Editor's note: Jeff Bartman is a former senior marketing executive at IBM. We’re excited to have him share his experience of how IBM approached marketing under the leadership of legendary CEO Lou Gerstner, who ran IBM from 1993 to 2002.
IS MARKETING AUTOMATION the reason why the sweaty old guys I hang with at the boxing gym get emails and web ads for bikini waxes, wedding dresses and infant formula?
Last year companies in the U.S. spent $260 million on marketing automation. But a glance at some stats points out some problems. In a 2011 Focus survey, 50% of marketing execs said they haven't realized the full value of their marketing automation system. In a Forrester survey, 47% said they close fewer than 4% of the leads generated by their marketing automation software.
Nearly two-thirds of CMOs say engaging senior decision makers is their top challenge. Yet they use automated email blasts to reach them. They’re spamming the executive suite, then getting miffed when it doesn’t work!
Obtain a Clue, People
Marketing automation makes me wince. It suggests something from which every ounce of creativity, personality, intimacy, and customization has been sapped. Can that wonderful family-run trattoria on the quiet little cobblestone street nestled in a hilltop village near Milan automate Grandma’s cooking, with all the elements that make dinner there so special?
Successful marketing is about understanding your customers: their industry, segment, geography, priorities, regulatory and competitive environment, business and economic challenges, budget process.
The problem with marketing automation is that it isn’t about your customers - it’s about you.
Nevertheless, marketing automation has become a booming business. Over 100 companies sell software for customer relationship management, lead generation, contact center, sales force automation, account management, marketing measurement and demand creation.
Agencies and software companies will explain that you’re not organized correctly; or that you didn’t buy the right modules; or that your expectations are wrong; or that you have bad content; or that you want quantity over quality. Or maybe you’ll get the line about how you don’t have the proper alignment between marketing and sales.
In other words: Blame the victim.
Templates? Lead Gen? No Thanks.
Back when marketing automation was starting to get some buzz, I was running marketing for a large business division at IBM. Corporate marketing embraced marketing automation technology with gusto. Out from corporate to the business units came a PowerPoint deck template attached to an email, with blank charts that we were supposed to fill in.
I understood the motivation. We were in marketing. IBM was about automation. So let’s automate marketing the way we do manufacturing, retailing, and finance. In the name of efficiency, let’s standardize, make things uniform, easier, perhaps even achieve economies of scale. Finally, we can quantify marketing.
Except my general manager said no. “We don’t do templates,” he barked, immediately making it policy.
My general manager had joined IBM from American Express. He’d been brought in by Lou Gerstner, the former chairman of Amex and RJR Nabisco. Lou was IBM’s first-ever non-homegrown CEO, and the youngest partner ever at McKinsey.
Like Lou, my general manager wanted his team focused on closing deals, building long-standing relationships, calling higher, understanding client challenges, developing opportunities, and relentlessly asking: “What problem are we solving?”
My boss was all about delivering value to customers. As he saw it, templates were about us, but we needed to be focused on them.
One day, in a meeting, the topic of marketing automation set my boss off.
“Leads?” he said. “If I have sales people who need automated leads, I have the wrong sales people! I’ve got highly paid Managing Directors with global P&L responsibility for some of the world’s largest banks. I expect them to know every time their client has so much as an idle thought about a project, an RFP, a potential pilot.”
He went on: “Does somebody think automated leads from an email will alert my people to an unknown deal, qualify it, and tell us how we deliver it profitably?”
I thought about institutional food versus Grandma’s cooking at the little family-run trattoria.
IBM in the Gerstner Era
In the Gerstner era, everything at IBM was questioned and ripe for re-engineering. Nothing escaped Lou’s scrutiny as he transformed, and saved, one of the world’s great companies.
Lou likened our work reviving IBM to landing a fighter jet on a pitching aircraft carrier in a stormy sea during a typhoon while the enemy shoots at us.
But Lou had a plan, which was to move from a go-to-market built on product categories to one focused on customer categories.
Our products would now be sold in the context of the specific needs of each industry: its challenges, processes, dynamics, economics, infrastructure, applications, and trends. IBM would specialize in the worlds in which our customers worked.
Ask someone what they do for a living. They don’t tell you that they’re a database customer, or a mainframe customer, or a cloud customer. They say: I’m in banking, or telecommunications, or education. Next they tell you what they do at their company.
Success for IBM meant becoming a trusted advisor, a higher value partner and not simply a vendor of products. At the point of the strategy arrow now were services, software, architecture, middleware, systems integration, outsourcing, IT strategy & planning, research, partnerships, financing.
For every dollar of consulting advisory revenue, IBM would generate $9 to $11 of downstream technology review. Gray matter sells better than things that hurt when they fall on your foot.
Lou understood the link between strategy and structure. He aligned all of IBM around this new segmentation.
Again, organizing by product is all about you. Organizing by customer makes it all about them.
Segmentation Trumps Automation
Starting with eight large industry sectors, we parsed our business with more and more granularity - industry first, then segment, sub-segment, company size, geography, country and industry-specific application solution area.
Our segmentation work created manageable universes of clients, clusters small enough for high-touch “account-specific” marketing programs.
We found that just 18 global banks delivered 80% of our over $22 billion in revenue. This manageable number of clients almost pre-determined our marketing outreach.
It surfaced a sales coverage model in tune with our available resources. We built our marketing plans around account-specific high-touch tailored programs.
This was a higher-value form of marketing in tune with our strategy. No wasted impressions. No automated outreach followed up by robo-calls.
Low Tech, High Touch
What tools did we use? Roundtables, advisory boards, working sessions with analysts, strategy reviews, forums on the landscape of issues and trends. We sponsored a Monday staff meeting held by a major bank’s CMO, bringing in breakfast and a well-known journalist to discuss his coverage of Dodd-Frank.
We held a series of global thought leaders forums around the goal of agreeing on the group’s top 10 business drivers titled “The Challenge of Change.” Customers participated in open discussions with analysts, academics, trade editors, IT researchers and technology partners, all at the same table.
We funded research on the IT impact of what they voted to be their industry’s major issues. The results themselves yielded press coverage, building awareness of our role in each industry.
Our sales teams became the point of customer contact for a valued ecosystem based on ideas, best practices, problems and solutions. Business cards were exchanged. Relationships were built. Opportunities developed. Proposals were submitted. Deals were signed. Engagements were delivered. Downstream revenue flowed.
For us, basic but robust market segmentation trumped marketing automation. It wasn’t big data we needed. It was small data – granularity, focus, manageable numbers. Better to reach the people who count than count the people we reach, as the old saying goes.
After our banking industry thought leaders forum in Italy, we invited attendees to dinner at a wonderful little family-run trattoria on a quiet cobblestone street in a hilltop village near Milan. The food, wine, ambience were terrific. Impossible to duplicate. Impossible to automate. Grandma was in the kitchen.
Jeff Bartman is managing partner at Ellery Associates, a venture investment and advisory firm. He spent most of his career at IBM as a senior marketing executive and was later vice president of marketing and business development at SAP.
Originally published Dec 12, 2013 8:00:00 AM, updated October 20 2016