulations also threaten to cut off the data supply of marketing and advertising systems, creating an “extinction level event”. Searles announced a “customer commons” that lets consumers share data on their own terms . It’s an interesting concept but I suspect few consumers will put that much work into personal data management.

My initial inclination was to agree with Searles about the implications of new privacy rules, but I’ve since adjusted my view.  It’s just inconceivable that an economic force as powerful as Internet marketing will let regulations put it out of business. It's much more likely that companies like Google and Facebook will learn to work within the new regulations, which after all don’t ban personal data collection but merely require consumer consent. Surely firms with products that are literally addictive can gain consumer consent in ways that will satisfy even the most determined regulators. More broadly, big companies in general should be able to make the investments needed to comply with privacy regulations with minimal harm to their business.

Small businesses are another matter.  Many will lack the resources needed to understand and comply with new privacy regulations.  In other words, privacy regulations will have the unintended consequence of favoring big businesses – which can afford to find ways to comply – over small businesses – which won’t.   Google and Facebook will spend whatever they must to protect their businesses, in the same way that auto manufacturers found ways to comply with safety and pollution regulations. Indeed, as the auto industry illustrates, the actual cost of compliance is likely to be slight and may even result in better, more profitable products. The impact on small businesses will be to push them to use packaged software – yes, including Customer Data Platforms – that have regulatory compliance built in by experts. The analogy here is with financial and human resources packaged software, which similarly provides built-in compliance with government and industry standards.

Of course, if Google, Facebook, and a handful of others take near-total control over access to customers, there won’t be much data for anyone else to manage. But it seems likely that companies will find ways around those toll booths, especially when dealing with customers who have already purchased their products. Ironically, this would return marketers to the situation that existed before the Internet, when data on prospects was limited but customers could be reached directly. That might put a small crimp in martech growth but would still leave plenty of room for innovation.

Saturday, May 06, 2017

Martech Vendors Can't Avoid Ad Audience Battles

It’s been said that sports are soap operas for men. You can see business news the same way: a drama with heroes, villains, intertwining story lines, and endless plot twists. One of the most interesting stories playing out right now is online advertising, where the walled gardens of Google, Facebook, and other audience aggregators are under assault by insurgent advertisers who, like most rebels, aspire as much to replace their overlords as destroy their power. What they’re really fighting over is control of the serfs – oops, I meant consumers – who create the empires' wealth.

Recent complaints about ad measurement. audience transparency, and even placement near objectionable Web content are all tactics in the assault, aimed both at winning concessions and weakening their opponents. More strategically, support for letting broadband suppliers resell consumer data is an attempt create alternative suppliers who will strengthen the insurgents’ bargaining position.

Yet another front opened up last week with an announcement from a consortium of adtech vendors, including AppNexus, LiveRamp, MediaMath, Index Exchange, LiveIntent, OpenX, and Rocket Fuel, that they had created a standard identity framework to support personal targeting of programmatic ads. The goal was to strengthen programmatic’s position as an alternative to the aggregators by making programmatic audiences larger, more targetable, and more unified across devices.

The consortium was quite explicit on this goal. To quote the press release:

"Today, 48 percent of all digital advertising dollars accrue to just two companies – Facebook and Google," said Brian O'Kelley, CEO of AppNexus. "That dynamic has placed considerable strain on the open internet companies that generate great journalism, film, music, social networking, and information. This consortium enables precision advertising comparable to that of Google and Facebook, and does so in a privacy-conscious manner. That means better outcomes for marketers, greater monetization for publishers, and more engaging content for consumers."

But behind the rallying cry, the alliance between advertisers and programmatic ad suppliers is uneasy at best. After all, programmatic threatens the core ad buying business of the agencies and faces its own problems of measurement and objectionable ad placement. How the two groups cooperate against a common enemy will be a story worth watching.

Martech vendors have so far remained pretty much neutral in the ad wars, feeding audiences to both sides with the pragmatic indifference of merchants throughout history. But the new ad tech consortium brings the battle closer, since it involves the personal identities that have been the martech vendors’ stock in trade. In particular, LiveRamp (which links anonymous cookies to known identities) belonging to the consortium creates a connection that will likely pull in other martech players. Of course, the convergence between adtech and martech has long been predicted – it's more than two years since I oh-so-cutely christened it “madtech”  and the big marketing clouds started to  purchase data management platforms and other adtech components even earlier.  The merger is probably inevitable as programmatic advertising looks more like personalized marketing every day.  Martech vendors have growing reason to side with the programmatic alliance as it becomes clear that audience aggregators could threaten their own kingdoms by cutting off access to personal data and taking control of contact opportunities.

In short, what seems like a remote, and remotely entertaining, conflict in adland is more closely connected to the central martech story than you may think. So it’s worth watching closely and deciding what role your business will play when they call your cue
.



Thursday, April 27, 2017

Infusionsoft Announces Freemium Marketing Automation to Expand Its User Base

Infusionsoft has always presented combined methodical management of its own business with evangelical cheerleading for its small business clients. The contrast was even greater than usual at the company’s annual ICON conference in Phoenix this week. For Infusionsoft managers, the big news was a new product called Propel, which delivers prepackaged programs for business owners who don’t want to get involved in the details of marketing. For attendees, who were a largely partners and power users, the most exciting announcements were improvements to the current product such as a vastly better Web form builder. Propel will let Infusionsoft serve business owners who find the current product too complicated or expensive. Pretty much by definition, those people weren’t at ICON. So while Infusionsoft managers and some far-sighted partners were almost giddy about the growth that Propel could create for their businesses, the larger audience was more interested in ICON’s usual training sessions and inspirational hoopla.

Propel addresses a fundamental problem that has limited the growth of all small business sales and marketing systems: the vast majority of small business owners don’t have the time, money, skills, or interest to use them well.  Vendors have addressed this either by reducing the required effort through easier-to-use interfaces, content templates, and prebuilt campaigns, or by providing services that do the work on business owners’ behalf.  Infusionsoft has done both and also used a relatively expensive mandatory start-up package ($999 or higher) to screen out buyers who aren't serious about using the system. This has worked well for Infusionsoft – the company has grown steadily, although it no longer releases client counts as it positions itself for an as-yet-unscheduled Initial Public Offering. But it also limits the market to the most aggressive small business owners.

Infusionsoft sees Propel as a third way to serve less-ambitious businesses: not just by making the product simpler to use, but by removing some tasks altogether. For example, prebuilt campaign templates typically require users to create or customize the actual content, and often require them to set up campaign flows following cookbook-style directions. Propel will include default content tailored to a particular industry or product. It will automatically scrape a client’s Web site to find a logo and brand colors and apply them. When customization is unavoidable, Propel will let campaign designers build wizards that ask users key questions. The system will then automatically adjust the campaign by inserting relevant information or changing the campaign flow. The goal is campaigns that can be set up in a few minutes with no training and deliver immediately visible benefits. Infusionsoft hopes these will entice business owners who don’t want to commit from the start to a long-term marketing plan.

The success of this approach is far from certain.  Business owners must still take some initial steps that could be daunting. Infusionsoft managers are acutely aware of the issues and doing everything they can to remove start-up barriers. This includes making it easy to import existing email addresses from phone contact lists, personal email accounts, spreadsheets, accounting systems, or elsewhere. More radically for Infusionsoft, there will be a free version of the system and no start-up fee. This will clearly attract a new set of less-committed users. Delivering enough value for these to stick with the system will be difficult. So will making the system so easy to use that customer support costs are close to zero. It could be hard for Infusionsoft’s entrepreneur-loving staff to limit the help they give to new clients.

Infusionsoft also announced two other major changes during the conference. The simpler one was “partner first”, which translates to relying more on partners to train new clients and provide on-going support.  This will let Infusionsoft support more customers without expanding its internal staff and help to attract more partners.  Propel supports "partner first" by letting partners build their own packaged campaigns and sell them directly to their own clients or in a marketplace to all Infusionsoft clients. Although “partner first” would make sense even without Propel, leveraging partners is a key way for Infusionsoft to grow quickly while keeping costs down and margins high. The company said the proportion of new clients trained by partners has already moved from 20% to over 80%.

The second change was technical: Infusionsoft has built a new data structure and services oriented architecture that can more easily synchronize data with other systems, especially in real time. The slogan for this is “from all-in-one to one platform”. (Infusionsoft loves its slogans.)  Infusionsoft has always been clear that it won’t build a truly complete set of functions: for example, it limits its ecommerce to a relatively simple shopping cart and doesn’t provide its own Web content manager. So the real change is that the underlying data model now includes data expected from external systems. This will simplify integration with new systems and make the imported data easily available for Infusionsoft campaigns and reporting. The goal is for Infusionsoft to be the “one place” that users look for all their data, making life simpler for users and, of course, ensuring that Infusionsoft has a central role their business operations. The new platform also supports Propel by exposing more functions to build into packaged campaigns and adds some partner-friendly features such as unified access to all instances belonging to a partner’s clients.

Infusionsoft staff made scattered references to using artificial intelligence inside Propel to make recommendations and implement some changes automatically. That would be the ultimate in work reduction.  But they didn’t talk about AI in any detail, perhaps because it’s still in early stages and perhaps because it could scare some users and partners. Or both.

Current customers will have some access to Propel in May or June, and new customers will be placed on the new platform starting mid-summer. Existing customers will be migrated to the new platform in stages through the end of 2018.


Wednesday, April 19, 2017

Here's Why Airlines Treat Customers Poorly

Last week’s passenger-dragging incident at United Airlines left many marketers (and other humans) aghast that any company could purposely assault its own customer. As it happens, airline technology vendor Sabre published a survey of airline executives just before the event. It confirms what you probably suspected: airline managers think differently from other business people.  And not in a good way.


The chief finding of the study is that the executives rated technology as by far their largest obstacle to improving customer experience. This is very unusual: as I wrote in a recent post, most surveys place organizational and measurement issues at the top of the list, with technology much less of an issue. By contrast, the airline executives in the survey– who were about 1/3 from operations, 1/3 from marketing, sales, and service, and 1/3 from other areas including IT and finance – placed human resources in the middle and organizational structure, consensus, and lack of vision at the bottom.  The chart below compares the two sets of answers, matching categories as best I can.



It would be a cheap shot to point out that the low weight given to “lack of vision” actually illustrates airline managers’ lack of vision. Then again, like everyone else who flies, I’ve been on the receiving end of many cheap shots from the airlines. So I’ll say it anyway.

But I’ll also argue that the answers reflect a more objective reality: airlines are immensely complicated machines whose managers are inevitably dominated by operational challenges. This is not an excuse for treating customers poorly but it does explain how easily airline leaders can focus on other concerns. Indeed, when the survey explicitly asked about priorities, 51% rated improving operations as the top priority, compared with just 39% for aligning operations, marketing and IT, and only 35% for building customer loyalty.

There’s a brutal utilitarian logic in this: after all, planes that don’t run on time inconvenience everyone. The study quotes Muhammad Ali Albakri, a former executive vice president at Saudi Arabian Airlines, as saying, “Two aspects generally take precedence when we recover irregular operations [such as bad weather]: namely crew schedules and legality and aircraft serviceability. Passengers’ conveniences and connecting passengers are also taken into consideration, depending on the situation.” In context , it’s clear that by “situation” he means whether the affected passengers are high-revenue customers.

But as you may remember from that college philosophy course, most people reject pure utilitarianism because it ignores the worth of humans as individuals. Even if you believe businesses have no ethical obligations beyond seeking maximum profit, it’s bad practice to be perceived as heartless beasts because customers won’t want to do business with you. So airlines do need to make customer dignity a priority, even at the occasional cost of operational efficiency. Otherwise, as the United incident so clearly illustrates, the brand (and stock price) will suffer.

If you’re a truly world-class cynic, you might argue that airlines are an oligopoly, so customers will fly them regardless of treatment. But it’s interesting to note that the Sabre paper makes several references to government regulations that penalize airlines for late arrivals and long tarmac waits. These factors clearly influence airline behavior. There's even a (pitifully slim) chance that Congress will respond to United's behavior. So the balance between operational efficiency and customer experience isn’t fixed. Airlines will react to political pressures, social media, and even passenger behaviors. The fierce loyalty of customers to airlines that have prioritized customer experience, such as Southwest and Virgin America, should be lesson to the others about what’s possible. That those airlines have had very strong leaders who focused on creating customer-centric cultures highlights the critical importance of “vision” in producing these results.

In short, the operational challenges of the airline industry are extreme but they’re not an excuse for treating customers poorly. Visionary leaders have shown airlines can do better. Non-visionary leaders will follow only when consumers demand better service and citizens demand governments protect them.


Thursday, April 13, 2017

Monetate Adds Machine-Learning Based Real Time Ecommerce Personalization

Monetate is one of the oldest and largest Web testing and personalization vendors, founded in 2008 and now serving more than 350 brands. Its core clients have been mid-to-large ecommerce companies, originally in the U.S. and now also in Europe. I’ve been meaning to write about them for some time but when we finally connected late last year they had a major launch coming this April, so it made sense to hold off a little longer.

That day has come. Monetate last week announced its latest enhancement, a machine-learning-powered “intelligent personalization engine” that supplements its older, rules-based approach. Machine learning by itself isn’t very exciting today: pretty much everybody seems to have it in some form. What makes the launch so important for Monetate is they had to rebuild their system to support the kind of machine learning they’re doing, which is real-time learning that reacts to each visitor’s behaviors as they happen,

Montetate now holds its data in a “key-value store” (meaning, instead of placing data into predefined tables and fields, it stores each piece of information with one or more identifiers that specify its nature). This is a “big data” approach that lets the system add new types of information without creating a new table or field. In practical terms, it means Monetate can give each client a unique data structure, can rapidly add new data types and individual pieces of data, and can maintain a complete, up-to-the-moment profile for each customer. These are all essential for real-time machine learning. (Of course, the system still has some standard events shared by all clients, such as orders and customer service calls. These are needed to allow standard system functions.)

Important as these changes are, the basic operation of Monetate is still the same. First, it builds a database of customer information. Then, it draws on that database to help test and personalize customer experiences.

The database is built using Monetate’s own Javascript tags to capture behavior on the client’s ecommerce site. Users can also add other first- and third-party data through file uploads, by monitoring real-time data streams, or by querying external sources on demand. Monetate stitches together customer identities across sources and devices to create a complete profile. It can also build a product catalog either by scraping product information directly from the Web site or by importing batch files. Customer browsing and purchase behavior are matched against this catalog.

Testing and personalization rely on Monetate’s ability to modify each visitor’s Web experience without changing the underlying Web site. It achieves this magic through the previously-mentioned Javascript tag, which can superimpose Monetate-created components such as hero images, product blocks, and sign-up forms. Users manage this process by creating campaigns, each of which contains a user-specified target audience, actions to take, schedule, and metrics. Users can designate one metric as the campaign goal; this is what the system will target in testing and optimization. They can track additional metrics for reporting purposes.

The campaign audience can be based on Monetate’s 150 standard segments or draw on Web site behaviors, visitor demographics, local weather, imported lists, customer value, or other information derived from the database. Actions can virtually insert new objects on a Web page, or hide or edit existing objects. Users can build content with Monetate’s own tools or import content created in other systems. The content itself is dynamic so it can be personalized for each visitor. Actions can be reused across campaigns and campaigns can contain rules to select different actions in different situations. The new intelligent personalization engine automatically picks the best available content for each customer, drawing on both individual and group behaviors. Users can also embed split or multivariate tests within a campaign. The system will reallocate traffic to better-performing options while the test is running and switch all traffic to the winner when enough information is available.

In other words, this is a very powerful system.  The user interface is also remarkably, well, usable: some training is certainly required but no deep technical skills are needed.

Monetate’s intelligent personalization is currently limited selecting content for Web interactions. The company plans to add product recommendations later this year (finding the best product among thousands is a different challenge from finding the best content among dozens or hundreds). It will add support for other channels next year.

Pricing for Monetate has also changed with the new product. It was previously based on page views but is now based on unique visitors and number of channels. This reflects a desire to stress customer value over individual decisions. Fees start around $100,000 per year for a small to mid-size company.

Wednesday, March 29, 2017

Do CMOs Really Spend More on MarTech Than CIOs? A New Study Says No.

Like many people in the marketing technology industry, I was tickled in 2011 when Gartner predicted that CMOs would soon have bigger tech budgets than CIOs, and even more tickled when Gartner said in 2016 that it had happened.  But my recent pondering of the relationship of marketing and IT departments had me rethinking the question. On an anecdotal level, I’ve never seen or heard of a company where the marketing technology group was anywhere near the size of the IT department. And from a revenue perspective, there’s no way that marketing technology companies make up half the total revenue of the software industry.

But just as I was working myself up for some back-of-the-envelope calculations, the good people at International Data Corporation (IDC) announced a report with authoritative figures on the topic. Actually, the study estimates spending on 20 technologies and 12 corporate functional areas across 16 enterprise industries in eight regions and 53 countries, comparing the amounts funded by IT departments and by business departments. They haven’t published the figures for marketing in particular but did graciously provide them to me with permission to reprint them here. Without further ado, they are:



As you see, marketing technology expenses for 2016 are estimated at $82.3 billion, which is just 6.7% of the $1,235.3 billion for all categories. Slightly more than half of the marketing spend is business-funded, which presumably means it’s spent by CMOs. But that wasn't what Gartner had in mind: they were definitely comparing corporate IT budgets against marketing IT budgets. 

I understand Gartner's logic but I find the IDC figures more plausible. One reference point is the known revenues of martech vendors. Adobe, which may well be the largest, just reported $1.6 billion in 2016 revenue for its marketing cloud (apparently including analytics and advertising products).  Even if there are ten other vendors as large as Adobe, the top ten would have just a 20% share of the $82 billion. It’s hard to imagine the market is really that fragmented, even allowing for expenses that are unrelated to software.

Another reason I prefer the IDC figures is that surveys consistently show that marketing technology is far down the priority list of IT managers.  That wouldn’t be the case if martech spend were equal to all other tech spending combined. Indeed, one of the main reasons that marketers have been eager to take control of their technology has been the neglect, benign or otherwise, shown by corporate IT.

So let's assume the IDC figures are much closer to correct.  Does it matter?  I'd answer it does because understanding the real relationship between martech and other systems is important.  Marketers need to recognize that their systems are a small part of a big picture and can’t work independently of the rest of the company. Yes, marketers should control their internal systems. But the IDC figures show that sales and customer service spend more on tech than marketing. So, when it comes to customer-facing systems, marketers shouldn’t expect other departments to simply adopt marketing systems as a new core.

More likely, all departments will need to coordinate their existing systems with a shared, enterprise-level resource. This suggests that the common core / edge model of marketing systems needs to modified to distinguish an enterprise-wide core from a marketing department core.  In some ways, this isn't a huge change because marketers have always co-existed with enterprise-core systems such as human resources and accounting.  But marketers are much more likely to want control of customer-related systems like the Web site and Customer Data Platform.  In this model, those are also part of the enterprise core.

Of course, having enterprise core systems leads right back to having the IT department manage those systems and ensure that departmental systems are compatible.  IT departments are not necessarily eager to take this on. They have their hands full with things like security, cloud migration, and digital transformation. Nor are enterprise IT teams usually experts at the finer points of customer data management. They’ll certainly need help from marketing and other customer-facing tech teams. But, ultimately, managing the customer experience is a job for the whole enterprise, and enterprise  IT is the logical team to manage enterprise-wide technology.






Thursday, March 23, 2017

Wondering How Customer Data Platforms Relate to Other Marketing Systems? Here's a Picture


I was asked the other day about the distinction between Customer Data Platforms and Journey Orchestration Engines. My immediate answer was “Some CDPs are JOEs and some JOEs are CDPs. A CDP is a JOE if has journey orchestration. A JOE is a CDP if its data is accessible to other systems. Think Venn diagram with two intersecting circles.”  It's not clear the answer helped, but it did get me thinking about clarifying with a Venn diagram.  The diagram I originally had in mind was this one, showing that CDPs unify customer data and make it available, while JOEs unify customer data and select messages. Systems that do all three are both a CDP and a JOE.


On reflection, that’s not the right way to draw a Venn diagram. Each circle should represent one set of traits. So the picture should really look like this:


That's fine, but it seems odd that “unify customer data” has no system associated with it. Is there a type of system that just unifies customer data without making it accessible or selecting messages? Come to think of it, there is.  Systems that just do customer matching used to be called Customer Data Integration but I don’t hear that much any more.  Sometimes people talk about Identity Resolution but mostly it seems that Customer Data Integration has been absorbed by the larger category of Master Data Management (MDM) systems, which integrate all kinds of data. So let’s add MDM as the label for that.    
But why stop there?  Let's see how other systems would fit into the diagram. First to come to mind was marketing automation platforms (MAPs), which also select messages (like a JOE) but don’t build a unified customer database or offer open data access. The diagram with MAPs included looks like this:
The next is a Data Lake. It provides open data access like a CDP, but doesn’t build a unified view of the data.  Adding that to the diagram gives us:


Hmm, what about CRM? In many ways its out there with MAP: another system that selects messages but doesn’t build a unified database. So we need to introduce a new split, of marketer-controlled vs. sales controlled. I'll give control a different color for clarity.  Apologies to CRM people that your circle is so tiny; I'm not suggesting anything about the importance of your systems.

Still thinking about control, Data Management Platforms (DMPs) look a lot like Marketing Automation Platforms: they’re marketer-controlled systems that select messages (sort of) but don’t unify data from all sources or provide open access. So unless we want to further subdivide the marketer controlled space, they share the same location as MAPs.
Since control has its own color, Data Lake and MDM jump out as not having an owner. In fact, they’re both typically owned by corporate IT, so we can easily add that circle.
This raises one more question: is there an IT-controlled equivalent of a CDP?  That would be a system that unifies customer data and provides open access but is owned by IT not marketing.  You betcha.  It might be an Enterprise Data Warehouse (EDW) if that has all the access features of a CDP (high speed, flexibility, etc.). But most EDWs don’t meet that standard. So let’s just call it an Enterprise-controlled CDP, or ECDP, if you’re wild and crazy enough to accept a four letter acronym. You’ll remember there’s some debate about whether marketing or IT should really own the CDP.  This doesn't provide an answer but it does give a clearer picture of the question.
I've summarized this information in a table below.  Still confused?  We just posted a answers to Frequently Asked CDP Questions on the CDP Institute blog.  Maybe that will help.  


Thursday, March 16, 2017

Is MarTech Too Important To Leave To The Marketers?

I’m still pondering the relationship between marketing and IT: what it is, will be, and should be. A few new ingredients have kept the pot boiling:

- a chat with Abhi Yadav, founder of Zylotech, a MIT-bred, artificial intelligence-driven Customer Data Platform and message selection engine.  Those roots made it seem a likely candidate for IT-driven purchases, but Yadav told me his primary buyers are marketing operations staff.  In fact, he hasn’t even run into those marketing technology managers everyone (including me) keeps talking about. On reflection, it makes sense that marketers would be the buyers since Zylotech includes analytical and message selection features only used in marketing.  A system that only did data unification would appeal more to IT as a shared resource. Still, Yaday's comments are one point for the marketer-control team.

- a survey from the Association of National Advertisers that found marketers who control their technology strategy, vendors, and enterprise standards are more likely to have a strong return on martech investment. (The study is only available to ANA members but they gave permission to publish the table below. You can see a public infographic here).  That’s two points for Team MarTech.


- a study by IT staffing and services provider TEKsystems that found senior marketers with more advanced strategy were more likely to control their own technology.  The difference wasn’t terribly pronounced but it’s still the same pattern. MarTech is now ahead 3-0.  (I was actually more impressed that 65% of departments with no strategy were in charge. Yikes!)


So far, the game’s a blow out. Marketing is usually in charge of its technology and does better when it is.  A doubter might question if marketers really make better choices or are just happier when they’re in control. I do suspect that IT people would be less confident that marketers are making optimal decisions. Still, there’s no real reason to doubt that marketers are the best judges of what they need.

But the game’s not over. Let's call in a recent Ad Week article about global tech consultancies buying marketing agencies. The article cites Accenture, Deloitte, IBM, KPMG, McKinsey and PricewaterhouseCoopers and notes that each already has huge agency operations.  To the extent that these firms are working with marketing departments, it’s still more evidence of marketing being in charge. But the real story, at least as I read it, is these firms are getting involved because they see a need to integrate marketing technology with over-all corporate technology, just as marketing strategy needs to support corporate strategy.

“The consultants’ bread and butter has traditionally been large IT and business-transformation projects,” says Julie Langley, a partner at fundraising, merger and acquisitions advisor Results International, in the article. “But, increasingly, these types of projects have ‘customer experience’ at their center.”

To me, this is the key. As every aspect of customer experience becomes technology-driven, technology must be integrated across the corporation to deliver a satisfactory experience. Marketing may be the captain, but it’s still part of a larger team. If marketing can be a true team player, it gets to call the plays. But if marketing is selfish, then a coach needs to step in for the good of the whole.

I’ll spare you the extended sports analogy. In concrete terms, if marketing picks systems that only meet marketing needs, then the integrated customer experience will suffer. Worse still, some new tech-driven offerings may be impossible. This could be fatal if other, nimbler competitors deliver them instead. Tech-based disruption is a real threat in many industries. Companies can’t just hope that each department working on its own will yield an optimal solution for the business as a whole.  In fact, they can be quite sure it won't.

That’s why I’m not convinced by surveys showing marketers are happier or get better return on investment when they control their own technology. It’s possible for that to be true and for the corporate to miss larger opportunities that require cooperation across departments. If marketing can take that broader perspective, there’s no problem. If it can’t, IT or another department with enterprise-wide perspective will need to enter the game.

Tuesday, March 14, 2017

CrossEngage Orchestrates Customer Journeys Using Events

It feels like forever since I first wrote about Journey Orchestration Engines (JOEs), although it is just one year. Orchestration was already a hot term when I started, so I take neither credit nor blame for its continued popularity. I will say that I’ve now seen enough orchestration systems to start making subtle distinctions among them.

Subtle distinctions are needed because the systems are basically similar. They all ingest data from multiple sources; convert it into unified customer profiles; apply rules and analytics to find the best message for each customer in each situation; and, send those messages to external systems for delivery. Unified customer profiles make these products look like Customer Data Platforms. JOEs that expose their profiles for external access really are CDPs; JOEs that keep the profiles for their own use, are not. In theory, a JOE could connect to an external customer database rather than building its own, but I haven’t seen that configuration in practice.

The main ways that JOEs differ include:
  • Channel scope. Some systems are largely limited to online interactions, while others are built to combine online and offline channels. Some systems that look like JOEs work with only Web or email. But orchestration pretty much implies multiple channels so I’d probably exclude those from the JOE tribe.
  • Decision methods. JOEs can work with conventional, rule-driven campaign structures or use automated techniques to customize the path followed by each customer. There’s also considerable variation in exactly what gets automated: some automate campaign assignments but use static content; some automatically run a/b tests and pick the winners; some automatically create customer segments that receive different content; some use machine learning to dynamically generate custom content. 
  • Journey framework. My original definition of JOE was quite rigorous: journey orchestration meant all campaigns were defined relative to a master model of the customer journey. This really means that stages in the journey are “states” that customers flow between, and campaigns are chosen in part based on each customer’s current state. I still think of JOEs that way and definitely see some systems organized along those lines. But when you start looking at some of the more automated decision methods, it’s harder to apply concepts of fixed states or journey flows. So I still check whether a system has a journey framework but don’t necessarily require a JOE to use it. I realize this means you could have a journey orchestration system without journeys. If that’s the silliest thing you’ve been asked to accept recently, you haven’t been watching the news.
This is all a very long-winded introduction to CrossEngage, a Berlin-based firm that released its product about six months ago. CrossEngage works in online channels, using its own tags to capture Web interactions and API connections to ingest data from email providers, mobile apps, and other sources. It can also load CSV files if necessary.

CrossEngage treats most data as either a customer attribute or event, using big data technologies that store inputs and to allow data access with minimal schema design. The system also stores some information that’s neither attribute nor event, such as products and locations. The vendor maps new sources into the system and can define logic to create custom events. (A self-service event builder is planned by July.) Customer data from different sources is stitched together using deterministic matching only (that is, CrossEngage will only connect different identifiers to the same person if an external source provides the relationship).

A dashboard lets users see Web site events as they stream into the system. Users can apply filters to see only certain events. Campaigns also make heavy use of events, referencing them as entry and exclusion conditions, in combination with user-defined segments; as campaign goals (which may be one or several events); and, as campaign steps (each step being a different event). Event definitions can reference other events and can include brain-bending logic such as checking whether a second train fare request specified the same departure city as the first request and happened within ten minutes. In that example, the first request would be first event in the campaign. This is tremendously powerful and, as the vendor points out with some understatement, poses a substantial technical challenge to do in real time.

Each event in a campaign can be assigned a message, which will be delivered by an external system such as an email vendor. CrossEngage can map its data to delivery systems so they can use the data in their own message templates. Alternatively, messages can be created in CrossEngage’s own templates, which can include conditional scripts for dynamic content generation. The system has external integrations for email, direct mail, mobile push, text messages, and Facebook Customer Audiences, with more on the way. It has its own connectors for Web site and Web browser messages, Web hooks, and file extracts. Users can also attach discount coupons to messages.

Campaigns can be assigned frequency caps that limit the number of messages each person receives in different time periods (per minute, per hour, per day, per week, or per month). Caps are defined separately for each campaign. Another set of caps applies across all campaigns on a per channel basis. Campaigns that generate transactional messages can be exempted from the frequency caps to ensure their messages are always sent. People can also be excluded from campaigns based on whether they were recently in that same campaign or a different one.

CrossEngage also has user journeys, which involve a set of related events. Journeys can exist within a campaign or be used outside a campaign to analyze customer behavior. If you’re keeping track, this is a different use of the term “journey” from the one I described earlier.


This is a pretty mature set of features, especially for such a young system. But nuances also include noticing what CrossEngage doesn’t do. There is no machine learning to recommend the right campaign, right message, or right message timing, although the system does support a/b tests. There’s also no visual flow chart to lay out campaigns. This is a choice made by CrossEngage based on its designers’ previous experience that flow charts quickly become too complicated to be understood or maintained over time.

Speaking of nuance, CrossEngage also has a mature approach to user rights management, allowing administrators to specify which users can perform which actions on each object. Team-based rights are on the roadmap.

CrossEngage currently has about fifteen major clients, spread across travel, ecommerce, fashion, dataing, and other industries. Pricing is based on the number of events tracked in the system, not the number of messages sent. It starts as low as $2,500 per month although average client pays about twice that. 

Monday, March 13, 2017

Forecast: Self-Assembling Application Bundles Will Manage Customer Experience

I recently described a Deloitte paper on technology trends, focusing on their descriptions of IT management methods. The paper also covered broader trends including:
  • Unstructured data, which they saw as a potentially bottomless source of insight. What’s interesting is they didn’t suggest many operational uses for it.  By contrast, traditional corporate data management is almost exclusively about business operations.
  • Machine intelligence, which they described as broader than artificial intelligence. They saw deployment moving from offering insights, to interacting with people, to acting autonomously. They also described it as controlling internal business processes as well as customer interactions. That's not the way marketers tend to think but they're right: the bulk of company processes are not customer-facing.
  • Mixed reality, which is a combination of virtual reality, augmented reality, and Internet of Things. They focused less on game-like immersive experiences than on new types of interfaces, such as gesture- and voice-based, and on remote experiences such as collaborative work. They also listed some requirements that aren't usually part of this discussion, including machines that can understand human expressions and emotions and security to ensure hackers don’t falsify identities or inject harmful elements into the remote experience (such as, telling you to make a repair incorrectly).
  • Blockchain, which they presented as mostly in terms of easing security issues by verifying identities and allowing for selective sharing of information.
Those are intriguing thoughts but don't present a specific vision of the future. A recent paper from Juniper Networks rushes in where Deloitte fears to tread.

Juniper's term is "digital cohesion", which they desfine as "an era in which multiple applications self-assemble to provide autonomous and predictive services that continually adapt to personal behaviors.”  It somewhat resembles the ideas I offered in this post about RoseColoredGlasses.me and further elaborated here.  I guess that’s why I like it.

Beyond having excellent taste to agree me, Juniper fills in quite a few details about how this will happen. Key points include:
  • Disruptive competitors can use high speed networks, local sensor data, and centralized cloud processing to offer new services with compelling economics (e.g. Airbnb vs. Hilton).
  • Smartphones provide pre-built mass distribution, removing a traditional barrier to entry by disruptive competitors.
  • Consumers are increasingly open to trying new things, having been trained to do so and seen benefits from previous new things.
  • Natural interfaces will eliminate learning curves as systems adopt to users rather than the other way around, removing another barrier to adoption.
  • Autonomous services will self-initiate based on observing past behavior and current context.  Users won't need to purposely select them.  More barriers down.
  • Services will be bundled into mega-services, simplifying user choice.
  • Open APIs and interoperability will make it easy to add new services to the bundles. This is a key enabling technology.
  • Better security and trust are essential for users to grant device access and share information with new services.
  • Business relationships need to be worked out between the individual services and the mega-bundles.
I’m sure you see the overlap between the Deloitte and Juniper pieces. Machine intelligence and insights from unstructured data will be critical in building services smart enough to make the right choices. Machine intelligence will also create an underlying infrastructure that’s elastic and powerful enough to deliver services reliably regardless of user location or aggregate demand. Mixed reality will be key for gathering information as well as delivering interactive user experiences. Loosely coupled systems and disaggregated services will make it easy to inject new services into a bundle. Blockchain could play a critical role in solving the security and trust issues.

I’m also sure you see how this relates to ideas that neither vendor mentioned directly, such as the increasing value of rich customer data, importance of accurate identity resolution, role of brands in creating trust, and natural tendency of consumers to do everything through a single mega-service.

Of course, there’s no guarantee this vision will come to pass. But it’s an interesting working hypothesis to shape your thinking. More than anything else, it should help you look beyond optimizing your current stack to ensure that you’ll be able to adapt if radical changes are needed.