How to Align Marketing Technology with Business Strategy

MarTech Boston August 19, 2014 David M. Raab

Raab Associates www.raabguide.com

draab@raabassociates.com

Strategy = method to a goal

Strategy Implications Strategy Statement: Attract large numbers of high-paying customers by creating a highly innovative product that can be sold via ‘buzz’ marketing.

Financial Margin • High

Number of customers • Add customers

Revenue / customer • High

Customer Value Image • Exciting • Advanced

Relationship Product • Unique

Internal Operations

Marketing • Build ‘buzz’

Innovation • Simplified

interface

Production • Quick

delivery

Customer support

Admin

Learning

Information & systems Competencies • Outsourced

manufacturing, • Channel training, • Design, • Marketing

Organization Product-based

Successful Strategies

• Steve Jobs’ Apple: insanely great products

• Amazon: customer convenience

• UPS: efficiency and reliability

• Southwest Airlines: low cost

Unsuccessful Strategies

• Steve Cook’s Apple: multi-color phones?

• Steve Ballmer’s Microsoft: copy Apple?

• JCPenny: high fashion or low price or in-shops or ???

• Radio Shack: only source for stuff nobody wants

Good Strategy: It’s All About Fit

• Resources

• Competencies

• Market needs

• Competitors

• Environment

Strategy Implications Strategy Statement: Attract large numbers of high-paying customers by creating a highly innovative product that can be sold via ‘buzz’ marketing.

Financial Margin • High

Number of customers • Add customers

Revenue / customer • High

Customer Value Image • Exciting • Advanced

Relationship Product • Unique

Internal Operations

Marketing • Build ‘buzz’

Innovation • Simplified

interface

Production • Quick

delivery

Customer support

Admin

Learning

Information & systems Competencies • Outsourced

manufacturing, • Channel training, • Design, • Marketing

Organization Product-based

Case Study: Strategy to MarTech Connection

• Business: – New company, disruptive tech, clearly superior

• Business Strategy: – Grow quickly by adding customers via partner sales

• Marketing Strategy: – Now: support partners via joint field events – Future: build company-generated lead flow via media, Web site

• MarTech Strategy: – Build for fast growth, future needs – Now: support field via self-service promotions – Future: support media via analytics, Web site via MA integration

• MarTech Choices: – Now: best-in-class end-user email, forms, selections – Future: flexible MA database, data warehouse outside MA

Strategy to MarTech Framework

Business Strategy

Marketing Strategy

MarTech Strategy

MarTech Architecture

MarTech Components

• Focus: Product vs service vs cost • Financial:

Margin vs number of customers vs revenue per customer • Value Prop:

Image vs relationship vs product

• Channels • Spending • Intimacy •User skills • Target metrics

(CPA, LTV, ROI, growth, etc.)

• System scope • Channel

integration • Execution

automation • Program

sophistication • Flexibility • Scalability • Cost • Staffing

• Shared vs siloed • Suite vs. best

of breed • In-house vs

outsource •Owned vs

rented • External

integration (CRM, Web, etc.)

•Database • External data •Data quality • Identity

association • Analytics •Decision

engines • Execution

systems (email, Web, social, events) •Management

(content, planning, budget, etc.

Strategy to MarTech Example

Business Strategy

“Offer low prices profitably in online retail by running with low operating costs” • Focus: Cost • Financial: Modest margin, high number of customers • Value Prop: Relationship (trusted source of best prices for standard products)

Strategy to MarTech Example

Marketing Strategy

“Attract price-conscious customers by stressing low prices and making highly targeted offers; key metric is marketing ROI (=promotion efficiency)” • Channels: limit to major channels (easier to optimize) • Spending: tie closely to profitability but grow over time to gain scale • Intimacy: track customers closely to allow targeted offers •User skills: modest (standard skills needed; keep costs low) • Target metrics: ROI is most important

Strategy to MarTech Example

MarTech Strategy

“Keep costs low by running tightly integrated systems, highly automated systems with limited scope (i.e., optimize in only a few channels)” • System scope: manage all marketing interactions through single system • Channel integration: tightly integrate channel data; loosely integrate promotions • Execution automation: highly automated targeting to add revenue and reduce costs • Program sophistication: modest sophistication; only need targeted offers • Flexibility: accept limited flexibility in return for lower costs of optimized processes • Scalability: high to accommodate required volume and avoid replacement projects • Cost: as low as possible • Staffing: small, highly skilled staff to run automated systems and manage

outsourced resources

Strategy to MarTech Example

MarTech Architecture

• Shared vs siloed: share all possible functions to reduce costs • Suite vs. best of breed: use suite to reduce costs, improve integration • In-house vs outsource: outsource to reduce costs; accept limited flexibility •Owned vs rented: rent at start but ultimately want to own to reduce costs • External integration (CRM, Web, etc.): highly integrated to capture and consolidate

data and to present targeted offers during interactions

Strategy to MarTech Example

MarTech Components

•Database: standard database; limit unstructured data unless clearly cost-effective • External data: limited use to reduce costs •Data quality: basic capabilities required • Identity association: basic capabilities required; primarily tracking known customers • Analytics: highly automated offer targeting, media optimization •Decision engines: must insert business factors into decisionis (e.g. inventory levels) • Execution systems (email, Web, social, events): use suite features if possible •Management (content, planning, budget, etc.): use suite features; need tight cost

management but otherwise only basic capabilities

What’s for lunch?

Does anybody really do

this?

Why Strategy Matters