2014 Demand Metric Outlook Study: Highlights & Horizons

1. Outlook Study 2014 Outlook Study: Highlights and Horizons By Clare Price, VP of Research January 2014 ! © 2014 Demand Metric Research Corporation. All Rights Reserved.

2. TABLE OF CONTENTS About the Research Analyst 22 3 Highlights – How-To Guides 30 Introduction 4 Horizons: Predictions for 2014 Our Thought Leaders (A-M) 31 5 Key Takeaways from 2013 38 Our Thought Leaders (N-Z) 2013 Research Highlights 8 About Demand Metric 44 Highlights – Benchmark Studies 8 18 Highlights – Best Practices Reports © 2014 Demand Metric Research Corporation. All Rights Reserved.

3. 2014 Outlook Study: Highlights and Horizons ABOUT THE RESEARCH ANALYST Clare Price, VP Research – Demand Metric Clare Price, VP Research – Demand Metric Clare is an expert in marketing strategy, branding, strategic communications, sales enablement, social media marketing, content marketing and leveraging marketing technologies. Clare is a former Gartner Research Director at and helped build their Internet Strategies Services division with clients such as Microsoft, IBM, HP, Cisco, Proctor & Gamble and Wells Fargo.   Her specialties include: brand strategy, brand development, customer acquisition and relationship development, content and digital marketing strategy, sales enablement and social media marketing. 3 © 2014 Demand Metric Research Corporation. All Rights Reserved.

4. 2014 Outlook Study: Highlights and Horizons INTRODUTION There’s little doubt that 2013 was the Year of the Customer. Successful companies have always known that the “Customer is King.” What was different about 2013 was that companies, particularly their marketing and sales organizations, had better tools with which to understand their needs, wants and desires and better ways to serve these needs. 2013 was also the year in which the Modern Marketing Organization consolidated and deepened its role within large and mid-sized organizations as the owner and driver of revenue-producing initiatives and programs. More than ever before, Marketing has direct control over the sales/buying process and with it the customer journey. That change has given Marketing more opportunity to prove its value to the company, while at the same time increasing pressure to deliver results with measureable advances in performance and productivity. This premier Demand Metric Outlook Study will examine Highlights of 2013: Our best research, great marketing moments and major influencers in our industry as shared by our Research Directors and Senior Analyst Network. In the Horizons section of this study, we pull out our crystal balls and share our predictions for trends, new ideas and emerging vendors and products we see on the Horizon for 2014. ? 4 © 2014 Demand Metric Research Corporation. All Rights Reserved.

5. 2014 Outlook Study: Highlights and Horizons KEY TAKEAWAYS FROM 2013 From Marketing Automation to Gamification, the 2013 Demand Metric research agenda was devoted to providing marketing professionals with fresh insights, new methodologies, maturity models and best-in-class tools for assessing, designing and driving your organization. The key takeaways from 2013 are: 1.  Marketing Automation softwarehas moved down market from an enterprise corporate solution to a mid-market company requirement in the last three years. Marketing Automation products and the solutions integrated into CRM systems lay the foundation for the Modern Marketing Organization. Success with this integrated foundation requires: !  Clean, high quality data as the basis of your CRM system. !  Expertise: Few marketing automation systems provide anything beyond the most basic attribution options, so a sophisticated approach will probably require using external software or consultants. !  Measuring and reporting your results. 2.  Alignment between marketing and sales is critical to Sales Enablement and a key ingredient of the improvements in performance and productivity that companies are requiring of their marketing departments. 3.  Sales Enablement has a very significant and positive impact on the organizations that are employing it using systems & best practices. 5

6. 2014 Outlook Study: Highlights and Horizons Chart 1: Digital Marketing Landscape Benchmark Report; Benefits 4.  Revenue & ROI Marketing. As marketing becomes more directly responsible for driving revenue, marketing analytics have become increasingly important. Organizations that are investing at least 6% or more of their marketing budgets to analytics are claiming the greatest impact and highest credibility from their efforts. Benefits of Digital Experience Creation 74% Visits, page views, etc. 5.  Digital Marketing. The growth of digital marketing has meant that even small marketing organizations need to manage many different programs and content versions across multiple channels, and to introduce new versions more quickly. Digital Marketing is a means to an end, and that end is increasingly the creation of unique, memorable digital experiences that captivate and engage customers and prospects. (Chart 1) 64% Grow brand awareness 49% More leads 47% Better leads 34% Better conversion (L to Q) 31% More sales 6.  Customer Journeys. As prospects and customers embark on their self-directed purchase journeys, vendor sales’ relationships must change from creating and filling a need to one of a partner and coach. Only by understanding and aligning sales’ activities to the buyer-personas journey and expectations can companies be successful and drive revenue growth. 23% Better conversion (Q to S) 11% Shorter sales cycle 0% 20% 40% 60% 80% 6 Published November 2013, n=518

7. 2014 Outlook Study: Highlights and Horizons Chart 2: Employee Engagement Benchmark Report; Retention 7.  Customer Value. Customer lifetime value is an indispensable metric that can serve the long-term monetary and strategic goals of your company. Organizations that use this metric are driving long- term profitability by focusing on the ‘right’ type of customers. Organizations with Customer Retention of 80%+ 60% 8.  Gamification. New ways to engage customers and prospects such as location-based advertising and gamification became cutting-edge tools for modern marketers in 2013. 55% 50% 40% 9.  Break up Sales and Marketing. Organizations that maintained separate sales and marketing teams were more likely to achieve their revenue goals than teams that were integrated under a single manager. 37% 30% 20% 10.  The Competitive Advantage of Engaged Employees. Organizations with high levels of engagement enjoy customer retention rates that are 18 percentage points higher than organizations with lower levels of engagement. (Chart 2) 10% 0% Engagement < 50% Engagement >50% 7 Published November 2013, n=291

8. 2014 Outlook Study: Highlights and Horizons 2013 RESEARCH HIGHLIGHTS BENCHMARK STUDIES Demand Metric completed a number of benchmark studies in 2013, and each of them provide marketing organizations with insights on what they should consider doing in 2014: Investing in Marketing Analytics Pays Off Demand Metric completed two studies on marketing analytics in 2013 – the Marketing Analytics Benchmark Report and the Sales & Marketing Analytics Benchmark Report. The former looked at adoption and value that comes from the analytics process; the latter considered the tools and data that support analytics. Recommended actions for marketers from these studies include: !  Allocate at least 6% or more of your marketing budget to analytics. Organizations that are investing at this level are claiming the greatest impact and highest credibility from their efforts. !  Collaborate & share. Critical success factors for analytics effectiveness are high levels of collaboration throughout the process, and effective sharing of results. Both of these factors strongly predict effectiveness of decision-making based on real-world results. !  Ditch the spreadsheets. While spreadsheets have a place in the analytics process, they should not be the primary analytics tool. The use of spreadsheets has a negative impact on analytics tool satisfaction, the collaboration process and the sharing of results. 8

9. 2014 Outlook Study: Highlights and Horizons Sales & Marketing Best Practices: Alignment Not Integration It seems intuitive that aligning the sales and marketing organizations would provide benefits, and the Sales & Marketing Alignment Report details and quantifies them. Recommended actions for marketers on this topic include: !  Break up sales and marketing. Organizations that maintained separate sales and marketing teams were more likely to achieve their revenue goals than teams that were integrated under a single manager. Figure 1: Sales & Marketing Alignment Benchmark Report Published: June 2013, n=550 !  Finish the implementation. The presence of CRM and Marketing Automation systems contributes to alignment and revenue achievement, but only if the implementations are mature. Be sure that you invest the time & resources to fully and completely implement the systems to support your teams. !  Integration = Achievement. Integrating your CRM and Marketing Automation facilitates alignment and revenue attainment. 80% of companies with highly integrated systems achieved their revenue goals compare to just 36% with little to no integration. © 2014 Demand Metric Research Corporation. All Rights Reserved.

10. 2014 Outlook Study: Highlights and Horizons Chart 3: B2B Email Marketing Benchmark Report; Sender Score B2B Email Marketing Losing Effectiveness Email remains the dominant marketing channel for many organizations – 91% of this study’s participants use it to some degree, but only 28% report that it is getting more effective. The B2B Email Marketing Effectiveness Benchmark Report details these findings. Recommendations for email marketing include: !  Know thy recipient. Significant inhibitors to inbox placement include catch-all, invalid and high-risk email addresses, but marketers are chronically underestimating their impact on campaign effectiveness. Marketers should consider using services that help identify and remove these addresses from their email lists. Reported Sender Score 13% 95 or higher 8% 90 to 94 7% 85 to 89 3% 80 to 84 3% 75 to 79 1% 70 to 74 !  Manage your reputation. Whether you know it or not, you have a digital reputation, but 62% of study participants had no idea what it is. Most of those organizations that claim to know have a dramatically inflated view of it. Measure your digital reputation at Sender Score. It takes only minutes to obtain online, and it is free. Scores that fall in a range between 50 and 80 indicate a need for improvement, without which a portion of the sender’s emails will get blocked. Scores less than 50 indicate the sender is perceived as a spammer. 3% Less than 70 62% Don't know 0% 20% 40% 60% Published November 2013, n=291

11. 2014 Outlook Study: Highlights and Horizons Real-Time Bidding: A New Trend in Online Advertising Online display advertising has and continues to be a staple for digital marketers: 56% of firms in this study purchase online display ads either for themselves or a client. For many years, advertisers purchased online advertising much like they purchase traditional print advertising. A new approach for buying and selling online advertising has emerged: real-time bidding (RTB). This approach uses technology to sell online advertising through an exchange, where advertisements are purchased – and served – on demand. Review Demand Metric’s research on this topic in the Online Advertising Benchmark Report. If your organization advertises online and is not yet using RTB, it’s time to investigate this approach: !  Immediate Impressions. Online advertising has always had far more immediacy than print advertising, but with RTB, that immediacy is almost instantaneous. !  Highly targeted. 82% of study participants indicate that the ability to target advertising to a specific audience is the top benefit of online advertising. The platforms that support RTB don’t just blindly serve up ads online: they offer the ad buyer the opportunity to purchase impressions for a specific audience across a broad spectrum of websites that have ad inventory to sell. RTB offers more immediate reach to a better targeted audience, with greater efficiency and effectiveness, !  Ignorance isn’t bliss. Even though over half the study participants said online display advertising was important or very important, fully 77% either had not heard of or were not using RTB. 11 © 2014 Demand Metric Research Corporation. All Rights Reserved.

12. 2014 Outlook Study: Highlights and Horizons Curing the Sales Enablement Identity Crisis Sales Enablement as a function suffers from an identity crisis. Some organizations don’t have it, some do but don’t know what it does, and in other organizations it contributes significantly to the achievement of revenue goals. As a function, its purpose is simple: to develop and implement strategy to help improve the sales process. The Sales Enablement Benchmark Report includes candid research on this topic. Here’s what organizations need to do to leverage Sales Enablement effectively in 2014: !  Give it a home. Ad-hoc, informal and often poorly resourced Sales Enablement functions don’t contribute much. Providing a vision for the function, structure, management oversight and adequate resources will allow Sales Enablement to have an impact. !  Orient it properly. Most organizations define this function strategically, as one that “develops strategy to help improve the sales process.” However, 54% of organizations surveyed said that their function is primarily operationally oriented. Don’t foster a bi-polar Sales Enablement function by launching it as a strategic function, but allowing it to devolve into an order-taking team that simply fulfills requests for sales assets. !  Tell people about it. Sales Enablement often needs a little internal PR. 74% of organizations in the study that said the function is not effective also report that it is poorly or very poorly understood. Let the sales team know what Sales Enablement is and how to take advantage of it. !  Measure it. Almost half of the organizations that report Sales Enablement is not effectively contributing also have no measurements in place for the function. 12 © 2014 Demand Metric Research Corporation. All Rights Reserved.

13. 2014 Outlook Study: Highlights and Horizons Dirty Data Inhibits Customer Interaction Key question from the Sales and Marketing Data Quality study: “Is the incorrect or missing data in your CRM or Marketing Automation systems just an annoyance, or is it really costing you?” Only four percent of participants in our study on this topic rated their data quality “very clean,” so it’s everyone’s problem. Yet, a majority of organizations have no formal process for cleaning their sales and marketing data, and as this study concluded, there is a relationship between data quality and revenue growth, because dirty data inhibits customer interaction. The Sales & Marketing Data Quality Benchmark Report highlights where sales and marketing data resides, how much exists, how data enters sales and marketing systems, the prevalence of cleaning processes and techniques and much more on this topic. Figure 2: Sales & Marketing Data Quality Benchmark Report Published: November 2013, n=227 13 © 2014 Demand Metric Research Corporation. All Rights Reserved.

14. 2014 Outlook Study: Highlights and Horizons Here’s what organizations should do to keep data quality from getting in the way of revenue generation: !  Catch it early. Because of the high degree of integration between various sales and marketing systems, dirty data that enters through one system quickly proliferates. Have a process to check and clean data as close to the point of entry into your systems as possible. !  Invest in cleaning systems. For those organizations that have a data cleaning process, 66% of time it is a manual one. Invest in a solution that automates this process. !  Cost isn’t the issue, revenue is. Only 12% of study participants cited cost as a reason for not having a data cleaning process. Recognize that the bigger issue is the ability to generate revenue: organizations that are experiencing revenue growth are almost three times more likely to have clean data than organizations with flat or declining revenue growth. All Marketing is Digital Marketing It seems that all marketing is digital marketing these days. The term “digital marketing” covers a broad spectrum, from email to geo-location. Digital marketing is a means to an end, and that end is increasingly the creation of unique, memorable digital experiences that captivate and engage customers and prospects. Digital experiences are digital environments, typically associated with a post-click experience, that meaningfully and warmly embrace visitors. They are created using a variety of approaches, such as microsites, wizards, web applications, interactive content and more, providing visitors with choices to engage in ways that best address their needs and interests. 14 © 2014 Demand Metric Research Corporation. All Rights Reserved.

15. 2014 Outlook Study: Highlights and Horizons Chart 4: Digital Marketing Benchmark Report; Sophistication Here’s what marketers should know about the digital marketing landscape: !  Make it a priority. There’s a relationship between putting a high priority on digital experience marketing & revenue growth. 76% of study participants reporting revenue growth in the most recent fiscal year also put a high priority on digital experience creation. Sophistication & Revenue Growth Declining Flat Growing 100% !  Don’t let the tail wag the dog. The tools & technology choices for creating digital experiences abound and change almost daily. Let your objectives drive your tools choices. First clarify who you’re trying to influence, how to reach them & what they need to experience. Then, make tool and technology choices to achieve your objectives. 83% 74% 80% 62% 60% 40% !  Go big or go home. As you develop digital experiences, lean toward the more sophisticated end of the spectrum. Basic levels of digital sophistication don’t separate you from the pack. A big “wow” factor is a significant differentiator. Read the Digital Marketing Landscape Benchmark Report for more insights. 26% 18% 20% 12% 11% 8% 6% 0% Basic Mid-range Advanced Published November 2013, n=291

16. 2014 Outlook Study: Highlights and Horizons The Competitive Advantage of Engaged Employees Old school management thinking says that providing employment, a decent wage and benefits are all that is needed to secure an employee’s best effort. However, great organizations understand that a workforce of highly engaged employees is the product of company culture. Achieving it requires investment, leadership, commitment and time. It does not come about because of the right words on the mission statement poster in the break room. Employee engagement concerns marketers, because when levels are high, it creates a tremendous and sustainable competitive advantage. Organizations with high levels of engagement enjoy customer retention rates that are 18 percentage points higher than organizations with lower levels of engagement. The Employee Engagement Benchmark Study delves into current employee engagement initiatives and predictions for future development in this space. Figure 3: Employee Engagement Benchmark Report Published: December 2013, n=291 16 © 2014 Demand Metric Research Corporation. All Rights Reserved.

17. 2014 Outlook Study: Highlights and Horizons Here’s what CMOs and other leaders should know about nurturing engagement: !  Walk the talk. Engagement follows leadership: 81% of organizations with leaders who emphasize employee engagement are getting it, with more than half of their workforce truly engaged. !  Take your pulse. Many indirect indicators of employee engagement exist, such as customer satisfaction, but if you want a direct measurement, you need to take an employee survey. Surveys are very effective as long as you ensure employee confidentiality during the process and share both the results and what you plan to do about them. !  Performance reviews help – and hurt. The most used initiative for nurturing engagement is the performance review. However, it is used equally by organizations with high and low levels of engagement. There is no inherent benefit to engagement from the presence of a review process. It’s all about how the performance review is done that makes the difference. Employees must see the review process as a stepping- stone in the path to achieving their goals. ABOUT OUR BENCHMARKING STUDIES Demand Metric Benchmark Studies are conducted on a regular basis throughout the year to provide our members with the pulse of the market from inside the trenches and from their peers. Look for more ground-breaking benchmark studies in 2014. 17 © 2014 Demand Metric Research Corporation. All Rights Reserved.

18. 2014 Outlook Study: Highlights and Horizons 2013 RESEARCH HIGHLIGHTS BEST PRACTICES REPORTS BEST PRACTICES REPORTS The Sales Enablement Landscape is Shifting Fast Although Sales Enablement has been used in global corporations since the late 1990s, it is fast becoming critical for mid-market companies as well. In this comprehensive, Sales Enablement in 2013 Best Practices Report, we cover this important topic from the benefits to the organization to how to create an effective Sales Enablement function for your company. Here are some of the highlights: !  Our research, benchmark studies, methodologies and tools have consistently shown that Sales Enablement has a very significant and positive impact on the organizations that are employing it when they do so by following best practices and processes. !  Both internal company and external market/competitive forces are driving the need for Sales Enablement within mid-size enterprises. 18 © 2014 Demand Metric Research Corporation. All Rights Reserved.

19. 2014 Outlook Study: Highlights and Horizons We have identified these ten factors as the most notable trends in creating broad interest in the willingness to engage in a Sales Enablement initiative: 1.  Drive revenue and company/sales performance particularly in companies that have experienced flat or declining sales and companies that have set aggressive new sales targets. Figure 4: Sales & Marketing Data Quality Benchmark Report Published: November 2013 2.  Do more with less. Companies are asking marketing to take on more responsibility for lead qualification and revenue responsibility. Sales Enablement can help marketing meet that new challenge. 3.  Growth curve plateau or declining sales. Increasing sales productivity by reducing prospecting time and decreasing the sales cycle. 4.  Fast growth. Sales Enablement makes sales teams more agile by shifting the responsibility for lead generation and nurturing to marketing. 5.  Sales team growth. Sales Enablement can cut the on-boarding process for new sales reps. 19 © 2014 Demand Metric Research Corporation. All Rights Reserved.

20. 2014 Outlook Study: Highlights and Horizons 6.  Customer decision process and buying changes. Customers now do 50-60% of their buying research before speaking with a sales rep. Sales Enablement applications can help companies target their content specifically to the buyers’ direct needs increasing close rates. 7.  Competitive pressure. Sales Enablement enables reps to more position their products against the competition with higher quality, customized content, demos and presentations and quotes. Figure 5: Sales Enablement in 2013 Best Practices Report Published: December 2013 8.  Market speed/changes. Sales Enablement reduces the conflict between marketing and sales which reduces the lag time between marketing efforts and sales closed. 9.  New product/service that creates new customer or market opportunity. Sales Enablement speed sales training on new products, services and markets. 10.  Corporate/Executive push for alignment/integration drives the Sales Enablement initiative and provides critical resources in staffing and budgets. 20

21. 2014 Outlook Study: Highlights and Horizons !  The first step in Sales Enablement is to make sure the marketing and sales functions are properly organized for success. Success for Sales Enablement is built around one basic tenet – ALIGNMENT. Sales Enablement is required for the kind of performance and productivity gains that companies expect from their Modern Marketing Organizations. !  The most significant finding of our study is how the organization views Sales Enablement; whether it is considered strategic or operational. Overall, for those who report having Sales Enablement, 20% say it is oriented very or primarily operational, 42% say it is balanced between operational and strategic, and 14% say it is oriented primarily or very strategically. !  Our research shows that more organizations are leaning toward operational. However, when viewing orientation through the effectiveness data, there's a huge difference. 39% of companies that claim to have effective Sales Enablement report that it is oriented primarily or very strategically. By contrast, only 6% of companies who report low Sales Enablement effectiveness have their functions oriented this same way. ABOUT OUR BEST PRACTICES REPORTS Demand Metric’s Best Practices Reports provide an in-depth look at trends, best practices, and technology enablers for a wide range of practice areas. Look for best practice reports on Modern Marketing, Demand Generation, and Customer Experience coming in 2014. 21 © 2014 Demand Metric Research Corporation. All Rights Reserved.

22. 2014 Outlook Study: Highlights and Horizons 2013 RESEARCH HIGHLIGHTS HOW-TO GUIDES HOW-TO GUIDES Marketing Automation: Integration is Key Marketing Automation software has moved down market from an enterprise corporate solution to a mid-market company requirement in the last three years. Marketing Automation products and the solutions integrated into CRM systems lay the foundation for the Modern Marketing Organization. In his How-To Guide, Driving Value with Marketing Automation, David Raab points out that the current complexity of marketing automation software requires integration with existing CRM and SFA systems, lead scoring has become more sophisticated, and metrics tied to revenue have become a leading indicator of overall system value: “Deployment of marketing automation systems has become more complex as standalone systems now require integration with CRM and Sales Force Automation systems to be efective. Few marketing automation systems provide anything beyond the most basic attribution options, so a sophisticated approach will probably require using external software or consultants. Lead scoring as a baseline success factor of marketing automation became more sophisticated in 2013. Marketing organizations began to look beyond simple lead scoring by job title, industry and company size to the larger value of lead scoring models: models that actually predict sales acceptance rather than closed deals. Measuring results matters more than ever. Some measures will track progress against your deployment plan, such as the number of multi-step campaigns in production. But the most important measures will show the value your system has created.”

23. 2014 Outlook Study: Highlights and Horizons Resource Complexity Requires Better Management Practices Although Marketing Resource Management processes have been used in large organizations for decades, the complexity of marketing, especially digital marketing, now requires this same discipline in mid- market companies. David Raab’s How-To Guide: Marketing Resource Management, points out that marketers in all companies need to utilize the processes and practices of Marketing Resource Management: “The growth of digital marketing has meant that even small marketing organizations need to manage many diferent programs and content versions across multiple channels, and to introduce new versions more quickly. This expanded complexity has rarely been accompanied by a corresponding expansion of staf, adding to the pressure for more efcient operations. At the same time, costs have decreased as MRM capabilities were added to integrated marketing suites and as stand­alone MRM products became available as vendor hosted services (Software as a Service, or SaaS). The result has been increased use of MRM systems among companies of all sizes.” Figure 6: Marketing Resource Management How-To Guide Published: December 2013 23 © 2014 Demand Metric Research Corporation. All Rights Reserved.

24. 2014 Outlook Study: Highlights and Horizons But marketers must also be aware that MRM is not without its challenges: “Because MRM is about process management, your action plan can draw on the extensive body of techniques developed to improve manufacturing and other production processes. But marketers must realize that MRM technology is only as good as the processes it manages, and ensure they devote enough efort to defining the processes they want and training the staf to implement those processes correctly.” Social CRM Best Practices Social media are now part of every business and consumer activity, joining telephone, web, broadcast, and face-to-face interactions as primary communication channels. This means that all marketing, sales, and service organizations should include social media as part of their basic activities. Yet social media are still new enough that many organizations are still struggling to learn how to use them, while others are learning how to use them most effectively. In David Raab’s How-To Guide, Social CRM Best Practices, he illustrates the importance of integrating your social media into your CRM system, reminding us that social media offers perspectives other channels do not: “Even though social media are now as common as other communication channels, they play a diferent role. Specifically, they allow companies to initiate relationships with people who are otherwise inaccessible, because they are not paying attention to conventional mass media and are not responsive to untargeted direct messages such as bulk emails. Perhaps most important, social media allow consumers to share their own experiences with a company, providing a more credible source of information than the company itself. Social media must be integrated into every type of customer interaction, from advertising to prospects to support for previous buyers. Careful tool selection and best practice-driven deployment will ensure that companies gain the most value possible from their social CRM investments.”

25. 2014 Outlook Study: Highlights and Horizons The Modern Marketing Organization The modern marketing organization is more customer-centric and more content driven than ever before. In the Modern Marketing Organization How-To Guide, Demand Metric’s VP of Research, Clare Price, spells out three major changes in the modern marketing organization: “The first big change has been in marketing’s view of the customer. Where previously broadcasting to large populations was a key success metric of marketing, today the focus is on very well defined, specific content delivered to micro targets and personalized content delivered to individuals. The second big change is marketing’s direct control over more of the sales process and with it the customer journey. Where previously, marketing provided general education and sales tools with an emphasis on advertising to fill the very top of the pipeline, today marketing’s role extends down the sales funnel through early stage prospect qualification and lead nurturing. More and more marketing is taking responsibility for delivering close- ready prospects to sales rather than throwing buckets of leads over the wall.” Figure 7: The Modern Marketing Organization How-To Guide Published: October 2013 25 © 2014 Demand Metric Research Corporation. All Rights Reserved.

26. 2014 Outlook Study: Highlights and Horizons “Newer roles such as VP Demand Generation, VP Customer Success and VP Sales Enablement now exist along with the more traditional roles of Chief Brand Ofcer, VP Strategic Communications and VP Product Development. Roles focused on the Customer Experience and the Voice of the Customer have emerged with higher level director and VP authority. The third big change is responsibility for revenue generation. Where once this was owned exclusively by sales, marketing is now often measured by revenue goals and marketing spend is set by marketing’s ability to meet these hard dollar goals. The emerging role of Chief Revenue Ofcer is a testament to this change.” Gamification: The Way to Play Gamification moved from a curiosity to a major new marketing tool in 2013 and is set to explode in 2014. With new vendor solutions arriving daily, marketing organizations that ignore Gamification due so at their peril as Kristen Maida shares in her How-To Guide, Engaging Users with Gamification: “Gamification can provide a positive, rewards-driven environment for the users in your online community as well as deliver benefits to your overall business, including: engagement, loyalty, user advice & content, references, SEO, fun and revenue. Gamification will continue to grow in importance as the digital generations advance in their careers. An increasing number of businesses are beginning to consider developing communities with Gamification components to encourage user engagement, attract new clients, and increase and mature their overall brand.” © 2014 Demand Metric Research Corporation. All Rights Reserved. 26

27. 2014 Outlook Study: Highlights and Horizons Customer Life Time Value Matters More than Ever Common sense tells us that the longer a customer is in a relationship with a company, the more profitable that customer relationship is. However, many companies put the emphasis on new customer acquisition and not enough effort is made to retain existing customers. In her How-To Guide, Calculating Customer Lifetime Value, Kristen Maida shares verifiable data on the real sales and revenue cost of gaining and losing your customers: “Focusing on new customers at the expense of retaining existing ones is a mistake, because the financial impact of retaining customers is substantial: companies can increase profits by as much as 100% by retaining just 5% more of their customers. For these reasons, CLV is a crucial metric that most organizations overlook mainly because its definition and purpose are not entirely known. Customer lifetime value attempts to assess the true, long-term value and/or profitability of each client/customer. The purpose of this metric is to help businesses identify how much to invest in the development of each account. Customer lifetime value is an indispensable metric that can serve the long term monetary and strategic goals of your company.” Figure 8: Calculating Customer Lifetime Value How-To Guide Published: October 2013 © 2014 Demand Metric Research Corporation. All Rights Reserved.

28. 2014 Outlook Study: Highlights and Horizons Location-Based Advertising Gains Ground Location-based advertising has moved from the experimental stage to a central role in the modern marketer’s toolbox. In her How –To Guide, Understanding Location-Based Advertising, Research Analyst Kristen Maida, shares insights into this fast moving trend: “In the ongoing battle to stay competitive and relevant during 2014, one of the most critical mobile marketing concepts organizations should evaluate is location-based advertising. The influx of smartphone users and mobile marketing campaigns calls for more competitive positioning when it comes to mobile ad placement. As a proven method to increase the success of mobile ad campaigns, adding location-based advertising to your mobile marketing mix is an easy decision to make, and one which is also easily implemented.” Figure 9: Location-Based Advertising How-To Guide Published: November 2013 28 © 2014 Demand Metric Research Corporation. All Rights Reserved.

29. 2014 Outlook Study: Highlights and Horizons Journey Maps are More Than Customer Experience In 2013, Christine Crandell showed us that Journey Maps can be so much more than a way to lead a prospect from curiosity to customer. Journey Maps can be a foundational strategy for your marketing organization that enables you to increase sales and marketing alignment. In Christine’s How-To Guide, Developing Sales Playbooks from Journey Maps, she leads us through the process of creating customer-focused Journey Maps. Here are the highlights: “By developing Playbooks based on journey maps, sales can improve their close rates and forecast predictability as well as build a more credible, trusted relationship with prospects and customers. Basing Playbooks on journey maps grounds the tool in an ‘outside-in’ approach that increases the efectiveness and productivity of each sales person. It gives the sales person a clear roadmap of what to do and when - based on where the buyer is in their journey and their expectations at that time. As prospects and customers embark on their self-directed purchase journeys, vendor sales’ relationship must change from creating and filling a need to one of a partner and coach. A new approach to developing an “outside-in” Sales Playbook is needed to efectively enable and train sales resources. Only by understanding and aligning sales’ activities to the buyer-personas journey and expectations can companies be successful and drive revenue growth.” ABOUT OUR HOW-TO GUIDES Demand Metric’s How-To Guides provide practical, actionable advice and plans that enable marketers to gain the knowledge and skills that they need to increase the performance and productivity of their organizations. 29

30. 2014 Outlook Study: Highlights and Horizons HORIZONS: PREDICTIONS FOR 2014 For Demand Metric’s 2014 Outlook Study we reached out to the marketing thought leaders on our Research Director Dream Team and Senior Analyst Network to provide highlights of the best moments and industry influencers for 2013 and to predict the next big trends, waves and impacts of 2014. We asked the following three questions: 1.  For 2013, what was the most impactful moment, shift or trend you experienced for marketers in your practice area? Why? 2.  For 2013, who had the biggest influence for Marketers or the Marketing organization in your practice area? Why? 3.  For 2014, what do you believe will be the most defining or impactful moment, shift or trend we will see? Why? Our marketing thought leaders’ responses to these questions appear on Pages 31-43. 30 © 2014 Demand Metric Research Corporation. All Rights Reserved.

31. 2014 Outlook Study: Highlights and Horizons 1.  In 2013, organizations started to crave a shared purpose within their culture. Those that didn't have one began to seek authentic stories to tell. And those who already do have a shared purpose, began to tell their story across all major media platforms. Look at Red Bull. They're not shouting at their customers to purchase their product. Instead they're focusing on who their customers will become when they consume their brand. They connect with adrenaline junkies through storytelling. I believe this shift is here to stay. 2.  Gary Vaynerchuck has risen above the noise, especially with his recent book, Jab, Jab, Jab, Right Hook. It goes deep with detailed case studies, and it makes you think differently about how to tell your story in a noisy social media world. He curates concepts that are on the cusp of content and marketing. And he interprets and analyzes brand stories in a way that's informative, educational, and fun. And who doesn't like fun? Modern marketing is fun for everyone involved because it puts the focus on high-quality content with depth and context. Jessica Ann CEO & Creative Director, Jessica Ann Media Senior Research Analyst, Demand Metric 3.  We're moving towards a concept that I like to call "slow media." Slow media makes you laugh, think, and question the status quo. Slow media compels your customers to want to hear what your brand is saying because you're creating meaningful media that has context and relevance to your customers. The tools and technologies of today give you more choices than ever. This means that you (and your customers) will be much more conscious of what gets consumed. We'll learn how to turn off needless interruptions. And we'll welcome brands who can bring beauty, creativity, meaning, and context to the online conversations. View Jessica’s 2014 Predictions 31

32. 2014 Outlook Study: Highlights and Horizons 1.  The shift into tangible results and social media becoming a viable metric in the bigger business plan picture. As real business acquisitions continued to dominate the social space, CMOs and Executive Leadership Teams are demanding more from their counsel (from consultants to agencies to internal advisors). This focus on results, and tying ROI to specific social activity, will mean businesses of all sizes that align social involvement with business goals will come out clear winners when it’s time to review fiscal year-end reports. 2.  In all honesty, I don’t think one single person had a major influence for marketers in general. 2013 has seen its fair share of successes and failures when it comes to social media and the marketing ecosystem – but the influence of these hits and misses will be relevant only to the marketers and businesses that person represents. Danny Brown Marketer, Author, Speaker & Technologist Research Director, Demand Metric 3.  Returning the customer to the forefront of everything we do as marketers, whether that’s on social, mobile, digital, offline or other. I’m biased, as it’s the core premise of the Influence Marketing book I co- authored, but without understanding what your customer wants, and at what stage of the buying cycle they’re at so you can prime your message for that exact moment, it doesn’t matter how cool the technology is, or the channels we use, or the implementation of a tactic. We now have linguistic mapping tools that allow us to segment customers, who they connect with, what they’re looking for, and archival history with our brand’s core business or competitors. 2014 will see us, as marketers in the social space, truly take advantage of that technology and deliver. 32 © 2014 Demand Metric Research Corporation. All Rights Reserved.

33. 2014 Outlook Study: Highlights and Horizons 1.  The shift in 2013 that had the most impact is the rise of the customer. Companies have intellectually embraced the need to be customer-centric.  In 2013, progressive CEOs in all industries realized that becoming customer-aligned was an across-the-board initiative that touched everything and everyone in their organizations.   It is a transformation and that is driving the rise of the Chief Customer Officer.  Companies leading the pack who have seen the transformation as a strategic and competitive edge have embraced customer experience as a business discipline that is funded with dedicated a budget and personnel.  CX technology vendors will be challenged to provide true solutions comprised of strategic consulting, tactical services and software. Christine Crandell President, New Business Strategies Research Director, Demand Metric 3.  While the customer experience movement will continue to gain momentum, 2014 will bring a defining moment in marketing. A defining moment will be the realization that dirty and incomplete data has been a major obstacle to marketing’s success. The big data movement of 2013 will be one catalyst for this defining moment.  The results of predictive analytics, trends and patterns will be questioned when the ‘advice’ of these applications do not match reality. Or translate into higher close rates.   Marketers who focus on cleaning up their data house will realize significant improvements in campaign performance and lead conversion.   33 © 2014 Demand Metric Research Corporation. All Rights Reserved.

34. 2014 Outlook Study: Highlights and Horizons 1.  Big data roared in for B2B, with its promises and pitfalls, in 2013. The landscape is bi-polar. On the one hand, the combined power of data analytics has helped marketers know what their audience is doing in real time across channels to make research and purchasing simpler and better. On the other hand, the realization that not only companies but governments now know an individual’s every move will effect how people interact online (dubbed the “Snowden effect”). For example, average smartphone users are willing to pay up to $5 extra for a typical application—or “app”—that won’t monitor their locations, contact lists and other personal information, a study conducted by two economists at the University of Colorado Boulder has found. (“The Value of Online Privacy,” Associate Professor Scott J. Savage and Professor Donald M. Waldman). Nalini Indorf Kaplan 2.  Rohit Bhargava, a marketer and professor, points out that for the first time in history, virtual trust exists. Virtual trust means that a person trusts the opinion of someone they don't know, no one in that person's network knows, and for whom there is no way to verify their identity or credibility. Virtual trust is active in the B2B world, adopting the lead of consumer companies such as Amazon as well as social media. Numbers matter here. If twenty CIOs vouch for a particular product for their companies, then it must be good, even though it may not be. Crowdsourcing, however, can be highly credible and accurate. Case in point, Wikipedia. Director of Marketing & Customer Experience Strategist, University of Colorado (Boulder) Research Director, Demand Metric 3.  In 2014, I expect to see a Return of the Relationship. Marketing professionals will embrace the fundamentals of trust-building, transparency-in-action, and consultative approaches. Marketers will work with deeper sophistication and sensitivity to privacy concerns with regard to how analytical tools provide context and real time intelligence to help B2B customers. 34 © 2014 Demand Metric Research Corporation. All Rights Reserved.

35. 2014 Outlook Study: Highlights and Horizons 1.  Marketers are beginning to realize the value of processes and why it is important to model them out in a CRM system. Without modeling the next steps and/or expectations within the CRM system you cannot succeed.  More importantly, you cannot define and report on your success. 2.  The Client/ Customer.  Without the vocalization and demanding (via all forms of media) of the client’s expectations either being met and/or left un-resolved no one would know that they needed to improve their service levels. Robert Kirk 3.  C-Level understanding of the Client Experience (Cradle to Grave) starts before they are on-boarded as a client.  CRM’s have typically been implemented to answer short-term issues only and they will start to implement complete workflows throughout the entire client experience with real time metrics. Senior Technology Executive Research Director, Demand Metric 35 © 2014 Demand Metric Research Corporation. All Rights Reserved.

36. 2014 Outlook Study: Highlights and Horizons 1.  2013 reflected growth of both depth and breadth for Customer Experience (CX) practices. The expertise, methods and skills sets for CX are becoming more solidified. We saw the power of the customer drive organizations from “we listen to customers” to recognizing the value of putting CX at the core of the organization’s culture. CX practices moved organizations to differentiation at a more rapid pace and the financial rewards followed. 2.  CX Professionals have come of age. A pinnacle event was the first Congressionally recognized CX Professionals Day on October 1. Diane Magers 3.  Increasing customer expectations will influence CX practices in 2014. Customers will be more vocal about their desired emotional and human connections with brands and want targeted and more valuable, personalized interactions with those brands. 2014 will also bring a heighten customer awareness of how organizations are focused on their needs and will show their preference for that treatment with their wallets. The move from CX activities to active customer engagement will result in deeper loyalty. This means more focus and an accelerated need to build and/or enhance your CX practice. Customer Experience Executive Research Director, Demand Metric 36 © 2014 Demand Metric Research Corporation. All Rights Reserved.

37. 2014 Outlook Study: Highlights and Horizons 1.  Within content marketing, I believe the most significant trend of 2013 was video marketing.  While the concept of video marketing has been around for some time, the increase in video viewing and sharing among Internet users has created an urgency for content marketers to produce more relevant, engaging video content for their target audiences (if they weren't already doing so). 3.  In 2014, marketers should either begin a video marketing plan or increase their online video presence considerably.  If current statistics are correct, video will be the most used and shared content format within the next two years.  As video marketing increases, I predict we will see significant changes in social media behaviors as well.  While predictions on the most popular social media sites for 2014 vary, marketers should ensure they are aware of all channels in order to leverage the best sites for their organizations. Kristen Maida Research Analyst, Demand Metric 37 © 2014 Demand Metric Research Corporation. All Rights Reserved.

38. 2014 Outlook Study: Highlights and Horizons 1.  Smarter buyers. Markets are more competitive than ever and the Internet, peers, analysts, social networks and other resources have empowered buyers. These buyers are smarter and demand that the seller be smarter, which is a primary function of the Sales Enablement system. 2.  Craig Rosenberg has reached many in the marketing and sales arena with his topics published as part of this funnelholic blog. His progressive views and writing style keeps the topic interesting and insightful.  3.  Real-time Sales Enablement. Sales Enablement continues to evolve beyond content enablement. In 2014 and beyond enablement resources will come in the form of subject matter experts (both live and on- demand) available anytime and anywhere when it matters most: before, during and after sales interactions with the customer.  The content will come from industry best practices using the power of a crowd- sourced approach with information available on-demand, and in some cases at a cost.  Built-into to the enablement platform must be collaborative capabilities that leverage mobile technology. Craig Nelson Founder & Principal, Sales Enablement Group Senior Analyst Network, Demand Metric 38 © 2014 Demand Metric Research Corporation. All Rights Reserved.

39. 2014 Outlook Study: Highlights and Horizons 1.  I see 2013 as the year when B2B marketing met “consumers” and were forced to change their entire marketing strategy. By ”consumers” I don’t mean traditional buyers of off-the-shelf goods and services, I mean business consumers of content, information and experiences that they want to be customized, localized and personalized and, oh, yes, mobilized. That trend will continue as marketers in mid-market companies continue to move toward data-driven, personalized, customer-centric marketing strategies. 2.  My choice for tech person of the year for marketers is Marc Benioff, CEO of salesforce.com. Like Oracle and Cisco in the 1990s did for database and networking, Benioff’s company has developed the foundational infrastructure for the sales, marketing and customer experience for the Modern Marketing Organization. With recent acquisitions like ExactTarget, BuddyMedia and Radian6, Benioff shows no signs of slowing down his relentless drive to own the CMO suite. Clare Price VP Research, Demand Metric 3.  I believe that 2014 will be the year of true ALIGNMENT for marketers, not just with sales, but across the organization. As marketing takes more control of IT spending budget and is tasked with actual revenue and profitability goals, increasing the performance and productivity of the Modern Marketing Organization will become a corporate-wide initiative. World Class Marketing Organizations will have influence and authority over just about every aspect of the journey of their company’s product/solution from concept/development through delivery into the customer’s hands. Improving Customer Life-Time Value will become a bigger measurement of success than new customer acquisition, market or competitive position. 39 © 2014 Demand Metric Research Corporation. All Rights Reserved.

40. 2014 Outlook Study: Highlights and Horizons 1.  Customer data platforms mature: Marketers will have an increasing number of ways to build consolidated, multi-source customer databases without waiting for help from their IT departments.  Systems that build such databases for specialized purposes such as lead enhancement, cross-channel campaign management, retention programs and advertising audience management will increasingly provide more value to their clients by exposing the databases to other execution systems.  As a result, the distinction between the customer database and execution systems will become more evident and companies will be able to offer one service or the other. 2.  Digital advertising and customer marketing converge: Data management platforms, which store semi- anonymous cookies for online ad networks, will converge with conventional customer databases, which store profiles tied to actual identities.  The advantage will be marketing programs that span both channels, delivering personally targeted information via display advertising and simplifying personalized marketing on mobile platforms that don’t support conventional cookies.  The unification of these data sets will allow more careful orchestration of customer treatments across all channels, increasing the effectiveness of all marketing contacts. David Raab President, Raab Associates Research Director, Demand Metric 3.  Predictive analytics finally take center stage: More accessible customer data and broader opportunities to deliver personalized messages will support the long-awaited mass deployment of automated predictive analytics tools. These will be deployed as part of a central customer management architecture that uses them to deliver the best message to each customer during each interaction, in every channel with customer recognition.  Increasingly automated testing will allow incremental optimization despite constant changes in customer interests, product availability, creative executions, and offers. 40 © 2014 Demand Metric Research Corporation. All Rights Reserved.

41. 2014 Outlook Study: Highlights and Horizons 1.  The relentless march toward data-driven marketing.  I saw several forces begin or continue to converge in 2013:  attribution, big data, marketing analytics and revenue marketing.  At the core of each of these is data.  Some marketers are embracing data and analytics, others are being dragged to it kicking and screaming.  Regardless of how marketers feel about data, analytics and the accountability it creates, the truth is hard to miss:  the effective use of data helps marketers produce better results.  Organizations that marketers serve have no patience for initiatives that are inspiration-driven only.  They expect marketing to function with the same precision as other functions, and provide analytical evidence that it is both aligned with corporate goals and delivering.  The only way a modern marketer can demonstrate this is with the right data.  Inspiration alone isn't enough, nor is data. They are two sides to the modern marketing coin. Jerry Rackley 2.  He may not be a household name (yet), but Scott Brinker, Co-founder and CTO of ion interactive, is doing a great job carrying the flag for how technology is changing marketing strategy, management and culture.  His blog should be required reading for any modern CMO:  chiefmartec.com. Chief Analyst, Demand Metric 3.  I think that marketing attribution will cast a big shadow over the 2014 marketing landscape.  It really is about answering what many marketers have considered an unanswerable question:  which of my many marketing efforts are having influence, and to what degree?  I saw the interest in marketing attribution start to register in 2013, and I think when marketers understand what it provides, no marketer will want to go without attribution data.  It helps link the work marketers do to the results they produce.  The value of understanding this relationship is immense; to know this is a Holy Grail of marketing. 41 © 2014 Demand Metric Research Corporation. All Rights Reserved.

42. 2014 Outlook Study: Highlights and Horizons 1.  In 2013, online video and video marketing went mainstream. Without a doubt, this trend is right in line with the surge of consumer adoption for mobile devices, from iPhones to iPads. The data supports it over and over again: Short, entertaining marketing videos dramatically increase the decision to buy. Just how mainstream is video marketing in 2013? A recent report shared that 93% of marketing professionals are now using online video for marketing and communications in 2013. 2.  If you had to choose a single person who massively influenced the online video world, and pushed it fully into the mainstream in 2013, it would actually be a tie. First we’ve got Reed Hastings, CEO of NetFlix who proved this year that the marketplace is fully engaged and on board with on demand online video, so much so that the ‘unstoppable’ video rental chain Blockbuster is closing the last of its stores. Second, there’s Salar Kamangar, CEO of Youtube. Needless to say, YouTube became a global phenomenon under his leadership, winning him 2013 Media Person of the Year for radically shaping and improving the media landscape for both advertisers and consumers alike. Phi Schmidt Founder & Lead Strategist, The Project Shaman Senior Research Analyst, Demand Metric 3.  Video will be a preferred channel for consumers, when delivering your marketing messages in 2014. Not only will it be expected as part of the shopping experience, but you’ll be expected to deliver high quality professional video immediately, across all possible devices. The bar has been set high in 2013, and the data supports that when quality’s low, or video doesn’t play fast enough, people move on to something better and faster. 2014 will also mark the year that video becomes both more explicitly interactive, and subtle simultaneously. Expect to see more animated and interactive elements online that are subtle but drive the message (without even hitting play!). 42 View Phi’s 2014 Predictions

43. 2014 Outlook Study: Highlights and Horizons 1.  Best-practice marketing focusing on segmentation and positioning became extremely important in order to manage the ongoing European economic crisis. Many people lost jobs in 2013 and new positions were scarce. The economic conditions spawned a number of European start-up companies in many different sectors. For these new companies, finding a profitable product-marketing combination and translating this into a proper revenue generating business-model is the way forward in 2014. 3.  To support consumer preferences in the last five to seven years, many retailers shifted their marketing budget from in-store/off-line to an on-line approach in order to create a multi-channel business model. This shift caused many business processes to change and new applications were implemented to support the increasingly on-line consumer. On-line sales have not yet delivered the anticipated success in Europe, with the average share of on-line revenue in The Netherlands of 4.7%, Germany 5.1% and in the UK 9.5%. In 2014, I foresee a more equal share of marketing budget invested in both off-line (store) and on-line (web) with an emphasis on linking the off-line audience to on-line campaigns through smartphones and interactive media. Han Verbaas SVP Europe & Middle East, Demand Metric 43 © 2014 Demand Metric Research Corporation. All Rights Reserved.

44. Outlook Study ABOUT DEMAND METRIC Demand Metric is a global marketing research & advisory firm serving a membership community of over 38,000 marketing professionals, CEOs, and business owners with advisory services, custom research & benchmarking reports, solution studies, consulting methodologies, training, and a library of 500+ premium tools and templates.   Using Demand Metric resources, members complete projects faster and with greater confidence, boosting respect for the marketing team and making it easier to justify needed resources. Our 1,000+ clients range from start-ups to members of the Global 1000. TO LEARN MORE ABOUT DEMAND METRIC To discover how Demand Metric can help you become more strategic, please visit us online at www.demandmetric.com MEMBER SUPPORT For information, inquiries and general support, please contact us toll-free at +1 866 947 7744, or info@demandmetric.com   We offer discounts for academic and nonprofit institutions, provide group memberships and license our content to associations and large enterprises for use on corporate universities and intranets.  © 2014 Demand Metric Research Corporation. All Rights Reserved.