In last month’s column, I described the importance of lead scoring within demand generation systems. But perhaps I should step back to describe those systems in general. Many people still confuse them with marketing automation or campaign management products. It’s an easy mistake. Both sets of systems maintain a contact database used to drive outbound marketing campaigns. Both provide reporting and analysis tools to understand promotion results. And both may include marketing, planning, content management and project management.

The obvious difference is that demand generation software is usually used by business marketers, while marketing automation and campaign management are used primarily to reach consumers. But this distinction is less useful than it seems. Many traditional marketing automation systems are also used for business marketing, and many small consumer marketers use lower-end demand generation software.

A more meaningful distinction is between companies that market directly to their customers and those that sell through salespeople. Traditional marketing automation systems are used primarily in financial services, travel, retail and communication companies. Their campaigns sell specific products, even though the sale may be completed at a retail store, bank branch or by a sales agent. By contrast, demand generation systems attract and nurture leads, which will be handed to sales departments when they are ready to buy. The salespeople will then identify needs, select appropriate offers and close the deal.

Another difference is that demand generation systems work with leads - people who have not yet made their first purchase - while marketing automation systems focus on existing customers. The fundamental distinction between nurturing leads and managing customers drives the major differences between the two sets of products. These include:

  • Focus on Internet behavior. Demand generation systems drive prospects to the company Web site, monitor their behavior and infer when they are ready to buy. Most of herding is done with emails, which can report whether they have been received, opened and clicked on. Demand generation systems track Internet behavior in great detail, because it’s one of their two main information sources. (The other is user-provided information such as surveys.) By contrast, marketing automation systems work primarily with promotion and purchase histories.
  • Integrated Web pages and analytics. Demand generation systems provide tools to build Web surveys and microsites and to capture data from these directly. This reflects their focus on online media. Marketing automation systems can build Web pages, but they largely assume this will be done externally. Similarly, they usually rely on third-party Web analytics systems to capture information about visitor behaviors.
  • Tracking of anonymous visitors. Tagging anonymous Web site visitors with cookies, building a history of their behavior and merging that history with the visitors’ identities later are central features of demand generation systems. Marketing automation systems may not even track anonymous visitors and certainly do not consider this a core capability.
  • Multistep, highly reactive campaigns. Treatments within a demand generation campaign can vary quickly and significantly in response to an individual’s behavior. Marketing automation systems consider this an advanced feature that only the most sophisticated users are expected to deploy. In contrast, this is a fundamental capability for even basic demand generation products. In fact, finding ways to simplify deployment of multistep campaigns is one of the main competitive battlegrounds in the industry.
  • Limited segmentation. This is the flip side of campaign complexity. Because demand generation systems start with limited information about their targets, they build campaigns that adjust treatments as information is gathered during execution. Because marketing automation systems begin with a much richer customer history, they select treatments using complex segmentations when the campaign is set up.
  • Lead scoring. Demand generation systems support elaborate scoring calculations to measure when a lead is ready for sales. Although marketing automation systems often support user-defined calculations and predictive modeling, they lack specialized lead-scoring functions such as depreciating the points allocated to older events or capping the points generated by a particular type of event. This is another competitive arena for demand generation vendors.
  • Simple database structure. Both demand generation and marketing automation systems maintain databases with information about individuals. But the base structure in demand generation systems is usually just a lead table and contact history. A modern marketing automation system usually includes purchases and often includes additional information, such as account balances and customer service interactions. The theory among demand generation vendors is that detailed information will be kept in the company’s customer management systems. However, most demand generation systems let their clients extend the data structure through custom tables.
Many of these differences are more a matter of emphasis than fundamental technology. The products within each group also vary widely. So, you still need to identify your own business requirements and assess how each system would meet them. Understanding the distinction between the two categories should make it easier to narrow down the products best suited to your needs.

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