0 HubSpot's Latest Marketing Software Sends the Right Message

Poor targeting

HubSpot yesterday launched a “completely re-envisioned and rebuilt” version of its marketing system at its Inbound 2012 user conference. The main thrust of the new release was dynamic customization of emails, landing pages, and forms based on each contact’s profile and behaviors. This is a major expansion beyond HubSpot’s original focus on “inbound marketing” to attract leads.

Specific changes include:

- a new contact database that is much more flexible than the original HubSpot database, allowing access to all types of email and landing page interactions within HubSpot and to social media activities imported to the system. The new database is built with HBase, which accesses Hadoop files. More on that later.

- “smart lists”, which are rule-based definitions of contact groups whose membership is updated automatically as contact data changes. Apologies if that’s a bit jargony; it just means the lists are always current.

- “smart calls to action” which are dynamic content blocks driven by the smart lists. That is, users define which contents go to members of different lists. The blocks are stored in a library and the same block can appear within multiple emails, HubSpot landing pages, or external Web pages.  In practical terms, this means things like: users who have already downloaded one piece of content can automatically be offered something else.

- “smart forms” (do you sense a pattern?) which don't repeat questions a client has already answered. This isn’t quite true progressive profiling, which would replace questions that are answered with ones that are not.  But it removes a major annoyance.

- workflows (hah! Bet you expected “smart flows”) that are triggered by smart list-style rules and can include multiple steps with multiple actions assigned to each step. Available actions include changing contact data, sending a record to CRM, updating a lead score, setting a lifecycle stage, and changing the call to action.

- social media tracking that captures responses to system-generated social media messages within the contact database.  The responses are associated with specific individuals, so they can be used in smart lists and workflow rules.

- iPhone apps to view some reports and individual contact data

This is all good stuff, although far from revolutionary. Dynamic email content, for example, is available in 14 of the 22 systems in our VEST report. HubSpot recognizes that these are not new features but argues they’ve made them easier to use than competitors. I’m not so sure – the rule builder underlying the smart lists and workflows looks pretty much like every other rule builder, and the workflows themselves are also similar to the sequential flows in other systems.

This isn’t a criticism of HubSpot, but just a recognition that these are inherently complicated features which plenty of smart people have already tried to simplify. Radically better approaches may yet be found – I had an interesting chat about some possibilities with HubSpot co-founder Dharmesh Shah – but so far, the state of the art is what it is.

The new release also includes improved email and landing page designers, A/B testing for landing pages (not available in the entry-level version of the system, alas), enhancements to the app and service marketplaces, and expanded training services. The company said the coming year will bring enhancements to existing components including the blogging and search engine optimization applications.

What’s really important about all these changes is not whether they’re unique, but how well HubSpot has pulled them together and how it teaches its clients and resellers to use them. This is where HubSpot has always been strongest, and the vision it set out this week – of highly relevant marketing messages for each individual – is indeed advanced. (It’s also one I agree with – see this post on why the marketing funnel is dead.) If HubSpot can get marketers to focus on that sort of targeting, which is quite different from traditional campaign-oriented promotions, they can indeed have a revolutionary impact on their clients and the marketing industry.

And what about HBase? Although HubSpot didn’t talk about it in its marketing materials, switching from a conventional relational database to the Hadoop-based system is almost certainly the most radical feature of the new release. So far as I know, HubSpot is the only marketing automation system using HBase.

I discussed this a bit with HubSpot Chief Product Officer David Cancel, who joined the company when it acquired Performable, which was itself built on HBase. Cancel said HBase takes more resources than a conventional database engine but provides direct access to all details of each contact’s behavior history. One immediate benefit is that HubSpot now allows custom fields – up to 1,000, in fact – which it didn’t previously.  Ad hoc reports against the HBase data isn't available yet but is due before the end of 2012.

Longer term, I suspect HBase will make it easier to add custom objects and to deal with unstructured and semi-structured data such as Web logs and text comments. This could make HubSpot fundamentally more flexible than most B2B marketing automation systems, whose data structures are tightly linked to CRM data structures. As I mentioned last week, the main exceptions to that rule today are the high-end marketing automation products, which were built for consumer marketing applications and assume a custom data structure. Having that flexibility in product for small-to-mid-size businesses could open up some possibilities that truly do make HubSpot unique.

(Wondering about the alligator man picture?  Well, one of the sessions at the HubSpot conference said that having pictures in your blog posts increases readership, so I thought I'd give it a try.  If you want me to justify that particular image: she's getting a message she doesn't want.)

0 Raab Report: Act-On, Eloqua, Pardot, and Marketo Vie to Lead in Mid-Size B2B Marketing Automation Segment

Today I’ll present the third and (mercifully?) final installment in my series of posts on leaders in the different B2B marketing automation sectors, as determined by the ratings in our VEST report. I’ve saved the best for last, in the sense that the small to mid-size sector is the heart of the industry and its most complicated arena.

We define small to mid-size business as companies with $5 million to $500 million revenue. This covers a broad range of marketing users with widely varied needs. Most require the full set of marketing automation functions but apply these in simple ways. They have one to fifteen marketing automation users. This sector generates nearly 60% of 2012 revenue ($200 million) from 33% of the installations (9,400 as of mid-2012). The VEST report provides separate client counts for small business ($5 million to $20 million revenue) and mid-size business ($20 million to $500 million). These account for 16% and 41% of revenue and 16% and 17% of installations, respectively. Although small businesses generally buy lower-priced systems, they have largely the same requirements as mid-size companies.

The leaders quadrant in this sector is quite crowded, with Act-On, Eloqua, Pardot, and Marketo all jostling for position. Silverpop, Neolane, and Genius are all lurking nearby. In case you haven’t caught on to my color coding, blue type indicates that Eloqua and Neolane are leaders in the large company segment, while red type shows the others have their strongest position in this sector.

The variety of users within this segment is reflected by the differences among the leaders. Act-On, Pardot, and Genius specialize in smaller companies than Marketo or Silverpop, which in turn serve generally smaller clients than Eloqua or Neolane.  Act-On’s position on top of the product fit range is a bit misleading: when you look at the components of that score (see below; this comparison chart is another VEST feature), the vendors are all very close.  In fact, the only category where Act-On scores higher than everyone else is pricing.

This isn’t at all to say that the products are equivalent.  Rather, it means they each have different strengths and weaknesses that balance each other out when measured with generic scoring weights. For actual buyers with clear priorities, the difference among these vendors’ scores will almost always be much larger.


As with the other sector charts, the vendors in the upper left are also worth considering: they have strong product fit but relatively low market position.  SalesFusion appears here as it did in the micro- and large-business charts: what can I say, they have rich features at a good price. (And, no, they’re not my client.) eTrigue is the other noteworthy contender; it and LeadFormix are both close to the leader quadrant based on their vendor fit.

If there’s any one lesson from all these charts, it’s that picking the “leading” vendor is no guarantee of making a good choice. Our three sets of weights yield different sets of leaders, and even those vendors have different strengths and weaknesses. I’ve said it a million times but I’ll say it again: there’s no substitute for understanding your own needs and finding out which vendors match them best.

0 Raab Report: Neolane, Aprimo, and Eloqua Rate Highest for Large Company B2B Marketing Automation

Tuesday’s post looked at the micro-business sector leaders according to our VEST report and gave a bit of background on how the ratings are created.  Today let's take a look at the same diagram for large businesses, which we define as companies with $500 million revenue or more.

These companies have large marketing departments that may manage hundreds of campaigns for different products in different locations. Our scoring reflects their need for special features for automated content selection, project management, complex lead scores, and tight control over the rights granted to individual users. This group had about 1,400 clients in mid-2012, generating an estimated $85 million in revenue. This is 5% of industry installations and 25% of industry revenue. Many of these were small departmental implementations; there are probably fewer than 500 true enterprise-wide deployments. The non-specialist vendors such as IBM Unica and SAS, are not included in these figures but also have significant revenue in this segment.

As before, vendors closer to the top have the most appropriate features for this segment, and those further to the right have the most similar customer base and company resources. The chart shows Neolane and Aprimo (owned by Teradata) as the clear leaders, with Eloqua also very strong.  Marketo and Oracle (specifically, Oracle CRM On Demand Marketing) are considerably further back in the leader quadrant.

It’s important to recognize that Neolane and Aprimo are fundamentally different from the others. Both are general purpose marketing automation systems that serve large numbers of B2C as well as B2B clients. The clearest technical distinction is the marketing database: Neolane and Aprimo are designed to connect with custom-built, external marketing databases, whereas B2B marketing automation products like Eloqua, Marketo, and Oracle are based on an integrated database using a CRM data model (usually Salesforce.com, although Oracle is tied to Oracle's own CRM). This doesn’t mean that every client actually connects them to CRM system. But it does mean that the standard data models match the CRM data models and, in many cases, that abilities to expand the data model with custom tables are limited.  One reason that Neolane and Aprimo rank so high in this sector is, precisely, that large businesses often want more database flexibility than the CRM-based approach allows.

As with Tuesday’s chart, the other important place to look on the chart is the upper left, which captures companies that have suitable features for this segment but are too small to rate as leaders. SalesFusion (which also ranked highly in the micro business segment; a good trick) and TreeHouse Interactive stand out in that region. So does MarketingPilot, a newcomer to the VEST that is more like Neolane and Aprimo in serving a mix of B2C and B2C clients. See my 2011 MarketingPilot review for more details, bearing in mind that they’ve added capabilities since then.

0 Raab Report: OfficeAutoPilot, Infusionsoft and HubSpot Rate Highest in Marketing Automation for Very Small Business

One of the most important features of our VEST report on B2B marketing automation systems is that it divides marketing automation users into distinct segments, each having a different set of needs. This matters because the systems all do roughly the same things, making it hard for inexperienced buyers to tell them apart. Many vendors – especially those who target the middle sector – also try to serve all types of companies, adding to the confusion. Where the vendors differ is in the details of how they implement the common features, applying approaches that are generally best suited to one type of marketing organization.

The VEST segmentation is based on company size, as measured by revenue. I'm painfully aware that this isn’t the ideal way to group users, since companies of the same size can still vary greatly in their needs and marketing sophistication. But revenue is objectively measureable and most marketing automation vendors can provide reasonably accurate client counts by revenue group. So we use it as a proxy for the other client differences.

The primary way we report on the different segments is by applying different weights to the same feature in our vendor scoring for each segment. This lets us rank vendors based on how their features and company strengths match against each sector’s needs. A key part of the approach is to penalize vendors with negative weights for features that are too advanced for a particular customer group. So far as I know, no other analysts do this in their scoring.  It avoids a common problem with scoring systems, that systems with the most features always win.

The chart above shows our ratings for the micro business sector, defined as companies with under $5 million in revenue. These are very small companies, typically run personally by an owner. They rarely have a full-time professional marketer on staff. Primary marketing interests are group emails, landing pages, and simple lead nurturing through email auto-responders. Before marketing automation, they typically use an email system (which also provides landing pages and simple nurture campaigns) or sales automation product for their marketing. They often do not integrate marketing automation with a separate sales automation system, either because they don’t use one at all or because they rely on CRM features within marketing automation itself. As of July 2012, marketing automation vendors reported more than 17,000 micro-business installations, just over 60% of the industry total. But, because prices are lower than other segments, the segment generates only an estimated 18% of industry revenue, or $65 million for full-year 2012.

Companies in this sector have very limited marketing and technical resources. As a result, their overriding needs are ease of use and a broad range of features within a single product. What they don’t need are very complex campaigns, extensive planning and budgeting, and custom database  designs. Our scoring reflects those priorities.

As the chart shows, the leaders in this segment are OfficeAutoPilot, Infusionsoft, and HubSpot. The first two are micro-business specialists; in particular, they have built-in CRM and order processing. HubSpot isn’t quite as highly tailored to this segment, which is why it is a little further from the top than the other two. (The vertical dimension is product fit, which basically means features.) But HubSpot has a very large number of clients in this segment, so it is still quite far to the right. (The horizontal dimension is vendor fit, a combination of customer count, segment concentration, and vendor resources.) Act-On and Marketo also have strong positions in this sector, even though their features – especially in Marketo’s case – are not necessarily the best fit. Again, bear in mind that revenue is a very crude segmentation, so many Act-On and Marketo clients in this group probably have requirements closer to those I’ve assigned to the middle tier.

The other important set of vendors are those at the upper left of the chart: companies with a strong feature fit even though they are smaller than the leaders. SalesFUSION and MakesBridge stand out especially in this group for micro-business users. Oracle’s presence is, frankly, pretty odd: it’s due to a low per seat price and the vendor’s position that it has a built-in CRM module. In fact, nine of the 22 vendors say they provide a CRM option, which may be technically correct but in most cases probably isn’t realistic. This is even more proof – as if it were needed – that buyers need to explore the products in detail before making a purchase.

0 Raab Report: B2B Marketing Automation Vendors Are Making Incremental, Not Radical, Changes To Their Products

One of my favorite parts about putting out a new edition of the VEST report is I get to dive into a pile of new data about industry trends. Think Scrooge McDuck and his pool filled with gold coins.

Indeed, with 208 data points on 22 vendors, there’s so much data that it’s a challenge to make sense of it. The approach I settled on this time is to compare the average score of each item against its average in the previous edition, six months earlier. Since we only added one new vendor for this edition and kept all the old ones, the vendor base itself is largely stable. Items with the greatest change in average score are the ones that vendors are adapting most rapidly. (The scores are: 2=comply fully; 1=comply partly; 0=do not comply. So, a higher score indicates a more common feature. An item present in every system would have a score of 2.0. The actual average is 1.41.)

The table below shows the top 20 items based on this ranking. Colors in the “average score” column show the relative score of each item – closer to green means an item is more common; closer to red means it is more rare.  The ranking is based on all 200 items, so the broad range among this group shows that all types of features are being added, not just the rare ones.

At first glance, these items seem almost random. But on closer examination, they fall into three categories.

• Sophisticated marketing programs. These are features for advanced outbound campaigns.  This means they appeal to the most sophisticated marketers and are probably not very widely used. As hinted by the color coding and confirmed by group, these features are already relatively common. So their continued growth represents catch-up by vendors who had not already provided them, probably more for competitive sales reasons than actual customer needs.

• New channels. These are features for marketing outside of email. They include managing events such as trade shows, integrating with external Web sites, and support for fax and direct mail. As a group, these are more rare than the previous set (average score of 1.02 vs. 1.28), suggesting that vendors who add them are more leaders than followers. They illustrate the continued expansion of marketing automation to support true multi-channel marketing programs.

• Advanced marketing management. These are features to help manage large-scale marketing operations. They relate to administrative and reporting needs including fine-grained control over user access rights, detailed cost reporting, user interface in multiple languages, and control over large volumes of assets. Most of these features are still relatively rare, although the group average is raised by two relatively common items (templates that automatically copy changes into existing assets and reports on asset usage by campaign). As with the changes to support sophisticated marketing programs, these features are needed by a small fraction of marketers, but vendors are probably adding them because they appear on buyer checklists.

You may have noticed that social media is missing from these lists.  Don’t be alarmed – it's just that most social media features were not covered in the previous edition, so we can't calculate growth rates. Here’s a list of all the new items and their scores. As you see, they’re all still relatively rare. I'm pretty sure that social media features are being added quickly although I don't have the data to prove it.

What didn’t grow so much? Well, there’s little change in basic marketing capabilities but that's just because pretty much everyone already has them. Less predictably, there’s little change in reporting, CRM integration, database design, features targeted at ease of use, content creation, and pricing models. If there’s a pattern here, it’s that these are fundamental aspects of system design and business models.  In other words, vendors are making incremental enhancements rather than radical changes.

You can read this as a sign of maturity or stagnation. Maybe they're the same thing.  Either way, it's arguably a good thing for marketers that the pace of change has slowed down a bit, since it gives them time to catch up.  It's more dangerous for vendors, since a stable feature set is easier for outsiders to duplicate, and gorilla invasion is the biggest threat faced by existing marketing automation leaders.  As my previous post reported, small vendors can still grow quickly enough to approach the industry's top ranks.  But it's entry by large outsiders who can leverage an existing customer base, such as users of email, CRM, or Web content management systems, that could really change the industry structure overnight.   Stay tuned.