Marketing Cloud Falls Short On Expectations

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1 A Forrester Consulting Thought Leadership Paper Commissioned By Yes Lifecycle Marketing December 2017 Marketing Cloud Falls Short On Expectations Marketing Cloud Users Supplement Gaps With Best-Of-Breed Solutions

2 Table Of Contents Executive Summary Customers Digital Experience Expectations Raise The Martech Bar The Marketing Cloud Promise Falls Short On Expectations It s A Misnomer: Marketing Cloud Users Are Really Best-Of-Breed Key Recommendations Appendix ABOUT FORRESTER CONSULTING Project Director: Andia Vokshi, Market Impact Consultant Contributing Research: Forrester s B2C Marketing research group Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2017, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to forrester.com. [ ]

3 Marketing clouds are a single suite of marketing technology primarily delivered as SaaS by one vendor. Marketers shouldn t treat the cloud as a single product, but rather a confederation of offerings that still require supplemental resources and tools to be successful. Executive Summary Today s consumers are savvy and empowered, and they have high expectations for customer service. This evolution puts the burden on marketers to deliver consistent, contextually relevant experiences at the moment of need across the customer journey, regardless of device or channel. To satisfy evolving customer demands, an explosion of marketing technology tools has developed in recent years. But with all the options available, marketers are in the difficult position of deciding between the depth of best-of-breed solutions and breadth of marketing clouds extensive marketing technology portfolios primarily delivered as software-as-a-service (SaaS). Yes Lifecycle Marketing commissioned Forrester Consulting to evaluate whether marketing cloud solutions provide sufficient coverage to meet marketers needs and engage consumers. To explore this topic, Forrester conducted an online survey with 150 US customer insights and analytics professionals with responsibility or influence over their company s marketing technology purchases. The study found that marketing clouds fall short on expectations with integration, cost, coverage, speed, data, tech, services, and support. The reality is that marketers shouldn t treat the cloud as a single product, but rather a confederation of offerings that still require supplemental resources and tools to be successful. KEY FINDINGS Marketing technology portfolios are still too complex. Many have turned to marketing clouds to unify touchpoints, reduce complexity, and increase agility, but these solutions alone do not provide sufficient coverage to meet the long list of marketing needs. Marketing solutions must be comprehensive. This means they should incorporate the right data, technology, services, and support. Despite cloud vendor promises, users still struggle with all four areas. Marketing clouds require supplemental tools to be successful. The expected benefits of marketing clouds do not offset the cost and disruption of implementation as much as marketers expect. For successful execution, marketers must employ a best-of-breed approach regardless of whether or not they use a marketing cloud. 1 Marketing Cloud Falls Short On Expectations

4 Customers Digital Experience Expectations Raise The Martech Bar Today s consumers are savvy device users and information gatherers with a desire to be recognized. They alternate interactions between digital and physical without distinction. 1 Gone are the days of one-to-many and even a one-to-one customer reach approach. To engage empowered customers, marketers need a customer-first mindset that delivers contextually relevant experiences at each moment across the customer journey. Campaigns, targeting, customer segmentation, transactions, and other constructs that once served marketers needs are now being replaced with interactions, engagements, customer recognition, and exchanges of value that serve customer needs in the moment. 2 An explosion of marketing tools has developed to satisfy these customers evolving demands. Forrester Research recognizes 24 marketing and advertising technology classes, nearly two-thirds of which have earned significant success and half of which are still in the growth phase. 3 And this demand will likely persist in the years to come: Forrester predicts US digital marketing spend will near $120 billion by At the same time, marketers are becoming more sophisticated in the execution of marketing tactics and measuring the impact of their efforts, and, in turn, more selective in where they place their investments, giving preference to the areas that will make a demonstrable customer experience impact. 5 This shift in marketing technology (martech) strategy focus is necessary for navigating a category in which a myriad of tools have become extremely complex and nearly unmanageable. In fact, 60% of the marketers in this study want to reduce the number of vendors that supply their martech, and 48% believe their current portfolio is too complex (see Figure 1). To succeed in meeting consumers needs, marketers need to unify touchpoints, reduce complexity, and increase agility. 6 A select group of vendors now aspire to offer extensive marketing technology portfolios aimed at delivering on this promise. These players brand their offerings as marketing clouds, or enterprise marketing software suites, primarily delivered as SaaS. 7 With all the options available to them, marketers are put in the difficult position of deciding between depth and breadth in their technology solutions. On one hand, adopting a best-of-breed approach addresses specific needs exceptionally well but requires massive and continuous integration. On the other hand, while a single suite suffers from inconsistent functionality depth, it s billed as fully integrated, something that marketers surveyed are willing to prioritize: 56% agree that best-of-breed is less important than the ability to integrate. 8 Figure 1 How strongly do you agree with the following statements? (Options 4 and 5 shown from a 1 to 5 scale where 1 is Completely disagree and 5 is Completely agree ) 60% agree We want to reduce the number of vendors that supply our marketing technology 48% agree Our current technology portfolio is too complex Base: 150 professionals with responsibility or influence over their firm s marketing technology purchases Source: A commissioned study conducted by Forrester Consulting on behalf of Yes Lifecycle Marketing, September 2017 With all the martech options available, marketers are put in the difficult position of deciding between depth and breadth in their technology solutions. 2 Marketing Cloud Falls Short On Expectations

5 The Marketing Cloud Promise Falls Short On Expectations Users have high expectations of marketings clouds. The marketing cloud users in this study cite a long and varied list of objectives that drove their decision to invest (see Figure 2). In fact, 40% listed seven or more investment drivers. They expect this solution to deliver across tactical and strategic goals that not only include pure marketing-focused areas like marketing planning, but also better data integration for reporting (the top goal cited), ease of use, data security, cost savings, speed, and innovation opportunities. At the same time, marketing cloud technology has afforded marketers greater access to certain capabilities like analytics, data storage, and reporting; fewer than half say areas like marketing automation, voice of the customer, and cross-channel orchestration and integration categories are included as part of their solution. Figure 2 What were the objectives behind your organization s decision to invest in a marketing cloud solution? (Select all that apply; top responses shown) 64% Greater data integration for reporting/analytics 51% Improve ease of use 48% Better secure customer data 48% Offer consistent experiences between channels 47% Enable more coherent marketing planning 47% Cost savings 46% Improve the effectiveness of marketing campaigns 45% Optimize customer experience across touchpoints 45% Better understand the customer across their life cycle 30% Easier to implement 29% Reduce complexity/redundancy in the martech stack 28% Minimize latency between communication channels 25% Easier to purchase 25% Foster innovation Base: 96 professionals with responsibility or influence over their firm s marketing technology purchases at companies that use a marketing cloud Source: A commissioned study conducted by Forrester Consulting on behalf of Yes Lifecycle Marketing, September Marketing Cloud Falls Short On Expectations

6 Given the intense expectations placed on marketing cloud suites, it s not surprising that the reality of these solutions falls short of expectations in several key areas (see Figure 3): End-to-end coverage. Marketing cloud users want the best of both worlds: 61% believe that most of their marketing functionality should come from one vendor, but fewer than half (45%) believe a single vendor can provide them with all the capabilities they need. In fact, cloud users are working with many vendors: Nearly 70% have more than five vendors supporting their technology, and 39% have over 10. Further, just 23% describe their cloud solution as very effective at reducing the overall number of suppliers with which they work. Forrester s research has shown that no single cloud vendor addresses 100% of marketers needs, making it difficult to categorize marketing clouds as fully differentiated from best-of-breed solutions. 9 Integration. Marketers need integrated tools that seamlessly share data and content across systems and enable users to do their jobs. Ease of integration with other data sources and systems was an important consideration for 87% of marketers when implementing or using their cloud solution. However, when asked about challenges with implementing their martech, respondents revealed that integration with legacy systems is the number one challenge cloud users face (40%). Cloud implementations can be highly disruptive endeavors as companies work to integrate with existing software and on-premises tools in which they have long-standing investments. 10 If not handled with care, it can lead to poor experiences for both employees and customers. As one VP of a business services firm reported: Implementation has met resistance from employees, and the result has been a less-thanconsistent experience among clients. It has also resulted in taking up more time with meetings to get buy in. Cost. Several marketing cloud investment criteria focused on costs: Over 80% said predictable ongoing costs, total cost of ownership, and ROI on their cloud investment were important considerations. At the same time, unexpected costs are the second-most frequently cited marketing cloud implementation challenge. A director at a biotech firm warned that cloud users may need to stretch beyond their original budget projections to get it right: The best approach for integration is to seek out the highest quality, even if some cost from budget is compromised to get the best results. This can be problematic for marketers to justify as they are placing more scrutiny on their marketing spend than ever before. Speed. Cloud solutions can afford increased opportunities to deliver deployments at speed. But Forrester s research has shown that this remains a challenge, especially when executing in real time and at scale is concerned. 11 Cloud users place high value on speed from insight to communication deployment and speed-to-market, but the third biggest issue with cloud implementation manifests itself as delays due to an extended implementation period. A retail C-level executive claimed: Our cloud solution is sometimes not robust enough to allow us to move as quickly as we would like when trying to move forward with innovative approaches to reach the customer. The need to customize the solution periodically has slowed our progress in various marketing initiatives. 4 Marketing Cloud Falls Short On Expectations

7 Figure 3 EXPECTATION REALITY End-to-end coverage How strongly do you agree with the following statements? (4 and 5 on 1 to 5 scale where 5 is Completely agree and 1 is Completely disagree ) How many vendors support your marketing technology stack today? * 39% 29% 30% 61% Most of the functionality should come from one vendor 45% A single vendor can provide all the capabilities we need 1 to 5 6 to or more Integration How important are the following as you implement or use your marketing technology? (4 and 5 on 1 to 5 scale where 5 is Completely agree and 1 is Completely disagree ) 87% Ease of integration with other data sources and systems What challenges is your organization experiencing with your marketing technology implementation? Challenge #1 Integrating with legacy systems 40% Cost 87% Predictable ongoing costs 86% Total cost of ownership Challenge #2 Unexpected costs 38% 83% ROI on cloud investment Speed 84% Speed of insight from communication deployment 79% Speed-to-market Challenge #3 Delays due to an extended implementation period 34% Base: 96 professionals with responsibility or influence over their firm s marketing technology purchases at companies that use a marketing cloud Note: Don t know (1%) not shown Source: A commissioned study conducted by Forrester Consulting on behalf of Yes Lifecycle Marketing, September Marketing Cloud Falls Short On Expectations

8 It s A Misnomer: Marketing Cloud Users Are Really Best-Of-Breed Digital business has exploded and with it so have new methods of customer engagement, generating the need for marketing capabilities that keep up with rapidly increasing expectations. 12 But meeting these requirements takes more than a collection of functionality; marketing solutions must incorporate the right data, technology, services, and support. Marketers can t assume that marketing cloud solutions hit the mark in all these areas. Despite big vendor promises, users still struggle with: Tech. Marketers rely on technology to better understand and engage with customers, increase conversions and acquisitions, and improve retention. 13 And Forrester s data indicates that 64% of global marketing decision makers whose companies have budget for technology plan to increase their marketing technology spend, reflecting the appetite for technology to offer contextual and relevant customer experiences. However, marketing cloud users believe their technology stack is: Too complicated. Despite having invested in a one-vendor marketing suite, marketers still rely on many apps and vendors to fill the gaps of the cloud. Results from this study expose a correlation between the number of vendors and the complexity of marketing cloud: The more vendors involved, the more complex the cloud (see Figure 4). Incomplete. Almost 60% of marketing cloud users agree that there are gaps in the current capabilities of their marketing technology. Some users within this group do not have certain technology categories as part of their marketing cloud solutions, including data storage and management, security, online marketing, digital delivery networks, and more. When technology limits marketers ability to deliver relevant experiences, the business loses. Marketing technology must: 1) offer user interfaces and workflows that are usable for marketers; 2) reduce silos to tie together customer experiences; and 3) expose insights for an understanding of how marketing drives the business, what is working, and why. 14 But marketing cloud suites have gaps across these areas. Figure 4 Marketing cloud complexity by number of vendors Our current technology portfolio is too complex 23% 1 to 5 28% 6 to 10 12% 11 to 15 16% 16 to 20 14% 21 to 30 7% 31 or more Base: 43 professionals with responsibility or influence over their firm s marketing technology purchases that use a marketing cloud and believe it s too complex Source: A commissioned study conducted by Forrester Consulting on behalf of Yes Lifecycle Marketing, September

9 Data. Technology is only as good as the data it integrates, and 76% of marketing cloud users agree, emphasizing the importance of quality data to be successful in their initiatives. But marketers struggle to even upload their own data to the cloud, further hindering marketing success. As one director from the travel industry put it, We are challenged with getting our data into the marketing cloud so it can be effective. To add insult to injury, marketing cloud users don t have access to all the data they need in their marketing cloud (see Figure 5). In fact, less than half have access to most data, including social media data, which is one of the top five data types marketers say they need to meet their goals. Support. Updating and upgrading marketing technology is no easy undertaking. Unsurprisingly, 95% of marketing cloud users experience challenges with implementing their marketing cloud (see Figure 6). An implementation of this magnitude must be structured and planned, and knowledgeable resources are crucial to the success of these efforts. The strong majority, 90%, not only agree that knowledgeable resources are important as they implement their marketing technology, but also would have done things differently to maximize the effectiveness of their marketing cloud, primarily by relying on a specialized team that manages the complexities or hiring experienced third-party consultants to assist them through the process. Services. The reality is that marketing cloud solutions are more complex than most companies can handle. As a result, 64% rely on outside consultants or systems integrators to help implement their marketing technology, and most see value in working with a technology partner that can help them locate and manage the solutions of two or more vendors. [Marketing cloud] will be difficult to integrate with your legacy systems, so you should get help with that. Make sure to have a specialized team for the difficulties associated with cloud. Director, financial services If it s your first time with cloud marketing, use a third-party consultant. VP, business/consumer services THE GAP BETWEEN MARKETING CLOUD CAPABILITY AND REQUIREMENTS IMPACTS MARKETING PERFORMANCE Marketing cloud solutions don t offset the cost and disruption of implementation as much as marketers expect them to. Realized benefits from adopting a cloud solution fall short of expectations (see Figure 7). For example, 51% of marketing cloud users expected to achieve greater operational efficiency because of this implementation, but only 30% have realized this benefit today. Discrepancies like these are also true in other areas, such as gaining a holistic understanding of the customer, improving customer experience, providing relevant offers or recommendations, and personalizing interactions. Single stack can be very effective, and there are benefits from building a strategic relationship with one primary vendor. Just understand any shortcomings in a given stack, and supplement with other best-of-breed solutions. Director, IT 7 Marketing Cloud Falls Short On Expectations

10 Figure 5 Which types of data do you have access to in your marketing technology? (Select all that apply) 61% Demographic (age, gender, family status, children, etc.) 54% Transaction (purchases, subscriptions, deposits/withdrawals) 53% Marketing response/interaction (views, click-throughs, conversions, acceptances, clickstream, app use) 52% File content (documents, photos, music, videos) 50% Technology ownership/use (devices, software, services) 50% Identity (name, address, birthday) 48% Sentiment (feedback from surveys/calls/ s, ratings and reviews) 43% Time (day of the week, time of day) 42% Application content (calendar, , contacts, browsing history) 41% Social media content (blog posts, social network comments) 41% Location (GPS position) 39% Preference (opt-ins/outs, channel/communication preferences) 39% Testing response (response to experience improvement methodologies like A/B testing) 35% Affinity (social networks/membership, loyalty programs, political/social causes) 31% Journey/activity (intent, goals, progress) 30% Biographic content (articles, citations, public records) 29% Attitudinal (beliefs, values, propensity) 25% Situation (sensor/movement data) 21% Environment (temperature/weather) Marketing cloud users need a variety of data to meet their goals. Top five data types needed include transaction, demographic, marketing response, social media content, and tech ownership and use. Base: 96 professionals with responsibility or influence over their firm's marketing technology purchases that use a marketing cloud Source: A commissioned study conducted by Forrester Consulting on behalf of Yes Lifecycle Marketing, September Marketing Cloud Falls Short On Expectations

11 Figure 6 What challenges is your organization experiencing with your marketing cloud implementation? (Select all that apply) Integration with legacy systems Unexpected costs Delays due to extended implementation period Difficulty integrating data from different channels Implementation was more challenging than expected Difficulty integrating data from different vendors/partners Difficulty adapting processes or marketing approaches to the way we operate (e.g. tagging, tracking, etc.) Business units are siloed Poorly defined martech strategy Base: 96 professionals with responsibility or influence over their firm s marketing technology purchases that use a marketing cloud Source: A commissioned study conducted by Forrester Consulting on behalf of Yes Lifecycle Marketing, September 2017 Figure 7 What business benefits does your company expect to realize from your marketing technology investment? What business benefits has your company realized from your marketing technology investment? (Select all that apply) Benefits we expect to realize Benefits we have already realized Greater operational agility Holistic understanding of the customer Improved customer experience Ability to leverage more comprehensive customer data to proactively provide highly relevant offers and recommendations Ability to leverage more comprehensive customer data to highly personalize interactions and applications Speedy access to real-time customer data Eliminated reliance on IT for data access Testing velocity Campaign velocity 51% 30% 39% 21% 69% 52% 51% 39% 52% 42% 45% 41% 24% 24% 26% 26% 33% 34% Base: 96 professionals with responsibility or influence over their firm s marketing technology purchases that use a marketing cloud Source: A commissioned study conducted by Forrester Consulting on behalf of Yes Lifecycle Marketing, September Marketing Cloud Falls Short On Expectations

12 Key Recommendations The reality is that marketers shouldn t treat the cloud as a single product, but rather a confederation of offerings that still require supplemental resources and tools to be successful. The takeaway? Marketers must employ a best-of-breed approach whether or not they use a marketing cloud. To start: Manage expectations. Marketers understandably have high expectations for their marketing technology investments; after all, effective martech usage is critical for meeting consumers needs. While it s tempting to ask the world of a large-scale technology investment, marketers must take a pragmatic approach. First, they must identity their key requirements to ensure that they select the right tools to meet their needs. Second, marketers must focus their requirements to a practical range of capabilities that technology can realistically fulfill. Consider the entire package. Successful technology usage requires more than features and functionality. Marketing technology is complex, requires effort to deploy and maintain, and involves many stakeholders. Firms must consider the entire suite of capabilities they need to handle their martech investments. To ensure success, marketers must not only evaluate technical aspects of a product, but they must also look at account management, technical support, ancillary services, service level agreements, and all of the aspects that will ultimately make a deployment successful beyond the software applications. Get help. Few organizations are equipped to handle marketing technology deployment and management in-house. Even firms with a strong IT or marketing technology office capability may struggle to incorporate new applications and emerging technologies. Failure to acquire sufficient knowledge about marketing technology will lead to delayed implementation at best, and at worst could result in a deployment that fails to meet internal and customer expectations. Marketing must understand the requirements of their technologies and, if they don t have adequate in-house knowledge, must plan to leverage external support from third-party experts or their vendors. Build the data foundation. Marketing technology is an empty shell without data to fuel insights and engagement. Firms must consider data requirements alongside their technology efforts to ensure that they can effectively execute on their targeting, personalization, and customer interaction strategies. Marketers must inventory their internal data assets, the use of third-party data, and ensure that those data sets are available to their technology. They must also ensure that their technology systems can ingest, manage, and leverage all required data types. 10 Marketing Cloud Falls Short On Expectations

13 Appendix A: Methodology In this study, Forrester conducted an online survey of 150 crossindustry organizations in the US to evaluate the success of marketing cloud solutions. Survey participants included customer insights and analytics decision makers with responsibility or influence over their company s marketing technology purchases. Questions provided to the participants asked about expectations, challenges, and realized benefits from implementing a marketing cloud. Respondents were offered incentives as a thank you for time spent on the survey. The study began in August 2017 and was completed in September Appendix B: Demographics/Data In which country are you located? Which of the following best describes the industry to which your company belongs? US 100% Using your best estimate, what is your organization s annual revenue (USD)? 23% $100M to $499M 29% $500M to $1B 27% $1B to $5B 21% >$5B Which title best describes your position at your organization? IT Financial services and insurance Retail Business or consumer services Healthcare Education and nonprofits Consumer product manufacturing Travel and hospitality Advertising or marketing Agriculture, food, and beverage Government Telecommunications services Media and leisure Publishing Other 20% 17% 15% 9% 8% 7% 6% 5% 5% 3% 1% 1% 1% 1% 3% 49% C-level executive or vice president What is your level of responsibility when it comes to marketing technology purchases at your organization? 51% Director I am the final decision maker I am part of a team making decisions I influence decision 7% 50% 43% Which of the following are you personally directly involved in? (Select all that apply) Customer insights and analytics Social media and community engagement Digital advertising Database marketing Direct marketing Search marketing TV/print advertising 73% 66% 65% 61% 54% 47% 100% Base: 150 professionals with responsibility or influence over their firm s marketing technology purchases Source: A commissioned study conducted by Forrester Consulting on behalf of YLM/Infogroup, September Marketing Cloud Falls Short On Expectations

14 Appendix C: Endnotes ENDNOTES 1 Source: The Rise Of The Empowered Customer, Forrester Research, Inc., August 2, Source: The Power Of Customer Context, Forrester Research Inc., March 31, Source: The Next Generation Of Enterprise Marketing Technology, Forrester Research, Inc., September 12, Source: US Digital Marketing Forecast: 2016 To 2021, Forrester Research, Inc., January 24, Source: US Digital Marketing Forecast: 2016 To 2021, Forrester Research, Inc., January 24, Source: Combine Systems Of Insight And Engagement For Contextual Marketing, Forrester Research, Inc., April 20, Source: Combine Systems Of Insight And Engagement For Contextual Marketing, Forrester Research, Inc., April 20, Source: The Next Generation Of Enterprise Marketing Technology, Forrester Research, Inc., September 12, Source: The Forrester Wave : Enterprise Marketing Software Suites, Q2 2016, Forrester Research, Inc., May 31, Source: Combine Systems Of Insight And Engagement For Contextual Marketing, Forrester Research, Inc., April 20, Source: Combine Systems Of Insight And Engagement For Contextual Marketing, Forrester Research, Inc., April 20, Source: The Top Emerging Technologies For B2C Marketers, Forrester Research, Inc., April 6, Source: Protect Your Investment: Build Privacy And Security Into Your Marketing Technology Strategy, Forrester Research, Inc., January 25, Source: Combine Systems Of Insight And Engagement For Contextual Marketing, Forrester Research, Inc., April 20, Marketing Cloud Falls Short On Expectations