Neolane has grown rapidly in the last year, and is poised for more growth in the coming year.
DemandGen Report had the chance to catch up with CEO Stephan Dietrich to discuss the key business drivers for marketing automation, what the BtoB space can learn from BtoC tactics and how mobile and social media are shaping up overseas.
DemandGen Report: Neolane has been growing aggressively with revenue increasing 30% in 2009. Do you anticipate a similar growth rate in 2010?
Stephan Dietrich: Neolane has consistently increased revenues over the past five years and our annual compound growth rate is close to 80%. Last year was a tougher year than usual across the industry, so 30% growth was still a great achievement. What is also significant is that 2009 was our fifth consecutive year of profitability, which distinguishes Neolane from most marketing automation vendors. Much of our growth can be attributed to marketing technology investments being made by mid-enterprise organizations, which is our core customer base. While revenue in 2009 increased significantly, we also increased our global headcount by nearly 25% and signed more than 40 new (enterprise-level) deals in North America and across Europe.
In 2010 we anticipate at least a similar projection of 30-50% growth for the year. There is still uncertainty in the market, but we certainly see things improving significantly in the enterprise marketing space. This year many companies are more willing to open up their budgets, but they still require strong ROI and a detailed business case. Neolane’s pipeline is very strong, particularly in the BtoB marketing automation space.
DemandGen Report: Are there certain verticals or types of companies you are seeing driving the growth and what are some of the key business challenges these companies are looking to address?
Dietrich: BtoB high tech is driving a lot of the growth for our business. There are several challenges that businesses are looking to address. Number one is driving top line revenue, which has been especially pronounced during these last few difficult years. One emerging trend is marketers’ goal to more consistently incorporate inbound interactions with prospects and customers into the overall marketing mix. In addition to integrating inbound and outbound communications, there is a need for increased efficiency, specifically in the mid-enterprise or enterprise segment. Neolane has built specific enterprise marketing software functionality for organizations that have distributed marketing teams so that they are able to collaborate with a consistent set of messages and materials. We also see a strong need for Marketing Resource Management (MRM). Marketers have evolved from pure, mostly single channel email marketing, to broader cross-channel marketing strategies that require a single, automated platform that can manage campaigns, resources, customer data and analytics to dramatically improve effectiveness and ROI.
DemandGen Report: Neolane recently launched v5.1 of its enterprise marketing software platform. Can you share more about the vision behind the launch?
Dietrich: Neolane’s vision behind version 5.1 was to unify inbound and outbound interactions. This version of our platform takes marketing from a one-way conversation to a dialogue-based marketing strategy. Historically, BtoB, and even BtoC marketers, have employed a push marketing strategy — pushing out marketing materials for webinars and white papers through email blasts and other channels. To be frank, that’s still what a vast majority of marketers are doing. Our version 5 has been integral in facilitating interactions between the prospect, customers and the brand, and unifying inbound and outbound communications. Consumers are evolving how they receive information and interact with brands, so marketers must be able to present consistent, relevant offers to customers and prospects regardless of the channel, inbound and outbound. Neolane v5.1 helps marketers use reporting and analytics to understand what offers are the most effective.
DemandGen Report: There is a lot more discussion in the marketing automation space around dynamic content to help companies present timely, relevant, and personalized offers across channels. Are you seeing more interest in this area and how are some of your leading companies already applying these processes?
Dietrich: We’ve been talking about this for six years, but the story is very different in the BtoB and BtoC spaces. Neolane’s first implementation of dynamic content was with a French electronics retailer in 2003. Because the retailer carried approximately 35,000 products on its web site, the challenge was to figure out which offers were relevant to customers. To solve the problem, we integrated a recommendation engine into our solution.
BtoB is only just starting to take off now. I think it’s a different animal from the BtoC play because marketers need to be very careful with what they do. Keep in mind that sales cycles involve salespeople. While a marketing automation platform supports the relationship, salespeople are really the ones driving and building the business relationship. However, moving marketing automation upstream in the sales funnel definitely makes sense in nurturing campaigns and pipeline acceleration (to some extent), but marketers need to be very careful to make sure the message is consistent with what salespeople are driving in terms of offers.
DemandGen Report: Are you seeing a lot of demand to address emerging channels such as social media and mobile in multichannel campaigns? What are some of the ways your customers are optimizing messaging and campaigns across these new channels?
Dietrich: To start, there is an important distinction to be made between multi-channel and cross-channel marketing. Multichannel is really engaging across different channels and very often needs different enabling technologies to do that. It’s done in different silos, sometimes in different pieces for different organizations. Some people manage web, some people drive email marketing, direct mail pieces, and in some cases now an outside agency is driving social media or mobile efforts.
We believe that BtoB marketers should move toward a more effective cross-channel approach where channels are integrated, and communications and experiences are consistent and coordinated — no matter what channel is being used to engage customers and prospects, be it email, web, mobile, direct mail or call center. In addition to considering strategic uses of mobile and social media, direct mail is a key component that still works very well for a number of organizations, so I wouldn’t discount that. Outbound call center is also a key component. We emphasize that the cross-channel mix clearly requires a platform that integrates all the different channels, and supports the need to deploy consistent, effective — and measurable — strategies across them all.
Mobile is accelerating very quickly in the U.S., but it’s still very far behind in term of its adoption in regions like Europe or Japan. For example, we’ve seen a number of BtoB and BtoC marketers use mobile campaigns (SMS primarily) during conferences to drive traffic to sessions and other events.
No one has found that killer application for social media either. Social is a great engagement channel and everyone is talking about it — it’s rare that we have a meeting with a prospect or customer without talking about it. But has a BtoB marketer cracked the code with social media? I’m not sure. Social media shouldn’t exist in a silo. It must be an integrated component of an organization’s total cross-channel marketing strategy. When a channel emerges, it’s always used in a very experimental way, but it should still be integrated into a mainstream cross-channel strategy.
DemandGen Report: Given the continued pressure for marketers to show ROI, how are your customers using automation to optimize campaign performance in a measureable way?
Dietrich: Companies need an automated solution that can provide insight into the monetization of each marketing activity and channel, so that marketing spend can correlate directly to the revenue generated. In the BtoB space there is a huge difference (from BtoC) because you don’t have one touch point, you have multiple touch points from different marketing channels across long sales cycles. Marketers need to be able to link those touch points to revenues generated. We see continued pressure on ROI, so results need to be defendable. Marketing needs the technology to justify the budgets to their executives and senior management. That’s an ongoing trend that has certainly been driven by the recession, where every dollar spent has to be accounted for — and that’s not going away.
The depth of integration with CRM systems in certain implementations can be challenging, especially with sophisticated response management and campaign match backs. These strategies need to be discussed with senior management and executives to discuss how they want to measure campaign performance. This is not something that marketers can implement as a plug and play strategy.
DemandGen Report: With Demand Generation a top priority for BtoB and BtoC marketers, how are you seeing companies utilize marketing automation to gain a holistic view of prospects/customers across channels?
Dietrich: The progressive rollout of CRM systems has unified the view of the customer database, but marketing and sales is much more than that. Before a lead is sent to a sales rep, there is a lot of insight that can be driven out of behavioral data. It’s fundamental to have a single enterprise platform that can provide a 360-degree marketing view of customers and prospects. Very often marketing organizations only see the top of the sales funnel once they’ve captured the lead and scored it. It’s important to have one central datamart that captures the information from prospects and tracks behavior. There’s still a lot to do here because most organizations complete this process just for email, but that’s only one channel. Marketers need to think outside of the box about other channels, and how to bring all that data together.
DemandGen Report: Since Neolane has a strong presence in both North America as well as Europe, can you share some of the unique trends you are seeing emerge across the different markets around the globe?
Dietrich: I think we can all agree that social media has been a strong trend. There’s a lot of research showing that even in the BtoB space, social media is influencing the sales cycle. We have also seen companies in Europe adopt technology to support distributed marketing teams earlier compared to counterparts in the U.S. market, mainly because of the geography and variety of languages spoken. All of our implementations in Europe span across countries, where companies have used Neolane to ensure local campaigns are aligned with corporate campaigns. We also saw one-to-one personalization earlier in Europe because the markets are smaller and you need to cater to those markets. The pressure for greater accountability hasn’t changed, and it’s not going away. That’s what I think will drive marketing in the next decade.
Stephan Dietrich is president of enterprise marketing software provider, Neolane, Inc., where he is responsible for driving the company’s strong business growth in North America. A recognized thought leader with 15 years of enterprise software and marketing expertise, Stephan is regularly interviewed in high-level publications and has spoken at several major US and European marketing events, such as NCDM, the Annual eMarketing Conference and Direct Marketing events. Previously, he was president of Cubicsoft and co-founder of AGDS, a company sold to Peregrine Systems, now HP.