Marketing technology is about scale.

Marketers tend to forget this because “scale” isn’t as sexy as Account Based Marketing or funnel reporting. ABM and funnel reporting are not new concepts, and they aren’t new tools.

What is new is the ability to scale up such data collection, reporting, and analysis now that all interactions can be recorded…at scale.

What is new is the ability to rapidly iterate storylines to more segments…at scale.

What is new is the ability to enrich leads and update data mistakes…at scale…without a programmer.

What is new is the ability to predict next best actions…at scale.

When I speak about marketing campaign operations with my team, the question is “How do we scale this rapidly to support more growth?” And if we don’t see the scaling, we re-think the structure of the campaign and even the entire campaign premise to enable scale, or empower a marketer to do more.

If you are considering a martech vendor of any type, I want you to really consider how the vendor empowers you to scale rapidly. One way to avoid “shiny object syndrome” is to ask scaling questions. Another way, is to know what you want. Scaling questions can be internal or external:

• Can I build templates of assets or workflows?
• Can I easily map data fields between systems?
• Do you have an API?
• How much time does this save me from doing X?
• Can I automate that?
• Does this point solution apply to more than one use case? Would I use it a lot?
• Is there another platform that can do something similar and does more?
• Are we already doing this, but a different way?
• Are we running enough of Y to need to pay cash to scale this?

I’m not going to call out any vendors on this. I do see a few interesting point solutions out there that expose certain kinds of data in an automated way, yet do not save so much time that they are worth purchasing because that information could be had with a few smart lists.

Some of the data middleware tools fall into this “is it worth it?” category, especially when the data architecture hasn’t been well planned. What’s the point of a data router if it doesn’t have data flow controls or mapping tools?

Ultimately, look for problems to solve and how to solve them before going shopping.

Whether you are a martech vendor, or just embracing the subscription economy, your firm relies on a fair pricing model.

Sometimes I see firms start life with a pricing model that made sense then, but now doesn’t make sense as the market shifts.

Data Vendor Renewal Story: Needs Change, Product Stays the Same

Many years ago, I was in charge of renewing our prospect database. I saw we were spending about $29,000 per year for 30 users. Their model was per-user-year plus a level of access to the database.

When I evaluated who really needed access based on real use and interviews internally, I saw we only needed 10 users. I told our salesperson we would reduce our need and I wanted more access to the database. Without even objecting, he reduced our costs to $15,000/yr and gave us more of what we wanted.

That’s great for me and the business, but that vendor just lost $14,000 per year.

Now why did these changes occur in our relationship?

• staff reduction and organizational changes.
• reduced budgets.
• Changed our interaction with data: sales teams hardly use the service while each department was pulling in more data automatically for different purposes. So we don’t need more users, we needed better connections with the data.
• Needed different data to support growth.

In theory, the salesperson could have sold me on the value, added connectors, and given me unlimited user licenses and instead charged me by the Record Download or profile levels (email, direct dial, etc). And he could have charged me $29,000/yr for that. Maybe I would have gone with that plan if his product accommodated my new needs.

The value to me and the business was effectively the same — the data — so why not just give us unlimited users when we know that most of the usage comes from 10 people? Was the data worth $29,000 per year to us? Perhaps, but not in the way we were asked to use and value it.

What Should You Do About Your Product and Price?

The lesson here is that he was constrained by his Company’s old style product that assumed value was related to the number of user licenses since it was hard to meter value per record back in the day.

Now think about what your clients are telling you? Does it sound familiar? When I was in Sales, I had a strong notion that many renewing clients were not fully satisfied with the database tools we provided. Sometimes their usage had declined or their users had left. Sometimes it was how they wanted to interact with the data. What usually happened was one of four things:

1. renewal with an increase in content at small fee increase.
2. reduction in content or price or users.
3. renewal with reservations and an attempt to build a direct feed or meet their needs in some other way.
4. cancellation.

The result was we gave away more valuable data without collecting more revenue. The company stagnated. The pricing model and product itself were stuck behind where the market moved to in terms of how they thought about value extraction.

So instead of just accepting a running retreat, why not modify your services and pricing to be where are clients are? It’s a scary move because it is possible to torpedo the business if the transition is not managed well.

Most SaaS subscription services these days are more flexible to keep up with shifting needs and expectations. But not all.

Martech Subscription Models Are In Danger Mode

I hesitate to call out any particular vendor here, but it’s hard for buyers to justify the value certain pricing models deliver. Sometimes it’s challenging because in MOPS, we may not always be able to calculate that value ourselves! Here are the models and pricing issues I am concerned with.

Price per Record

While this is common for databases, it is becoming onerous in Marketing Automation. Old email providers did fee per email, but that led to variable fees that were hard to contain, so pricing record tiers made a lot of sense eight years ago to entice a switch. Now it seems to be a limiter because marketers are loath to delete records, or it’s just hard to do so. What’s the real value of each record when some are Customers, some are MQLs, and some are unmarketable, but could be useful in other ways?

Price per Email Sent

The old ESP model still exists in some areas. This is often sold as email bands, but what’s the value of each email sent when response rates are under 1%? Marketers really have to know their LTV/CAC data.

Price per Add On

Sometimes this is coupled with a feature price with a per record price. I have mixed feelings because some add ons have clear value, while others do not. Always be careful with this one.

Fee per Registration

The fees for many event tool vendors feel opaque. Eventbrite-like vendors who mostly are payment platforms for tickets do well here because there’s a clear merchant fee for credit-card processing and platform. For large scale event tools, the per reg fee is sometimes couple with a platform fee. What’s the real processing cost of the Platform vs. each registrant? What if someone pays $1,000 for a ticket vs. $0? Should I still be charged the same fee? Is that the same amount of work for the vendor’s system?

Fee per Event or Meeting

Vendor charges a flat fee for a tiered event size or number of items used. Sometimes this works, but if the marketer takes advantage of this with lots of large events that technically fit in the buckets, the vendor loses out.

Fee per Feature or Level + User Scale

Smaller martech vendors and tools like LucidChart tend to do this. You get the famous three choices: Lite, Pro, Enterprise where they steer you to Pro in most cases. Really helps to understand your true needs as a buyer to select the right Feature Tier. Often a Feature Tier has a Per User Scale. Many people feel comfortable with this pricing model because we’ve all been trained to use Software License Seats. But not every user is the same and audits frequently find 10-30% of users barely touched it. Slack is famous for attempting to mitigate this on a monthly basis by not charging for unused seats.

For marketing automation platforms, the per user model is outdated. Some users are just API people, and some barely look at the tool.

Fee per MQL or SQL or Per Meeting 

Prospect data vendors and prospecting services will charge for actual value received. I like this, however, it’s difficult to track and remove leads that did not proceed. You have to be very sure of your ability to monitor the funnel with your vendors.

Fee per Computing Power Unit

A variation on the Per Unit model, this is now popular thanks to all the major cloud vendors. AWS in particular combines this with feature sets and database use. I’d like to see Martech vendors use this more because it more accurately reflects the variable costs and real use by marketers. Database costs are incredibly low, so when I’m processing 10 million records for some reason, I want to know it will run quickly. I want to pay for that speed so it doesn’t impact my actual business. Let me know when a martech vendor actually does this.

Now, I understand there are always challenges with metering use as a product ages, but if vendors cannot come up with pricing models which make sense for both parties, someone else will match that need (just like AWS did) and win the business of the future.

One of the first posts on this site was the Marketing Automation RFP.

That post was born out of working with my first Marketing Automation RFP where I selected Marketo over Eloqua (and a few others). Having been a salesperson, as well as having worked with many event vendors, meant I had a fairly good idea of how I needed to proceed. Yet, it was still a difficult call to choose one vendor over another when the comparison is fairly close. And it’s still a difficult call. All sorts of human thoughts come into play like:

• I’ll disappoint the salesperson. They were nice.
• This better work, otherwise it’s going to be on me.
• So-and-so wanted vendor X, but vendor Y is really a better bet.
• I’ve already put so much time into this vendor, it’ll be easier to stay with them (sunk cost fallacy!).

And unless you’ve worked with that vendor before, it is a pretty big bet to commit to a one year contract and tens of thousands of dollars and hundreds of hours of work.

A lot of smaller B2B firms, especially tech B2B, tend to play fast and loose with the many martech vendors out there. Some are super cheap microservices that are easy to swap. Others are much larger investments of time to solve real business scale problems.

When conducting martech vendor evaluations, I see a lot of firms and team members spend very little time evaluating the problem they want to solve and very little time evaluating the vendor. With a few simple rules, you can improve your hit rate with vendors and avoid bad experiences.

Understand Your Needs or You Will Get Sold

The simplest change you can make in your RFP process is to first understand fully your team’s needs. I receive a lot of requests from other marketers that go like this:

“We need vendor X because we’re growing.”

“We need vendor Y because I can’t do spreadsheets anymore.”

Notice that the vendor is already decided here without any particular understanding of the real need. It’s hard to do this, but you MUST push back in a professional, curious way to better understand why your colleagues need a new tool. Be curious, ask questions to fill the answers:

• Ok, tell me about your spreadsheets.
• Are your spreadsheets about budgeting?
• What are you trying to track?
• What do you do now?
• Tell me about your growth plans.

Usually there is resistance because these questions are getting in the way of your colleagues’ assumed plans. What you want to end up with is User Stories where you have a sheet or document that says:

As a marketer, I want to know how many registrants I have for event Z within seconds instead of going to 3 different places.

If you are able to do this effectively, you can then explore what may solve that problem or empower the marketer to do this. Many times, existing tools will help a person without purchasing anything. Sometimes it’s just a simple report tweak. Sometimes it’s exploring how an existing tool is used. For example, one need was to more easily deploy a small roadshow with a more flexible page layout. All we had to do was recode a page and Program Token to empower the marketer — no tool required!

Of course, your exploration of the needs will also translate into requirements and features, features you may not have right now. That’s when you compile the needs and can more effectively look outside the organization for a solution. Without this needs list, you will just see shiny objects everywhere.

Remember, it is the salesperson’s job to sell you, or “educate” you, on their services and vision. If you aren’t sure where you want to go, you will be sold on the vision that may not be a real solution to your needs.

Sales Responsiveness Matters

Sales responsiveness matters because it is an indicator of the culture of the firm and if they will care about you after the contract is signed, whether that’s Customer Success, Implementation, Support, or Roadmap – do they care about your business?

If there’s any feeling they do not care, best to drop them from the shortlist. Seriously. No regrets.

One of my core values is service, and as a salesperson, service meant picking up the phone in under 2 rings or responding to email quickly. I evaluate every vendor on this type of responsiveness.

In my first RFP process with marketing automation, it was hard to select a vendor! There were the usual 6 main choices to research—companies that you would feel, on the surface, are safe choices. I was concerned with how scalable the system was; would it work with our systems? Would I be able to make it work? Would other people adopt it? Would it be a quick project or longer? If this worked, would I advance my career? If it didn’t, how would I fix it?

As a marketer or salesperson, these are the hidden questions you, and your prospects and clients are asking. Find a way to answer them in the most appropriate way. The flip side is that you are asking these questions too when buying new martech, so remember how this all works!

Now you have to get a martech vendor to respond to you. This is surprisingly difficult. You have to show the right behaviors and reach their MQL/SQL thresholds to reach a real person. It is amazing how hard it is to have a company respond to a request such as

“I am selecting a Marketing Automation vendor for my company. I have $3,000 per month to spend. I will be your main contact and will recommend you to my manager. Please call me to discuss pricing and provide a demonstration. Please fill out my RFP.”

Some companies will never respond. WTF? When I was looking for marketing automation vendors, a couple of vendors responded with a quick demo, but when I asked for further details, I never heard back. One person actually wanted to not demo the service when I told her I was unable to pay $5,000 per month in the first months of the contract. She never even wanted to negotiate. Other vendors made me go through their junior SDRs to qualify me for the Account Executive. I found that frustrating because it meant repeating my needs to two or three different people before getting a demo.

One vendor I called several times to discuss how to go to the next stage. When I finally got him on the phone, I was told that “we were in our month end closing and I was busy.” So this guy just told me that new business wasn’t important enough for him to even let me know he needed time. Unsurprisingly, that MAP vendor went out of business years ago.

On the other hand, two firms were remarkably different.

Vendor X’s salesperson fumbled the initial call because he was working at home and had a huge pipe break. So when his plumber arrived, he had to go. Not auspicious.

But he called me back and spoke more. He was eager to come in person for a demo, which he did. Then he called me a few times to discuss generally how I personally would benefit from getting the implementation right. He offered guidance on how to work with Marketing Automation and how to time the implementation for maximum effect. When I made it clear that we were on a limited budget until next April, he helped me understand how I could meet my internal needs using his service and adjusting the timing of certain things.

He also offered to have his CMO speak with my CMO, and his CTO sent me a signed book on using Marketing Automation.

In other words, he seemed to care about educating me and making sure I was comfortable with their firm. He was on the short list before he even returned my RFP questionnaire.

The second company was different. I wasn’t sure I liked their name. I wasn’t sure I liked what I saw on the first pass. I thought they had ignored an earlier request for information. But their name came up in a conversation, so I called them again and was SQLd! By the end of the day, I had a real sales person on the phone, although I was disappointed it took the entire day. He sounded eager to please. I asked him for more details, for a demo, and to fill out my RFP.

He was also, however, clear with me that his time that week was limited and that I was asking a lot of him. But he never said No to me. I had a demo the next day and the details by the end of the week. He showed me tools that were lacking in other services, but were included with his system.

So he moved closer to my short list simply because he sounded like he wanted to make it happen.

What is the lesson from this?

It is that the most responsive sales people will get the business or get closer to the money than someone who ignores the buyer.

Business and Pricing Model

One area where buyers, especially in Marketing, get upset is pricing. Buyers are upset not with the price, but what they thought was included with the price. Understand the pricing model of your vendors before you sign a contract!

It is amusing that many marketers don’t explore this enough because it is often our job to build pricing models and explain them to Sales and to our prospects.

Always ask up front, and early, “What’s your pricing model look like?”

We all know salespeople are reluctant to talk about price on the first call. Do not be afraid to bring it up early because you don’t want to waste time with vendors who:

• Refuse to talk price.
• Have confusing or unfair pricing models.
• Are so outside your budget that no amount of “value” will ever make the deal happen.

Remember that there are solutions for all budget levels and your Needs Assessment should tell you what type of vendor you will evaluate to the call list. For example, if you run small roadshows of 50 people where there aren’t paid tickets, and you just need XYZ features, you will find some nice solutions out there at a fairly low price point. But if you actually want to run an entire User Conference with Booths, Exhibitors, Speakers, etc…there are enterprise level solutions that solve all that at a totally different price point.

One reason I chose Marketo originally was they made it clear they would grow their product with us as our ability to use it grew.

Some vendors price in a way that may not work for the way you want to work. Perhaps your budget is limited and you need to know the price won’t change as you use it. Perhaps you are growing fast and want to be charged in a clear way, but are happy to pay more as you grow. If your vendor cannot fit into your pricing needs, you may not want to go with them.

Pricing Model considerations:

• All inclusive monthly fees.
• Add Ons – what’s really included?
• Pay per Unit
• Minimum Fees
• Annual payment discounts
• Cancellation ability

Next time we’ll talk more about vendor pricing options and why some vendors don’t get it.