Thoughts on Marketo’s Q3 2013 Results

Marketo

In addition to enjoying S-1 filings (I know, nerd!), I love joining quarterly earnings calls, as they give a wealth of insight into the views held by leaders in other industries.

Last week, Marketo released their Q3 results (see the results here), and as a quasi-competitor, I find their insights particularly interesting.  Their success is admirable, but I believe the marketing automation space is enormous and still wide open, so there’s lots of room left to innovate.

Here are a couple highlights from the call:

B2C Marketing Automation: How does it compare to B2B?

Historically focused on B2B companies, Marketo has recently increased their focus on B2C companies.  In the 3rd quarter, their largest new transaction was a B2C company.

At MindFire, we’ve had a long history serving thousands of B2B and B2C companies, and have wrestled with which we are best suited for.  I’ve spent many days and nights thinking about the differences between B2C and B2B marketers, so it is of particular interest that Marketo feels their product applies equally well to B2C clients.

Phil (their CEO) claims that their B2C clients are moving away from batch-and-blast email campaigns, upgrading to Marketo to gain deep, personal connections to their customers and prospects.  We see much of the same.

During Q&A, Phil was asked if their B2C go-to-market approach is different than B2B.  Phil replied that they are essentially using the same 4-step strategy employed with B2B: (1) Innovating solutions, (2) bringing aboard beach-head Clients, (3) making those clients widely successful, and then (4) using the success stories to attain more Clients.

Phil said that their entire sales team sells both B2B and B2C, and that there is little specialization within the sales team.

Phil also said that they see many similarities between the needs of  B2B and B2C marketers.  In B2B, many of their clients have sales cycles that are weeks, months, or even years, with a high average selling price.  They’ve found that in many cases, B2C marketers are trying to solve a similar problem, in that they want to stay in touch with their most active buyers (to make sure they don’t go somewhere else to buy) — over a lengthy period of time.

Phil described their B2C pricing as also based on the # of records in the database, but utilizing a different price per record than B2B.  They peg the cost of each record to the value the name represents to the Client, since there is such a variety in the Client’s product price.  Phil stated that in B2C, they usually see more names in the database associated w/less value per name, whereas in B2B there are fewer names but each has a higher value.

Marketo’s Competition

An attendee asked around whether they’ve seen in changes given recent consolidation in the marketing automation space.

Phil implied that the recent 2 or 3 transactions have changed the environment, but that they feel Marketo (still) stands out as the gold standard for marketers.  Phil claims that they’ve seen Oracle bundling Eloqua into a deal when selling to CIOs, but beyond that, nothing major has changed.

In fact, he feels that the majority of the competition is standing still.  I’m sure the teams at Pardot and Eloqua feel much differently.

Another interesting question was whether Clients are using marketing automation to replace an older system, or another marketing automation solution.  Phil replied that it is very much all over the map, but that often they are replacing an email marketing solution (like ExactTarget).

In addition, they replace older technologies like Unica, Aprimo, Teradata, etc.  He also stated that there many enterprise and SMB marketers that are very ad-hoc, using spreadsheets and other manual processes.  In this situations, Marketo is their first mature tool.

I never cease to be surprised at how many well-established and mature companies are running successfully using ad-hoc tools and older technologies!

Marketing Automation = CRM?

A question I often get about our vision at MindFire is whether we intend to provide CRM functionality (there are some similarities).  Phil was asked a similar question, and replied that he sees Marketo as has having a strong data set about a Contact’s behavior, which he argues goes beyond traditional CRM (I agree); from this perspective, he feels they are a CRM of sorts — but they don’t want to be on the sales person’s desktop, nor do they have plans to declare war on the CRM market.

It’s great to see Marketo’s Q3 success, further validating the marketing automation space.  What else? What are your thoughts on Marketo’s future, and marketing automation as a whole?

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How the Sausage Gets Made at the Whitehouse: Obama Staffers Reflect

The other night, I stumbled on this video from the University of Chicago, with a panel of Whitehouse staffers including Jon Favreau, former director of speech writing for President Obama, Katie McCormick Lelyveld, former press secretary for First Lady Michelle Obama, Chris Lu, Cabinet secretary and former assistant to the President, and Elizabeth Jarvis Shean, former White House research director.

All worked in the Obama Whitehouse.  Some (like John Favreau) also worked on the campaigns.

I have always been interested in how other companies and organizations structure themselves around understanding what’s important and juggling multiple (and conflicting) priorities.  Is there anywhere this is more pronounced than the Whitehouse working with the President?

If you can think of an example, I’d love to hear about it!

Here are some interesting tidbits about how the Whitehouse operates:

  • John Favreau says that yes, Air Force One is as frickin’ cool as you’d imagine.  Replete with multiple offices, a conference room, workout facility, kitchen, and a surgical operating room, he describes Air Force One as a pretty amazing place.
  • Things are routinely hectic, and much is made up on the fly.  I found this interesting because I often fall victim to the fallacy of believing that everyone else has it together – when in reality, we all face similar struggles.  The panel gave some examples where the world’s affairs threw them off course and they had to make things up as they went along.
  • Similarly, I found it interesting that while many assume there’s a grand strategy behind everything the Whitehouse does — sometimes, there’s not.  I find this is also true of companies we look up to.
  • The world’s problems don’t fit nicely into a 9-5 schedule.  I can’t imagine a more stressful and nonstop job than working in the Whitehouse.  The panel gave examples of how it is sometimes difficult to disconnect, especially because natural disasters have no plan or schedule.
  • Arriving at the Whitehouse in 2008, the team was astonished at the state of technology: old Gateway computers, no wireless interest, and limited cell coverage.  Apparently this has improved over the past few years.
  • The team was also surprised by the work environment: whereas they were accustomed to big open work spaces like those they had on the campaign or other high-tech companies, they found the Whitehouse to be composed of many small offices, with great distances between various parts of the team. As a result, communication slowed down, and tasks became more difficult to carry out.
  • Becoming President was Barack Obama’s first opportunity to “work from home.”  His children had never experienced a time where their father worked from home.  I never really thought about the President as “working from home” – have you?

What do you think?  What’s most surprising to you about how other companies and organizations run themselves?  What surprises you about the panel’s insight into how the Whitehouse runs?

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