“We have ample information, generally speaking, to do really sophisticated marketing, really thoughtful offer strategies, really interesting modelling about lifetime value, the next logical purchase etc….
The data’s there. The problem is we don’t use it for anything.”
Businesses’ inability to use their marketing data effectively is a widely-understood problem – but understood no better, perhaps, than by Brian Kotlyar.
A career marketer, Brian first rose to the rank of VP at Dachis Group in 2010. Since then, he’s made a career of driving growth for startups which solve customer data challenges – most recently at composable CDP vendor Hightouch.
Hightouch is one of a wave of data startups now helping brands extract the value from more complex martech stacks. With more systems and touchpoints, come more possibilities for data-led marketing – but with a greater challenge in turning those possibilities into profitable business initiatives.
In this podcast, Brian and I discuss:
- the data challenge facing modern marketers, where time and resources are wasted on technology briefs, often simply in order to assemble and maintain usable audiences for campaigning
- the role of the composable CDP in addressing this problem, specifically in enabling brands to optimise use of their existing data resources
- the value of human capital for startups, based on Brian’s extensive experience of recruiting teams as a leader in martech.
Listen to the podcast here, or scroll down for an article based on the discussion.
Legacy data setups are holding back brands’ marketing teams
Hightouch’s mission is to ‘free marketers from the shackles’ of legacy data practices.
To understand the implication of ‘shackles’, Brian posits a common scenario where a marketer wants to maintain an audience based on the nature of their prior engagement with the brand.
“You want to look at this vast array of consumer data… and you want to group it into audiences that you can take action upon. So people who recently were on the website looking at these kinds of products but haven’t bought… etc.
Those kinds of groupings become the audiences that you need to treat… That data tends to be scattered all over the place.”
To execute campaigns against such audiences, marketers often find themselves heavily dependent on developer support, in order to assemble data from different systems in their customer-engagement platforms.
As Brian eloquently puts it…
“You shouldn’t need a whole analytics project to have an audience. You should be able to think about those opportunities and communicate an offer to a high-value customer without a big, complicated workflow.”
Equally importantly, those audiences should reusable across channels. That implies fluid movement of data between datastores, and tools where you have ‘surface area’ with the customer – CMS, CRM, email, SMS. Importantly, that data needs to update in real-time so that the audience is the same across all tools, allowing the marketing team to ‘take action comprehensively on this group’, without IT dependency.
A Hightouch case study, on the value of this work, comes from a cable provider, which had not previously been able to maintain suppression lists as an audience.
“We work with a cable company…. There are certain households they cannot market to because their fibre optic cable doesn’t go to those houses or they already have the product – but for years, they’ve been showing ads to households that they can’t service.”
In this case, simply creating a suppression audience for these households proved to be worth $300m a year to the client.
The $300m dollar figure is higher than most brands’ annual revenue – but a proportional level of wastage is commonplace across large and medium—sized brands. This is due not to the inability to identify audiences; rather…
“…there’s a last-mile issue to get that data into the hands of marketers..”
Challenges such as this are intended to be the domain of the customer data platform (CDP), however as Brian explains, first-generation versions of this model were held back by fundamental problems around data agility.
As in many other martech categories, this is where the composable CDP comes into its own.
Composable CDP frees marketers from IT dependency
To illustrate the potential lift from successfully managing customer data in the martech stack, Brian gives the example of Cars.com.
The client, he explains, had previously had little success with cart abandonment emails. That changed when they became able to merge three different data sources in real-time:
- card abandonment data
- additional insight from the customer data profile
- the customer’s credit score.
Based on this data, Cars.com became able to send personalised offers based on the customer’s preferences and affordability. This one change proved to be worth millions of dollars in top-line revenue.
Of course, this sounds much like a marketing personalization case study from any CDP vendor. In practice, however…
“The traditional CDPs of the last 10 years, they can work – but usually they do not. There’s something amiss with this category of software that on paper should work, but in real life doesn’t.”
The core problem here is that the traditional CDP comprised a bundled database – which meant that a significant data management piece was required in order to implement the solution.
“It’s a very heavy piece of software. You need to instrument a lot of data collection – which takes months. You need to set up a whole new lot of data storage; takes months. You need to understand what’s going on in that system; takes months. And at the end of the day, it’s not that easy to use.”
Brian quoted various studies showing that customers are generally unhappy with CDP implementations; a Forrester study showed that only 10% of marketers feel their CDP meets their current needs.
More worryingly, the share of marketers who believe it can handle future needs is only 1%.
By contrast, the composable CDP draws on the company’s existing data stack. This eases both implementation times, and ongoing campaigning with the technology.
“You already have the email tool? Great, we’ll work with it. You already have the database? Great, we’ll work with it. We just give the tools to your marketers and your data teams and off you go.
The essence of the composable thing is it’s just a more pragmatic solve. The time to value is crazy because you’re using the resources you’ve got…
It doesn’t make you adopt all the patterns and behaviours that the Salesforce, or Twilio, or Adobe CDP teams want you to follow. No; you just use your data and your way of working.”
Beyond putting the data in the right place, this also allows processes to become automated, which can have a significant impact on the bottom line.
Brian explains that if a company updates its suppression list monthly, by day 29, potentially thousands of customers have been exposed to irrelevant messaging, at significant cost. By contrast, with Hightouch’s CDP, the suppression list can be updated every minute.
Until recently, businesses had widely accepted inefficiencies such as these as a cost of doing business. Now, however, these sources of wastage are being eliminated by increased control of data across different systems.
Another example of this in action is the supply chain, where companies had previously relied on a lot of guesswork to maintain the right inventory levels in different locations – at a significant cost. Recently, Gurhan Kok of Invent Analytics explained on Martalks how his own composable data platform helps to resolve this inefficiency, quickly adding percentage gains to the bottom line.
Startup recruiting: “the best moat is having the best people”
In an industry characterised by high levels M&A, it’s important to recognise that the integration of teams is as important as the synchronisation of data.
Reflecting on his prior experience at Sprinklr, Brian says that the company became highly proficient at technology acquisition, thanks to the approach of rebuilding the acquired software in the Sprinklr codebase. This effectively gave customers enhanced functionality in their existing Sprinklr tools, rather than requiring the duplication of data across systems.
Despite the company’s remarkable commercial success, Brian expresses some regret at the way the company brought acquired teams onboard.
“Team integration is something we didn’t spend enough time on… The process of being consumed by a very large organisation wasn’t very fun for a lot of people.”
This is a welcome reminder for any technology leader. Being the employee of a startup is usually a rocky ride, even (or perhaps especially) when business is good.
Some of the employment best-practices that smooth out the bumps – such as fostering learning and development – take on greater importance at startups. After all, people take on greater personal risk, depending on an unproven business for their livelihoods.
As Brian rightly points out…
“These businesses, they’re tech companies, but most of its human capital. Most of our money is spent on people.
If you want to talk about a moat – one of the best moats is just having the best people.”
Indeed, attracting and holding on to the best people is crucial to the development of the best product – or at least one that’s competitive in the market.
But Brian also warns of a common recruitment pitfall that afflicts high-growth businesses.
“Keep asking questions… We’re always in this rush to hire at startups because we’re so desperate for help all the time. Every week that goes by when somebody’s not in the seat… it’s actually jeopardising important projects, because we don’t have fallbacks. Most people at these companies are 1-to-1 in their role.
But you really need to take the time to explore and see if those attributes are present… That extra two weeks is a trivial investment if they’re going to work there for 5 years and change the trajectory of the company.”
With over a decade as startup VP, with hundreds of hires under his belt, Brian’s advice seems valuable to startup founders & scaleup leaders everywhere – not to mention to their marketing and technology teams.
About Rosenstein Group
Rosenstein Group has been recruiting the leaders in martech sales for over 20 years. As the #1 executive search firm in martech, supply chain, ecommerce and SaaS, we specialise in recruiting heads of sales, channel sales leaders, and other members of the commercial team.
Learn more about Rosenstein Group here.
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