Coming Martech Era
The coming martech era will be different from the early days of martech. The first-generation martech tools were primarily point solutions solving specific needs. A few marketing clouds did emerge but they were built mainly out of components stitched together from acquisitions by the big players rather than natively built. The second generation will be about full stack solutions that solve the ABCDE problems of martech: attention (recession), branding (for retention), churn (of Best customers), data (silos), and engagement. These solutions will drive a rebalancing of the budget as marketers realise that a bird (customer) in hand is worth two in the bush! A new martech era is coming. Companies who can deploy its power appropriately will emerge winners and lay the foundation for exponential forever profitable growth and become “profipolies” of the future.
I wrote on the coming martech era in a recent series:
The Martech era will be characterised by a focus on 4Rs: retention, rewards, reactivation, and referrals. It will need marketers to think about segmentation based on customer lifetime value. Marketers will need to combine tech, data and analytical skills to make the most of all the demographic, behavioural and transactional data that will flow into a Customer Data Platform (CDP). They will need to integrate different tech solutions together to get a unified view of the customer. What will matter is not just a one-time acquisition but the customer journey, with the right nudges at the right time to ensure timely transactions. AI will assist the marketer at every stage but the questions and creativity will need to come from the marketer. Art and science is what will make martech work like magic.
This will need a new bag of tricks for marketers. It will be much more than just saying, “Oh – that’s what our CRM department does.” The Martech era is in fact the second coming of CRM. Only this time, marketers will be armed with much more data and have a wider arsenal of tools to create myriad magical moments for their customers, rather than just one-time offers. The way marketers have prioritised and perfected ad spending for new customer retention is what they will need to do with existing customers. As of today, most CMOs have a limited focus on this because adtech sucks away 80-90% of budgets and attention of marketers. In the years to come, in a world where the profitable pool of customers for a category is finite, marketers will need to switch time and money to martech to drive customer communications, engagement and experience and ensure they grow profitable customers who stay with them forever. Martech done right will help them optimise their adtech spends, create the space for profits, and lay the foundation for winning the customer moments that will drive exponential forever profitable growth.
…By using the secrets outlined here (smart segmentation, 4 Rs, full stack, progency and rebudgeting), brands can drive up the profitability in their business by ensuring the Best customers stay forever, the Rest customers are moved along the customer journey to become tomorrow’s Best, the Test customers are reactivated instead of being reacquired, and the Next customers come from referrals and a higher profitability pool of customers.
By working to maximise and then monopolise the profits in a category, brands create a profits flywheel to lead to a “profipoly”. This works as a double moat in the coming Martech era: the most profitable customers are retained to maximise lifetime revenues, and competitors are deprived oxygen of growth capital in the form of profits. The profipoly is thus the endgame. It also works as the beginning – because the profits can power the expansion into new categories – either organically or via acquisitions. Creating a profipoly is the real secret of creating a model that can power the “rinse and repeat” of exponential forever profitable growth.
Martech is at a strategic inflection point. The old will give way to the new, the first-generation to the second-generation, point solutions to the full stack.
