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B2B vs. B2C vs. Customer State Marketing

The B2B sales cycle focuses on the sales funnel: How to nurture and qualify prospects in order to turn them over to Sales at the opportune moment. The rationale for this is that sales reps are an expensive commodity with limited availability. The objective is to have these expensive resources talking to the prospects that are most likely to close. A lot of time and money are spent on achieving this goal. Big dollars are invested in purchasing and implementing marketing automation software, centralizing data, training personnel, creating business rules in the marketing automation platform, and in paying for consultants to implement the more complex and obscure portions of that marketing automation platform.

The B2C sales cycle focuses on the buyer’s journey: detecting what the buyer is doing and determining the context (e.g. is the first purchase, the third complaint this month, the second request for information…) of the buyer’s activity in order to respond in the most appropriate manner . The focus of B2C is on ensuring that the right offer is sent to the right person at the right time using the right channel. This is in contrast to nurturing and turning a qualified lead over to a direct sales representative. B2B marketing automation tools are very poor at B2C implementations because the customer’s journey is non-linear. B2B is designed for a linear sales funnel path from general inquiry to  properly qualified prospect. B2C requires flexibility in order to deal with buyers who move back and forth in what may appear as a random path from awareness to purchase. B2C must continually integrate new sources of information, new channels and new media. This continual integration challenge is why B2B marketing automation platforms have a problem with B2C – it would take too much of their development budget to continually integrate, test and ensure a consistent platform experience to its users. It is also the reason that there are so few affordable B2C marketing automation solutions available.

Customer State Marketing focuses on the context of the customer event/action dynamic. Customer State Marketing allows the marketer to follow each individual customer along their own unique journey. Whether it is a B2B or a B2C journey is immaterial. What counts is the customer’s state at the time of the event. For example, what is the proper response to:

1)      a white paper download event

2)      an abandoned shopping cart event

3)      one week of contact inactivity

The correct answer is “It depends on the context”! If this is the first time the contact downloads the white paper then the response is different than if it is the third time they download a white paper. If the contact abandons a shopping cart the response is different if this is the first cart they have ever abandoned vs. someone who always abandons a cart. If the contact is inactive for one week the response is different if you are sending them a confirmation email vs. a newsletter.

As you can see, the context of the event (i.e. what State the customer is in) determines the correct response. Only Customer State Marketing provides an easy and effective way to build marketing automation scenarios that take the customer’s state into account at the time of the event, whether it be B2B or B2C.

Customer State vs. Decision Trees in marketing automation

Marketing automation solutions allow the marketer to build scenarios that can be simple or complex. For the marketer, the true test of a marketing automation solution is the ease of use when building complex scenarios: how sophisticated can the scenario be before it gets too complicated to understand, to manage and to modify on an on-going basis.

A principle factor contributing to the complexity of marketing automation solutions is the decision tree. Marketing automation solutions offer various graphical and script based workflow tools that are just dressed up decision trees that automate complex multistage decision problems. Below I will be comparing decision trees vs. a customer state approach.

Decision trees

Decision trees such as figure 1 are a useful to for predicting outcome and are often used to map workflows.

Decision trees are also used to do dynamic segmentation. For example all subscribers who are female and click on the Fashion1206 link in the last email sent to them. Decisions are used to determine the proper response according to a particular customer’s micro-segment in respond to an event (e.g. a contact that signed up then click on the confirmation link and then did not open the next three emails that were sent.)

Decisions trees quickly become complex. The human brain is best when tracking 7 or fewer items. Figure 1 shows a multi-level decision tree for a simple process. Imagine trying to build a sophisticated email programs, let alone a cross channel marketing program. Building a complex marketing automation programs often requires dedicated resources in order to ensure consistent rules setting at every level of the decision tree. Unfortunately dedicated resources are something that is in short-supply in most marketing departments.

Customer State

Customer state is a means to map workflow processes according to a customer’s state at the time of a customer event (e.g. signs up for a newsletter). A customer state diagram (figure 2) maps an event / action scenario similar to the decision tree above yet is much simpler to understand. Reading from left to right the scenario is as follows:

1)      Contact

1. When a contact subscribes then send them a confirmation email and move then to an Unconfirmed state

2)      Unconfirmed

1. When the contact clicks on an email ling then if they are a female then send them the Welcome email and refer and friend email else send the Welcome email only. Move the contact to a Subscriber state
2. If the contact does nothing for 3 days then if they are a female then send the Welcome email and refer and friend reminder
3. If they bounce then flag them in the CRM

3)      Subscriber

1. When the contact clicks on the link then send them a targeted promotion.
2. If they refer a friend then send them the Confirmation email promotion
3. If they bounce then flag them in the C

Figure 2

Only events that are relevant (i.e. possible or interesting) to the customer’s state need be considered when describing a scenario.  For example, the only events that need to be considered when the subject is in an Unconfirmed state in Figure 2 are whether they click on a link, do nothing for three days or bounce. Customer state uses a simple event / action paradigm such as “When a customer signs up (event) then Send a confirmation email (action)”.

Since each action/reaction set is according to the contact’s state there are a finite number of events to consider for any given customer state. Rather than building large decision trees that must describe all possible outcomes and are hard to understand, customer state permits the design simple marketing scenario, such as acquisition, conversion, retention. Contacts can be in different states within each scenario. The various simple scenarios can be combined to create a rich marketing ecosystem.

The benefit of this approach is that scenario design is simple and manageable whereas decision tree modeling is constrained by its complexity. Customer state marketing significantly streamlines cross channel marketing program design and implementation. It enables an agile marketing and removes the need for dedicated marketing resources to build the marketing automation workflow.

Conclusion

As I said in the opening of this article, the true test of a marketing automation solution is the ease of use when building complex scenarios. Customer state has the distinct advantage of being easy to understand, is simple to implement, and is significantly faster to market that decision tree-based solutions.

 

One application to rule them all – AKA: Streamlining marketing operations

The small shop

Every Monday morning Frank logs into the CRM system, defines a list of criteria and pulls a series of lists of contacts to send their weekly promotions to. Frank then loads the lists into his email management system (EMS), creates the email templates and then launches each promotion blast. Frank repeats the process for his mobile message blasts. On a monthly basis he does the same thing for customers with birthdays in the coming month. They will receive a special Birthday offer. Four times a year, Frank pulls a list of all customers who have not purchased in the last six months. They will receive a special Reactivation promotion.

The big shop

David is responsible for marketing operations in a mid-sized company. His team manages a variety of applications including a CRM, an EMS, an e-commerce application and a BI application. David spends much of his time creating rules and ensuring that all the rules are consistent from application to application.

Last year David learned the hard way what happens when you forget to synchronize the rules. Suddenly customers were receiving the wrong promotional message because someone forgot to update the CRM rules after they had updated the e-commerce rules. David is worried about what will happen this year when he goes on vacation.

Problem

Frank’s company cannot afford to implement a marketing automation solution. The money is just not available.

David, for years, has been asking his boss to invest in a marketing automation solution to simplify marketing operations. David argues that an integrated solution would be so much easier to use and would avoid costly mistakes and reduce head count (although he will not commit to it until he can assess the impact of the new solution). David’s boss consistently responds that there is no ROI to support the cost and effort involved to implement a marketing automation solution.

The Solution

Both Frank and David need a way to streamline what they do. Frank spends far too much time doing non value-added work such as pulling and loading lists. David’s team spends far too much time replicating rules between various applications.

The answer to their problem is simple: install one application to manage the rules and automate the communications – rules such as pull this list and send this message if the contact is in this state (i.e. meets the selection criteria); or whenever a customer is flagged as a churn candidate by the BI application then send them this mobile message.

What Frank and David need is a customer state marketing application like Whatsnexx. It would allow them to build scenarios that govern the flow of communications to customers and prospects on a one-to-one basis in near real-time. Each scenario contains the business rules that direct the various applications (e.g. CRM, EMS, BI…) to execute the required function when appropriate.

For Frank this means no more pulling lists from one application and loading them into another. For David it means that he only needs to manage one rule set rather than crossing his fingers in the hope that he did not miss a rule in one of the applications.

The solution is simple and elegant: Put all the rules in one application and use it to govern the activities of the other applications. In essence, one application to rule them all!

Marketing Technologists: No programming needed, just Creatives!

In his post Rise of the Marketing Technologist (http://www.chiefmartec.com/2010/04/rise-of-the-marketing-technologist.html), Scott Brinker makes a number of great points that speak directly to my current occupation (all quotes are attributed to Scott’s article).

“...in the big picture of marketing, the real challenge isn't the individual components — it's how these different pieces fit together in your unique enterprise.”

Exactly so! All business activity can be broken down into discrete activities. The challenge is how to orchestrate these activities into a marketing symphony. Some might argue that a great marketer is an individual who can envision marketing strategy, devise programs to attain marketing objectives, execute campaigns that engage the audience and achieve a set number of goals in a measureable fashion. It is the rare marketer who also possesses technology skills.

Scott states that technology choices “open (or close) the door to synergies with your other technology choices.”

Argument for a Marketing Technologist is that a good knowledge of technology is important to a CMO. This is because technological choices have a long tail. They will be in effect a long time and will eventually become a legacy system or a candidate for replacement. As I.T. is responsible for system maintenance and integration issues, both present and future, they are rightly concerned and therefore somewhat rigid in their adoption of new technology. Bad technological choices can create geometric increases in maintenance costs. For this reason new technology must be vetted by I.T. before it can be adopted. This can create significant delays for marketers, marketers who need flexibility and speed to market in order to capitalize on market opportunities.

Marketing and I.T. can often seem at odds with each other. This is primarily due, in my opinion, to a lack of understanding of the requirements of the two disciplines (reliability and costs vs. speed and agility). When there is some understanding, there is often an insufficient depth to properly assess the business impact of current choices vs. speed to market.

“Marketing must take ownership of the technology in its domain.”

Scott refers to the need for a “marketing-technology czar” because “technology becomes one of the vertical pillars of the marketing function”. Whereas I agree with the last of these points, the need to understand the technology is no longer a major issue. I say this because of my own workday reality. I work with a tool that removes to a large extent my concern with technology integration and maintenance issues. My focus is on implementing marketing programs quickly and inexpensively by leveraging whatever marketing technology is readily available to the marketer.

“A CMO doesn't need to have been a Chief Creative Officer, but he or she must know how to manage and lead such resources.”

As Scott points out so succinctly, you just need to connect the dots. I spend my time with marketers asking them what they want to do, how they want to do it, and where is the information coming from. The tool I use allows me to easily connect all the dots, that is to say deal with any customer events and actions. All I do is receive data from a web form, a database, a spreadsheet, an XML ticket or whatever. I don’t really care because all I need to know is that when my marketing scenario receives this data we agree on the name of the event and the fields that will be received.

Once I receive the data all I need to do is execute what the marketer asked me to do, perhaps add the email to the database and send the contact a personalized barcoded coupon. To take these two actions I just have to select a list of actions for the applications the marketer wants to use, say Salesforce and ConstantContact.

I don’t worry about how the technology works. I do not need to master either web forms, Salesforce or ConstantContact. I just need to define the marketing rules and build scenarios such as acquisition, loyalty, reactivation to name just a few. My current reality is that I am usually waiting for the agency to deliver the Creatives. This is a real change from my old life when the client was always waiting on technology.

The freedom that my current design and implementation tool provides me means that marketers are now free to “wield technology as a strategic marketing capability.” I would go further and say to wield emerging apps and digital media as a strategic marketing capability.

It also means that the time to market for a marketing opportunity is now drastically reduced. Unless resources need to be trained in a new technology it is now possible to implement marketing campaigns as quickly as you can generate the content and visuals.

This simple customer state diagram demonstrates what I am talking about. It’s a scenario that governs a loyalty program that makes use of NetSuite and an email marketing system. No programming needed, just Creatives!

Customer State Marketing: The Agile Marketer’s automation tool!

Agile marketing is all the rage, and for good reason. The agile marketing manifesto highlights Agile’s focus on doing it now, doing it often, and learning from what you do. 

The challenge for the agile marketer who is looking to automate marketing is that there are few tools available for that purpose. The standard approach of centralize, analyze, segment, blast and pray does not work anymore. It is too costly, too lengthy and not flexible enough to react quickly to changing conditions. The agile marketer needs a design and implementation tool that speaks to the Agile Manifesto.

I am one of the lucky ones. I get to work with a Customer State Marketing platform that allows me to design various marketing scenarios and automate them in a matter of minutes. This is possible because the tool makes it easy to define a process, and makes it easy to change the process. It is also easy to connect the scenarios to outside applications (e.g. email, mobile, web, database…) and then put the scenarios into action on the cloud so no special IT infrastructure setup is required. As a result the design and implementation phases are compressed.

Thanks to this Customer State Marketing tool, what used to take weeks now takes only a few days. The agile marketer can now generate multiple iterations of a design and continually enhance it based on the result of the previous iteration. Before this, it was only possible to generate and put one or two versions into production. Now the agile marketer can quickly and easily develop new scenarios in order to continually test, test, test!

A short implementation cycle means lower implementation costs and faster time to market. That translates into having more of the marketing budget available to run more experiments, more time to adjust to last minute wrinkles and competitive tactics, and lower manpower requirements to operate and enhance the marketing automation process. The result is that the agile marketer can now concentrate on designing and implementing strategies and tactics that yield higher ROMIs.

Complexity killed marketing automation!

The problem

For marketing automation to really be effective it needs to be wielded by the marketer, not by the marketing automation expert. By expert I mean the consultant who knows how to configure this marketing automation suite or that marketing automation suite. Often, there may be various module experts involved as well. All of that effort, not to mention all of those resources, in order to automate what should be relatively simple marketing processes. As a result, marketing automation calls for a big up-front investment in training and implementation that result in a tough-sell ROI proposition.

The purpose of automation is to simplify and speed up processes   ̶  not complicate things! Marketers need and want a quick and efficient way to automate what are in reality relatively simple processes. The problem is that marketing automation solution providers need to integrate functionality in order to provide a rich cross-channel feature set that competes with the market leader. This is exacerbated by the market leader gobbling up and integrating emerging technology and media channels in order to stay in the lead. The net result is that the “integrated” technology is often more complicated to use than the processes to be automated, leading to a low process automation penetration rate, hence lower ROI.

The end-user needs a simple marketing automation interface if they are going to use it on a regular basis. Ideally the CMO and marketing directors brainstorm strategy and initial tactical scenarios using a design tool. These preliminary designs are then refined by the marketing analyst or admin assistant, depending on the size of the marketing department. The resulting marketing programs and campaigns are further refined and implemented using existing technology. Simple – or at least it should be. Sounds like a dream.

The solution

This is actually much closer to reality than you think! Customer State Marketing offers such a design interface. Due to its simplicity the productivity gains are astonishing, as I have alluded to in many of my blog postings. This got me thinking as to why this is. I think I have narrowed the design benefits of Customer State Marketing down to two components:

1)      Scenarios display the characteristics of object oriented programming

2)      Scenario programming is procedural

For programmers, these two statements are significant. For everyone else this sounds like some foreign language – definitely very obscure…

Let me put it another way:

1)      Scenarios are self-contained. They know how to behave in response to external stimulus (i.e. an event). This stimulus occurs randomly and the scenarios will automatically respond to the event according to the rules contained in the scenario itself. The scenario only knows what it needs to know in order to respond to the stimulus, and contains all of the information necessary in order to carry out its functions properly (i.e. actions), such as sending the appropriate email.

2)      Scenarios follow simple rules, and have a simple program flow and limited branching options. This makes it easy to design state-based event/action program flows that govern how and when a scenario responds to a random customer event.

The benefits

The benefits from combining these two design aspects, object and procedural, accrue when describing and building simple to complex marketing automation ecosystems that govern acquisition, conversion and retention tactics in accordance with a cross-channel strategy.

1)      The object nature of a scenario means that each scenario can stand alone. It does not need to be linked to other scenarios in order to function properly, something that would add complexity. By narrowly focusing on a specific goal, Customer State Marketing scenarios permit the marketer to consider only a limited set of relevant events thereby limiting complexity. This makes it possible to begin small, automate some quick wins, and then gradually build up to a complex Customer State Marketing ecosystem.

2)      The procedural nature of a scenario flow means that it is easy to understand, and similar to simple if/then/else branching that is familiar to non-programmers. As a result very little training is required, and a marketing person can quickly master the design tool. There is no longer the need for marketing automation solution experts and the time and expenses that entails, not to mention the loss of flexibility that occurs whenever you need to translate requirements from one department to another, what I like to call translating from marketing-ese into IT-ese.

Conclusion

These two aspects, object and procedural, of Customer State Marketing are what make it so simple to use and easy to apply in a tangible manner to automate marketing processes. It is such a pleasure to use. I get the best of both worlds, develop solutions in record time, and have yet to confront a marketing automation challenge that Customer State Marketing cannot resolve.

Remember: Simplicity, simplicity, simplicity because complexity killed marketing automation.

Marketing Automation in Frugal Times

Marketing, like most other corporate departments in 2012, is facing significant budgetary restraint, if not to say restriction, as part of corporate focus on cost cutting and the bottom line. The challenge for the marketer is that there is still a crying need to automate marketing processes in order to provide adequate marketing services with fewer staff. 

As big marketing automation budgets become a thing of the past another approach is required – Continual Gradual Automation. This approach starts small and implements quick win scenarios that finance the next step. Over time, it is possible to mash-up an efficient and effective customized marketing automation suite that encompasses database marketing, email, direct mail, social media, analytics, business intelligence, mobile, etc. to influence customer behavior across channels.

Customer State Marketing offers this ability. It allows for the design of independent marketing scenarios that govern the trigger and response behavior that automate various aspects of the marketing process and customer communications. Scenarios such as acquisition, conversion, retention, viral contests, etc. can be combined to build rich marketing ecosystems.

Action features such as sending emails, mobile messages, update databases, etc. are easily added as required. This approach eliminates the need to pay for unused features that are part of an integrated marketing automation suite. Rather, over time, additional channels and actions can be added as needed. The end result is a simple and faster marketing automation implementation eventually leading to a complete set of functions and features that are actually used by the marketing department.

Customer State Marketing is the ideal approach for marketers in lean times. It allows you to start small, win quick, and bootstrap a marketing automation process!

EZ ecommerce scenarios

I was recently asked to produce a Customer State Marketing ecosystem for an online retailer. In less than five minutes I designed a marketing ecosystem that does three things:

1)      Attempts to convert a recently signed up contact to a customer. A cascade of two promotions and reminders sent to the contact, one every 5 days. The promotion and reminder solicitations stop automatically as soon as the contact buys.

2)      Adds to contact to the daily email blast list and then adjusting the frequency of the mailings according to the contact’s open behaviour.

3)       Stimulate the customer to purchase by sending them different promotions 30, 60 and 90 days after their last purchase.

This is an example of a simple Customer State Marketing ecosystem that anyone can build quickly and easily. The three scenarios work together. The coordination of activities is governed by the customer's state at the time of the event.

Simplify and streamline the marketing automation process using Customer State Marketing.

In many of my blogs I have alluded to the fact that Customer State Marketing has significantly increased my productivity. The more I practice the craft the more productive I become. What really strikes me as incredible is the fact that I am seeing a 10 to 20 fold gain in productivity. How to explain this?

I guess the best way to look at it is that a Customer State Marketing diagram adds a new dimension that greatly simplifies the design of automated processes. As David Raab mentions in his Marketing Automation Interface Should Focus on Customers, Not Campaigns post, most marketing automation vendors use the same flowcharting techniques introduced by Frank Gilbreth in 1921. Customer State Marketing improves on this technique by adding the concept of Customer State. Simply said, Customer State is the context that governs the action/response flow of a process.

Let’s take a simple example such as a double opt-in process for an email subscription in the Customer State diagram below.  

This scenario contains three states: Unknown; Unconfirmed; End. An examination of each state reveals the following:

• State: Unknown – Possible events/actions:
  • Signs up/send confirmation email
  • State: Unconfirmed – Possible events/actions:
    • Clicks confirmation/add to newsletter list and send welcome email
    • Bounces/do nothing and move to End state
    • Does nothing (in the diagram above this is described as a ‘3 days after sign up’ event)/send reminder email
    • State: End

Notice how simple the scenario is. Knowing the state of the contact allows us to identify a finite number of events to consider when automating a process. The number of actions associated with each event is also finite and relevant to the state of the contact. A few simple steps are all that are required to build this automated scenario.

The same is true for more complicated scenarios. Each scenario contains a finite number of possible states, and each state contains a finite number of events and actions.

As of the writing of this blog, I am building a nurturing and retention program for a local retailer. He has segmented his prospects and customers into three groups: contact; top customer; regular customer. His nurturing and retention program includes 19 different communications designed to stimulate sales. The content of the communications depends on the state of the customer (e.g. contact, top, regular, or at risk) and the number of communications since moving to that state (e.g. there are six levels of reminders for customers who are at risk). So far it has taken me about 8 hours to design, build and connect the required scenarios. Testing will take another 3 to 4 hours.

 
(This is the Top Customer scenario. Note the four possible events that need to be considered for Top Customers)

If I think back to the way that I used to work, it would take me a minimum of a week to automate such a complex program. Thanks to Customer State Marketing I am done in no time, not to mention the agility to make changes at any time.

Customer State Marketing Gains Recognition

David Raab’s post of Dec. 15^th, Marketing Automation Interface Should Focus on Customers, Not Campaigns (http://customerexperiencematrix.blogspot.com/2011/12/marketing-automation-interfaces-need.html) is right on the money. Here are some quotes from his article that scream out to me:

Marketing automation vendors are using “The same flow charts that Frank Gilbreth introduced in 1921”.  

The old ways do not work indeed! Diagramming is too complex for users. This inherently limits the complexity that can be automated. A simpler diagramming method is required, one that is closer to the user. What is required is an interface that reduces complexity and provides the ability to focus on simple program flow with simple branching. This is precisely what Customer State Marketing does.

David writes, “… think outside the flow chart”. A properly designed Customer State Diagram (CSD) is an improvement over traditional float, dataflow diagrams and Business Process Modeling diagrams for describing and automating marketing behavior.

Once again, to take from David’s post, “The biggest problem with flow charts is they are inherently two dimensional”. A CSD introduces the state dimension to the automation design toolkit. Simple scenarios can be sequenced to cover a multitude of customer states (e.g. new customer, regular, VIP, at risk, online shopper…). Each scenario can be designed to respond to events (e.g. buys, blogs, purchases in store, online…) and take cross-channel action (e.g. send email, send DM, send mobile, tweet, update database…) according to the state of the customer at the time of the event.

It is possible to model for responses of first time customers versus repeat customers, VIP customers and customers that are at risk. It is possible to easily model an ongoing reactivation program when a Regular customer stops buying for a month by automatically moving them to an At Risk state that provokes a cross-channel promotional cascade. By focusing the design process on discrete customer states and state transitions it is possible to model responses to complex customer behavior across an ever growing number of channels.

Customer State Marketing takes the customer’s perspective. Individual customers move in an erratic fashion that baffles marketing automation systems that operate in a linear fashion. Customer State Marketing responds according to the current state of the customer, not according to the marketing automation sequence.

Back to David, “A customer-centered approach would develop rules for each situation rather than stringing together rules for many different situations”. This is exactly what Customer State Marketing does. A scenario for new customers, a scenario for VIP at risk customers, a scenario for a viral contest, a frequency cap scenario, a frequency optimizer scenario, a scenario to lookup an external database key, a scenario to consult a recommendation engine – each scenario is simple to design yet the whole describes a very complex marketing ecosystem that can be a game changer for the smart marketer.

The kicker is that the productivity gains for the Marketing Ecosystem designer are phenomenal! In a week I do what used to take me a month or more to accomplish. See http://blog.whatsnexx.com/2011/11/all-in-a-days-work-the-speed-of-customer-state-marketing-automation.html

Happy Holidays to all!

 

Jacques.

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