Friday, June 06, 2008

Oh, the Irony! Do Demand Generation Vendors Have A Sound Marketing Strategy?

There are literally dozens of vendors offering “demand generation” software, which can be roughly defined as systems to generate and nurture leads before turning them over to sales. Their function lists usually sound pretty much alike: outbound email campaigns to generate leads; Web landing pages to capture responses; lead scoring to determine how to treat them; multi-step email campaigns to nurture them; integration with sales automation systems; and analytics to track the results.

It’s a situation that cries out for vendors to specialize in different customer segments, but so far the only division along those lines seems to be that some vendors focus on small businesses while others target mid-size and larger organizations. If anyone has taken the obvious next step of creating vertical packages for specific industries, I haven’t seen it. (Of course, given how many vendors there are and the fact that I do like to sleep occasionally, it’s quite possible that these do exist.)

My guess, however, is that most competitors in this market (and their financial backers) are not yet ready to give up the dream of being the dominant player in a single, unified industry. The generic approach may also reflect the origins of many vendors in technologies like Web analytics and email campaigns, which themselves have not fragmented into vertical specialties. And I suppose the underlying features required for demand generation are in fact largely the same across most segments, so there is little technical reason to specialize.

One implication of this is that resellers, who do tend to specialize by industry, will play an important role in making these systems work for most users. This is what happened with sales automation software. If I’m correct, then the demand generation vendors should be competing aggressively to attract reseller support. I can’t say I’ve seen much of that either—so, again, maybe I’ve missed it. Or maybe deployment of these systems is so simple that resellers can’t make any money doing it. If that were the case—and I’m not convinced it is—then we’d expect vendors who already assist marketers, such as advertising and publicity agencies, to offer the tools as an extension of their own services. I’ve seen a bit of that, but it doesn’t seem to be the main strategy the demand generation vendors are pursuing.

So if demand generation vendors are not staking out vertical specialties or pursuing channel partners, just how do they seem to compete? Many show a reassuring confidence in their own systems, running exactly the sorts of lead generation and nurturing programs they are proposing for others. These are, or should be, coupled with attempts to build superior sales organizations that will close the leads the systems generate. Perhaps this sort of ferocious, nuts-and-bolts approach to sales and marketing is all they really need to win.

And yet, it would be more than a little ironic if companies that hope to sell to marketers were themselves ignoring the strategic marketing issues of branding, differentiation and segmentation. Ironic, but not inconceivable: the demand generation vendors are after all business-to-business marketers, selling primarily to other business marketers, who often pay much less attention to the grand marketing strategies than their consumer marketing counterparts. For better or worse, many business marketers focus primarily on product features and technologies, despite ample historical evidence that the best product does not always win. It should not be surprising that many demand generation marketing programs take a similar approach.

That said, some demand generation systems do seem to have a clearer approach to positioning themselves in the market. This post was going to profile one such vendor. But the preceding introduction ran on for so long that I think I’ll write about that vendor in a separate post next week instead. After all, it’s a Friday afternoon in the summer. Enjoy your weekend.

2 comments:

Landon Ray said...

David,

Funny commentary on an interesting situation: marketers marketing marketing software to marketers.

You've hit the nail on the head here in many respects. I think all us vendors believe that there's a huge market here and still space for several players, and we're all moving so fast that the idea of starting a 'specialization' project seems overwhelming and as yet unnecessary.

Regarding the battle for re-sellers, I'd have to say 'you missed it'. It certainly exists, with vendors offering to fly all over the world and personally train potentially important re-sellers. (Apply to our partner program at www.officeautopilot.com/partners/apply)

It's true that implementation of solutions like ours are simple enough that there's not much to it TECHNICALLY. But a sound strategy and quality messaging and collateral are critical value-adds that our resellers are providing.

I'm glad to see you're taking note of our burgeoning industry, despite your previous concerns that our emperor wears no cloths...

By the way, your reviews of both Marketo and Market2Lead are great, though I think several of the features you suggest are 'rare' are not so much (such as the ability to switch from one campaign to another based on some criteria).

I guess that just speaks to the fact that, once again, there are several players (including ours, if I may say so) with very mature applications. The differentiation is in the details, such as real-life usability (or is it vaporware?), what kinds of messages can be sent automatically, if the tools can stand-alone and, if not, who they integrate with.

Thanks again for your commentary.

Best,

Landon Ray

David Raab said...

Thanks Landon. I don't doubt that you're right about the resellers--I guess I simply missed it because the recruitment goes on behind the scenes.

Incidentally, I've heard privately about specialization projects as well--just not public yet.

David