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According to the latest Gartner CFO survey, 53% of chief financial officers plan to increase marketing budgets by at least 3% this year. The majority of marketers (60%), however, say marketing technology stacks are too complicated to use, with 20% saying it is “more complex than a black hole.”
In 2023, companies shouldn’t rely solely on a single marketing tool to boost their performance. Instead, they should integrate a complex marketing platform (yes, it could be tricky) that uses different components. Especially at this time, when 92% of U.S. consumers cut back spending and some major retailers are preparing for a period of slower sales.
Here’s what to keep in mind during the process of choosing and using martech stacks.
The basics
A martech stack is a set of tools, platforms and software used by a marketing team to boost the efficiency and productivity of marketing efforts. It integrates data from various sources in one place and is used in customer communications, provides a more personalized customer experience, and obtains comprehensive and precise analytics. When these things all come together, a martech stack empowers you to optimize your marketing efforts and boost business performance.
Depending on the business type, marketing goals and budget, a martech stack may include more than a dozen components such as:
- Customer data platform (CDP) for collecting and operationalizing data
- Customer relationship management (CRM) software
- Communication platforms and gateways (i.e. mobile app backend, web push messaging software, messengers, text messaging gateway)
- Personalization and order value tweaking tools (i.e. built-in dynamic blocks, pop-up windows, widgets, loyalty programs)
- AI/machine learning-driven tools and data warehouse for storing data used for analytics
A single tool is never enough
The key idea of building a martech stack is to track the entirety of a customer journey—starting with the very first touch point—and instantly adjust the offer and experience based on this data.
The modern customer journey can include various touch points: website, mobile app, offline stores, email and push messaging, customer service hotline and in-store communication. Therefore, by using your martech stack across all these touch points, you can improve the quality of data-driven decisions and make the customer experience much smoother.
The best customer experience is one that is consistent, so brands should have some sort of magic force aligning messaging and offers across all these touch points. This is precisely what CDPs are designed to do.
Also, it is obviously challenging to measure it all, which is why typically it’s worth having a separate data storage that’s cheaper than a real-time system (like a CDP), and use it for analytics and feeding AI/ML-driven tools, such as the product recommendation engines.
Still, which tool is the most important?
Similar to the way an orchestra needs a conductor, you cannot improve your direct-to-customer activities without a unified “orchestration” control center and data centralization.
This is where the second bottleneck arises, as you must choose between an integrated system (including a CDP) or a decentralized stack with the CDP/data warehouse at the center of it.
Both approaches have their pros and cons. Regardless of the choice, there is still one step required to unlock the CDP’s potential. By itself, a CDP, or even an integrated CDP, is not a silver bullet and won’t set up and test marketing experiments.
It’s crucial to have the right team and the right processes in place. The team should be cross-functional to avoid interdepartmental interactions, and they need to have a startup mindset.
Also, the marketing team must have a clear and measurable business goal with a proxy metric. For example, at Netflix, the key business goal is monthly retention, while the proxy metrics are “percent of members who add at least one member to their Friends list within six months” or “percent of members who stream at least 15 minutes of video in a month.” The company’s former vp of product management Gibson Biddle defines a proxy metric as the “percentage of members/new customers/returning customers who do at least the minimum threshold for user action by X period in time.”
And of course, they need to have operational freedom to be able to experiment in pursuit of the most efficient marketing strategy.
Communication tools provide loads of features, but they need to be used ethically. Constantly spamming your clients about an uncompleted purchase will not always result in a sale. In fact, it may cause them to become annoyed and go elsewhere.
According to Spamlaws, nearly 60% of all emails are spam, and advertising makes up 36% of all global spam content. When contacting your customers, try to implement a more thoughtful approach.
For example, United Colors of Benetton implemented cascading campaigns with push notifications in their Wallet app based on these principles:
- each subsequent message is sent only if the customer cannot be contacted in any of the previous stages of the cascade sequence
- free email and push notifications are sent first, followed by paid notifications via an instant messenger and/or text message
- messages stop as soon as at least one message has a “delivered” status or if the customer completes the target action
As a result, 3% of new customers from the Wallet app were converted into first-time purchasers.
Finally, it is crucial for a marketing team to use and merge data from a diverse set of data sources, including websites, call centers, ordering kiosks, apps and POS terminals. Also, remember to avoid treating a customer as two different people when they buy online and offline or when they unsubscribe from email notifications but keep receiving text notifications.
Lastly, it’s all about the team
A martech stack is an essential and powerful instrument for marketing teams. Its superpower is in combining a number of tools.
Among them, CDPs are still heavily underestimated, and we need a few years more and more use cases to reach a plateau of productivity. CDPs will develop further to absorb and process a variety of data types, such as point-of-contact streams, asynchronous data streams, as well as one-to-many and many-to-many (families, personal connections, pets, etc.) data models. This will entrench their position as the single source of truth for marketing purposes.
However, marketing tools cannot be the ultimate solution without a team that is capable of using them in the most efficient way.
