Blog

Last Friday, Twilio (TWLO) announced that it had acquired Segment in an all-stock deal worth north of $3.2B. The move has significant ramifications for the entire marketing and data technology ecosystem. Major players like Salesforce (CRM), Adobe (ADBE), and Oracle (ORCL) have the beginnings of a new, developer-focused marketing cloud competitor on their hands. Other martech vendors have new existential questions around the partnership and competitive landscape. Investors want to know if it’s a good deal. And brands still just want to message customers more effectively. Is new-look Twilio the answer? Is it a threat? Is it even a good idea? All of the above?Let’s look at the deal and see what’s going on.

Who is Segment? And how do they fit Twilio’s market thesis?

Founded in 2012, Segment began life as a segmentation tool (hence the name). Quickly, however, it pivoted into a new sort of tag manager that leveraged its late-mover advantage to differentiate based on its orientation to streaming data. Segment has since become the gold standard for web and mobile tracking — as seen by players like MetaRouter and RudderStack — leveraging their code in an open-source capacity. Over the last eight years, it has built an impressive roster of reportedly over 20,000 customers and $150MM+ ARR. Easily the largest non-marketing cloud player in the CDP space, Segment, like many other “CDPs,” has had an uneasy relationship with the category. Last year, it branded itself “Customer Data Infrastructure,” emphasizing its developer-first orientation and seeking to separate from the muddled mass of “CDPs” with varying functionality and maturity — and with very different buyers and end-users. In the press release announcing the acquisition, however, Twilio’s CEO Jeff Lawson embraces the term, writing:

As the leading CDP, Segment enables developers to unify customer data from every customer touchpoint, and empowers marketing, sales, and customer service leaders with the insights they need to design and build relevant, data-driven customer engagement.

The quote provides a good context on both Twilio’s orientation to Segment and to the market at-large. Twilio is a developer-first shop. Their fundamental market hypothesis is that developers will drive innovation in martech and customer communications through access to superior infrastructure. They believe that by owning the “pipes” that drive all customer communications, they at once control the emerging martech ecosystem (who build platforms on their pipes) and emerging brand ecosystems (whose developers build internal tools to send through them). Twilio’s 2018 acquisition of SendGrid affirmed this strategic orientation. Many, if not most, next-gen marketing clouds (e.g., Braze, Iterable) used SendGrid to send email — often exclusively and at tremendous volume. Many, if not most, emerging brands (e.g., Airbnb, Uber) used SendGrid to send both product and marketing emails — often exclusively and at tremendous volume. Twilio’s acquisition meant that developers from both ecosystems could now work with one progressive, high-scale delivery provider. Culturally and structurally, Segment feels almost identical. Segment sells mostly to developers. Segment views itself very similarly to SendGrid. Peter Reinhardt, Segment’s CEO, has spoken publicly about being the data infrastructure for the next generation of marketing tech. Developers at progressive, high-growth brands have used them to manage their data flows, and — in both cases — once deployed, they’re deeply entrenched.

What does the acquisition mean for Twilio?

With the acquisition, Twilio can step past simply being a one-stop-shop for marketing infrastructure. Twilio’s press release conspicuously stresses concepts like “customer experience” and “empowering marketers.” Coupled with a reference to Twilio Flex, this provides important clues into their forthcoming strategic orientation. The full formula for managing customer experience is simple: you need data solutions to help to understand customers; you need orchestration solutions to decide what messages they receive, and you need pipes to send those messages. Until now, Twilio has concerned itself exclusively with pipes while driving itself to a >$45B market cap. Turns out, controlling the pipes is pretty profitable. By acquiring Segment, Twilio is betting that significant additional opportunity lies in controlling the data flowing through those pipes. Snowflake’s IPO, along with the early spike in Twilio’s share price on Monday, certainly confirmed that public markets share this view. But Twilio’s press release doesn’t stop at controlling data and pipes. Specifically, CEO Jeff Lawson gives a telling reference to Twilio Flex, intended to be a developer-first orchestration solution:

Over time, the addition of Segment will allow Twilio to integrate data intelligence into Twilio Flex and every one of our offerings to provide highly personalized customer touchpoints.

The writing is on the wall here: Twilio likely intends to build a developer-first experience cloud. Flex will be their orchestration offering, and they’ll be taking on Adobe, Salesforce, and Oracle through a developer-first product suite that is designed for a more modern organization.

Will Twilio’s strategy be successful?

Twilio has shown a tremendous ability to evolve and change. Their longer-term success ultimately hinges on five important factors:

• Continued Martech Ecosystem Success: As noted above, a major pillar of Twilio’s strategic advantage is the extent to which marketing technology providers (e.g., Braze, Iterable, Attentive) use them as pipes for their own solutions. Segment’s partnerships with similar entities have provided important tailwinds to all involved. With a Flex + Segment-powered experience cloud, Twilio now faces Google Pixel-like competitive dynamics with their own customer base. Skillful navigation of this dynamic will be critical.
• Continued Strong M&A Performance: Twilio’s acquisition of SendGrid was smart and timely; the acquisition has been relatively smooth, owing largely to the cultural and product similarities, along with a relatively low tech-integration burden. The Segment acquisition can be a similar boon, but execution will be critical. Moving forward, the M&A teams at Twilio will need to close gaps in other areas. Will Flex actually be sufficient, or will an orchestration-focused acquisition be necessary? How will Twilio address other channels, e.g., web?
• Supportive Product Development: With heavy bets seemingly placed on Flex, the product and engineering teams at Twilio have their work cut out for them. Flex is far away from being anything approaching a sufficient orchestration solution today. Orchestration is a complex space with a long tail of features that are necessary for competitive enterprise parity with incumbents like Salesforce, Oracle, and Adobe. While Twilio’s developer focus can stave off some of this pressure in the short term, parity will eventually be required, and they may be years away.

Beyond simple orchestration, as David Raab at the CDP Institute notes, absent a meaningful customer acquisition story, Twilio will have to address additional channels and other critical functionality like reporting and content. The enterprise wants to integrate CX across product, marketing, and engineering — a far cry from Flex’s footprint today or anywhere in the near future. Additionally, integrating Segment brings its own challenges for enterprise companies which can be traced to its tag manager roots; ongoing product development to drive differentiation and integration enablement will be critical.

• Brand + Ecosystem Development: Twilio has a very different brand profile than Salesforce or Adobe, two companies with tremendous name recognition among enterprise marketers and technologists. Dreamforce is essentially a gigantic martech networking festival; Salesforce Trailblazers and MVPs provide critical mechanisms for celebrating marketing and technology specialists. Adobe has similar constructs with its Summit and other programs. Both have huge service and support networks surrounding their product suites. No one gets fired for buying these providers, and there are significant career upsides for investment in these ecosystems. To compete, Twilio will need to find ways to cultivate deeper relationships with non-technical buyers, which remains largely uncharted territory for them.
• Enterprise Sales Development: Neither Twilio nor Segment have meaningful enterprise sales pedigrees, particularly when it comes to targeting marketers. It is easy to underestimate the power that folks like Salesforce and Adobe wield via their massive sales engines. Twilio will need to develop real competencies around better penetrating enterprise accounts, building consensus, and driving decisions and upsells where they already have a presence.

The final point here is particularly nontrivial. Selling and implementing solutions like Segment in the enterprise is incredibly challenging, and may have had something to do with their desire for a deal. Twilio doesn’t have deep experience, and the headwinds are going to be significant. A CTO of a publicly-traded company shared this thought with me over the weekend along those lines,

“So many of today’s digital enterprise platforms have legacy systems and/or technical debt that makes deployment of systems like Segment incredibly difficult. The migrations and upgrades I led at [Company] made these sorts of deployments easier, but it was a long road that many shops won’t want to go down.“Beyond simply the technology challenges, accounting for measurement anomalies is a huge burden in the enterprise. Traffic numbers will change following installation, and we had to deal with their auditors to account for the differences. When we first launched, traffic was off by 0.5M per month and we did an insane dive to figure out all the differences and account for it. We required a disclosure when releasing their EOQ numbers, which was exquisitely painful.”

Why did Segment sell rather than IPO?

Twilio’s strategic trajectory and long-term ambitions are only one side of the story. Segment chose to do this deal and to do it against the backdrop of Snowflake’s valuation more than doubling following a last-minute repricing and significant private market valuation increases in the period leading up to IPO. Why? Public markets want data infrastructure companies. Data is the future. Outside looking in, doesn’t Segment stack up well against these criteria? Ostensibly yes. But now their strong alignment is Twilio’s to benefit. Why did they do the deal? Three theories:

• The Deal Was Just That Good: This is presumably what Segment would want you to believe, but was it? We aren’t privy to the full mechanics of the deal, but from the outside, it looks like a valuation around 20x. At $3.2B, that’s just over double Segment’s last private market valuation. In a vacuum, that’s an excellent deal for all investors and shareholders. For comparison, though, businesses like Twilio are trading north of 25x — and Segment is still relatively early. Maybe Segment’s revenue has been overreported, and we’re looking at closer to a 25x multiple. Maybe there are other factors at play.
• Segment Struggled To Expand Outside Of Their Initial Market: Obviously, Segment’s growth has been tremendous, but were they hitting their own projections? Were they set up to scale at a pace that would be consistent with the expectations of public markets? It’s possible that their developer-focused, mid-market/SMB TAM was getting too saturated to sustain growth rates, and new products weren’t delivering sufficient incrementality. There have been consistent rumblings that their Personas product was underperforming relative to internal expectations, and they’ve switched sales leadership repeatedly in an effort to unlock an effective sales motion to marketing and enterprise teams. It’s entirely possible that, despite good growth, the board and leadership team felt it was time to cash out and not risk future down rounds, particularly given the murky macroeconomic waters ahead.
• They’re True Believers: It’s reportedly an all-stock deal, which is somewhat unusual. Yet given the initial spike in Twilio’s share price, it’s perhaps a savvy move. It’s entirely possible that the Segment board looked at the sum of both companies and thought the upside was significant enough to offset the opportunity cost of not IPOing. Time will tell if this is the case, regardless of the cause. But, as noted above, there’s some strong synergy here if both companies execute well.

Ultimately, it may well be a combination of the above causes. The truth of the matter tends to leak out after the dust settles on deals like these.

Final Thoughts

At the end of the day, the success of this acquisition will be dictated almost entirely by two factors: Twilio’s share price and Segment’s ability to catalyze their long-term strategy. Jeff Lawson has strong ambition (and a matching checkbook) to take on large marketing cloud incumbents. Their developer-led, land-and-expand framework pairs perfectly with their current product ecosystem and Segment fits well into this landscape. If Twilio can develop a more powerful marketer-led enterprise GTM motion/brand, continue to make and integrate smart acquisitions, and navigate delicate ecosystem dynamics, they should be set up well. For the rest of the marketing technology landscape, there is both incremental uncertainty and opportunity. A CDP, your preferred definition notwithstanding, has been acquired for multiple billions. There will almost certainly be a scarcity-driven increase in CDP acquisition by relevant folks. From the perspective of other marketing tech providers, Twilio and Segment no longer seem like innocuous supporting pipes, but are now a daunting entity with a potentially nefarious agenda. The partnership landscape will undoubtedly shift. Some, like Sparkpost, will benefit, while others (e.g., pick your Twilio-powered ESP) may find it difficult to adjust. Brands, for their part, continue to struggle. Customer experience expectations are more intense than ever. Channels continue to proliferate. Data-privacy policy is evolving in near real time. The underlying challenges of true experience management remain daunting and expensive problems for almost every company. Expensive problems tend to command expensive solutions, so the budget will be allocated. But who will get it? Time will tell.

Traveling beyond 2020 to reimagine the customer experienceThe Travel & Hospitality Industry is probably the most stressful place to work right now for a number of reasons:

• To what extent will travel rebound?
• Over what timeline?
• What major changes will we see persist beyond the next 2–3 years?
• How will these changes affect each sub-vertical within travel (e.g. airlines can adapt to changing destination preferences in ways that physical hotels cannot)?
• What can be done now to prepare for any possible future?

By “preparation,” we’re not talking about stricter cleanliness guidelines, but about reimagining what capabilities the Travel & Hospitality industries can develop to serve customers better.Adversity and volatility are to be expected; when and in what form they will come is what we can’t predict. But volatility separates the brave and thoughtful from the scared and reactive. Travel businesses aren't powerless, however; critical areas of investment and improvement yet exist and making wise moves today can be the difference between success or failure tomorrow and in the longer term.Digital transformation is all about the customerEnterprise Travel & Hospitality brands were some of the earliest digital adopters, meaning there’s likely some subpar tech in your stack. Now is the perfect time to inspect your technology stack for weak tech, bad data, high-latency integrations, and suboptimal workflows. Think strategically about using this downtime to invest in shortening your digital transformation roadmap from 5 or 10 years to as little as three monthsBut why endure the headaches of a digital transformation in the first place? The first and best answer is this: your customers. An exciting silver-lining for the travel industry is just how eager people are to travel right now. Consumers are craving information on what is open and available. Travelers have broadened the scope of what is exciting to them (e.g., local getaways over global excursions). This makes messaging, partner sponsorships, and digital journey experimentation even more important.Better, more intuitive technology that eliminates silos and bottlenecks can enable your marketers to automate workflows, test new ideas, and ultimately communicate as humanly as possible when it matters most — like now. It’s likely that people have never wanted travel advice more than they do now. Even if offering the best advice doesn’t mean immediate conversions, you are building a trust-based relationship that will ultimately yield loyal customers.How to foster loyalty without destroying your marginsCustomer loyalty is a fickle thing in Travel & Hospitality, where people largely shop based on price and convenience. For this reason, the travel industry invented the modern-day loyalty program in an attempt to incentivize brand monogamy, but now everyone is just a member of multiple loyalty programs. The sometimes hard-to-swallow truth about business today is that — to compete against digital-first challenger brands — every company must be a media company in addition to their core business offerings. For instance, when COVID-related travel restrictions first hit, Airbnb was able to quickly pivot its worldwide Airbnb Experiences to digital format to sate users’ wanderlust with personal concerts in Paris or virtual street tours through Dublin. It’s not just that this was a product they could offer. Airbnb could use these engagements to learn more about their customers, and thus more effectively market to them now and in the future. For example: Did you do the virtual walking tour through Florence in May 2020? Now that it’s 2022, here are the top 20 Airbnb stays in and around Florence, a list of things to do while you’re there, and a list of similar destinations that appeal to the cohort to which you belong (without literally saying you belong to a cohort that we monitor and test against).

Becoming the customer-centric travel brandTravel & Hospitality have a chance right now to become something more than a physical destination or means of conveyance. At the moment, you’ve got less to sell and fewer people buying. The digital era is now five years ahead of schedule. We are not out of the woods with this pandemic, and we have no idea what diseases (or worse) may follow. If enterprise Travel & Hospitality brands are to remain viable for the long-term and weather any storm, their value propositions must live equally in the clouds and The Cloud. Being customer-centric translates to delivering not just travel and experiences but meaning. Meaning is different for everyone, so you need to be able to dig into your customer file and learn real things about real people and create action plans at scale. While expanding your media arm might not be simple, leveraging the data you get from customer interactions to automate workflows and deliver value will be the easy part.The customer-centric approachBelow is a scenario-play of how one piece of information can trigger a customer-centric marketer’s curiosity and creativity to serve customers better. With the right technology in place, this kind of ideation to actualization will be clicks away.

Bob is traveling to .

Why is Bob is traveling to ?

It's travel for pleasure

How do we know this?

• Bob has engaged with content about this country, similar destinations, and long-term travel.
• Looking at historical records, Bob flies to a new, international location for ~2 weeks every year.
• Bob’s wife and kids are also on the reservation.
• Bob paid for the flight with points. Were he flying for business, he would have paid with either a business card or with a personal card for reimbursement.

How do we use this knowledge?

We test and learn ways to become his vendor of choice for helping achieve his dreams of seeing X, Y, & Z. What content or special offers would make us the go-to “purveyor of travel dreams?” What content can we serve to learn more about his future travel plans? Can we create a profile builder where he can volunteer this information?

What can we do to scale these insights?

Create a segment based on our combination of data and marketing intuition to create test and holdout groups to measure incremental ROI of different “jetsetter” persona offerings.

He's visiting his childhood home

How do we know this?

• Looking at historical records, Bob flies to the same airport during the holidays every year.
• Bob has set up price alerts for this destination outside of peak travel seasons.
• Bob has never engaged with content about this area, so we might infer that he knows it well.
• Digging back, we can see that 10 years ago, Bob’s phone number matched this location.
• Digging back, we can also see that the local airport used to be Bob’s primary airport.

How do we use this knowledge?

Do a historical analysis to uncover how often and during what seasons he usually travels home. We can test and learn by creating custom packages or date-flexible price alerts for Bob’s bi-annual hometown visits. This could also feed into the profile builder for the jetsetter persona.

What can we do to scale these insights?

Create a test group and holdout group in our “occasional traveler” cohort to see if the offerings we’ve developed are enough to increase loyalty, as measured by a rise in consistency in bookings with us around times we infer they are traveling based on historical records.

It's a business trip

How do we know this?

• Bob is flying alone rather than with his family, with whom he often travels.
• Bob didn’t use his business card, but he did book business class, which he never does when his family members are also on the reservation.
• He paid with a card rather than points. When flying with his family, Bob always uses points, so we can infer that his job reimburses his travel expenses and he racks up points with business travel.

How do we use this knowledge?

What do we know about him that we can leverage to make recommendations, so he truly enjoys the time he’s not working? What partnerships can we leverage to make Bob fall in love with this destination (and, by extension, our brand)? Can his good experience extend to him referring coworkers and people in his network?

What can we do to scale these insights?

Test different offerings and messages within the “business traveler” cohort to learn which partnerships drive the most value, what messages most resonate, and what upsells are most effective. Build a referral program to track success and increase acquisitions or purchase frequency.

Bob is traveling to .

Why is Bob is traveling to ?

It's travel for pleasure

He's visiting his childhood home

It's a business trip

How do we know this?

• Bob has engaged with content about this country, similar destinations, and long-term travel.
• Looking at historical records, Bob flies to a new, international location for ~2 weeks every year.
• Bob’s wife and kids are also on the reservation.
• Bob paid for the flight with points. Were he flying for business, he would have paid with either a business card or with a personal card for reimbursement.

• Looking at historical records, Bob flies to the same airport during the holidays every year.
• Bob has set up price alerts for this destination outside of peak travel seasons.
• Bob has never engaged with content about this area, so we might infer that he knows it well.
• Digging back, we can see that 10 years ago, Bob’s phone number matched this location.
• Digging back, we can also see that the local airport used to be Bob’s primary airport.

• Bob is flying alone rather than with his family, with whom he often travels.
• Bob didn’t use his business card, but he did book business class, which he never does when his family members are also on the reservation.
• He paid with a card rather than points. When flying with his family, Bob always uses points, so we can infer that his job reimburses his travel expenses and he racks up points with business travel.

How do we use this knowledge?

We test and learn ways to become his vendor of choice for helping achieve his dreams of seeing X, Y, & Z. What content or special offers would make us the go-to “purveyor of travel dreams?” What content can we serve to learn more about his future travel plans? Can we create a profile builder where he can volunteer this information?

Do a historical analysis to uncover how often and during what seasons he usually travels home. We can test and learn by creating custom packages or date-flexible price alerts for Bob’s bi-annual hometown visits. This could also feed into the profile builder for the jetsetter persona.

What do we know about him that we can leverage to make recommendations, so he truly enjoys the time he’s not working? What partnerships can we leverage to make Bob fall in love with this destination (and, by extension, our brand)? Can his good experience extend to him referring coworkers and people in his network?

What can we do to scale these insights?

Create a segment based on our combination of data and marketing intuition to create test and holdout groups to measure incremental ROI of different “jetsetter” persona offerings.

Create a test group and holdout group in our “occasional traveler” cohort to see if the offerings we’ve developed are enough to increase loyalty, as measured by a rise in consistency in bookings with us around times we infer they are traveling based on historical records.

Test different offerings and messages within the “business traveler” cohort to learn which partnerships drive the most value, what messages most resonate, and what upsells are most effective. Build a referral program to track success and increase acquisitions or purchase frequency.

If you relied solely on the creative brainstorming portion of this exercise to bear priceless customer-centric fruit, you would have a lot of underripe nuggets to gnaw. Without a deeply embedded foundation of data that is made accessible to non-technical users and an interface that allows for the kinds of testing required to validate marketing efforts, the above are just fanciful daydreams.

On September 22, 2020, Simon Data held a Fireside Chat event with Simon’s very own Whitney Hudson, Director of Client Development for Financial Services, Simon Co-Founder and President Joshua Neckes, and Simon client Katherine Kornas, VP of Growth at Betterment. The discussion centered around the importance of building a human-first, relationship-oriented brand and the tactical and organizational components of getting there. This Fireside Chat is a part of a series of private roundtables that Simon has been holding with groups of executives around the world. The specific focus of our conversations vary but always orbit how to transform your organization, your marketing, and your customer experience to build deeper long-lasting customer relationships. The perfect storm has hit the financial services space with tech-enabled challengers and disruptive FinTechs up-ending a space once dominated by legacy players with a century of client history. Meanwhile, the digital era has increased convenience and lowered switching costs, and the international COVID-19 pandemic has driven people to rethink their personal finances. With consumer behaviors quickly shifting toward digital-only interactions, it’s imperative to get an agile understanding of financial services customers and to be able to meet them where they are today and into whatever tomorrow holds. Financial matters are incredibly sensitive and personal and finance brands must do all they can to build trust with their clients and prospects. This is why creating an authentic, human brand was the focus of this conversation. The key to success in this mission lies in redefining the intersection between technology, data, process, teams, and culture in service of the customer relationship.Katherine kicked off the discussion by describing how her user-centric product management background at consumer-facing companies informs her role as VP of Growth at Betterment. Originally recruited into a product role, Kornas started working increasingly with the marketing team to bring them up to speed on data-driven, customer-centric practices, such that “growth” as a function at Betterment now straddles content marketing, brand strategy, product management, engineering, design, acquisition marketing, and CRM. To learn more about how Betterment’s Growth function straddles marketing, product, and engineering, click here to see the full webinar.It’s Betterment’s focus on the customer relationship — which requires understanding their core customers and incorporating that understanding into both their product and their messaging — that has helped it organically grow through passionate customer word-of-mouth, which remains Betterment’s top source of new customers. Katherine went on to say that, in the context of Betterment’s customer-centric brand, it actually takes two different forces to be an effective consumer-focused brand. The first is the tactics:

1. Make sure that the messages you put in the market feel human
2. Put a face to the messages
3. Develop creative that resonates with and speaks to the consumer on a needs and motivations level

The second is team operations:

“It's really critical that my team shows up as human, and that I relate to my team as humans first and as Betterment employees second because I have seen that when we are all operating and recognizing each other as humans, we are more likely to connect with our customers as humans, which then leads to the great relationships that lead to not only the customer success but their ability to feel comfortable referring and bringing more customers to our platform.”

To learn more about the marketing tactics and unique organizational strategies that Katherine Kornas uses to keep Betterment a disruptive market force in financial services, click here to see the full webinar.

As a technologist, your job is to build systems and infrastructure to support the business and drive value. This value varies in form, from more efficient processes to improved and/or automated workflows, all to optimize outcomes. For marketing and customer experience technologies, this means supporting the deployment of targeted messages, campaigns, and other experiences. But technology plays a much bigger role than merely enabling execution. There are other elements in the “smart marketing” continuum that must be accounted for. This won’t come as a surprise to anyone with even a passing familiarity with the current martech solution market, but martech stacks — especially for legacy brands — can be miles high and made only taller by the massive gaps between systems and solutions. Each piece must not only solve its central problem; it must also connect to, enable, and amplify every other function within the stack. You build technology and buy technology, but you don’t want a stack — you want an ecosystem. What follows is Part 2 of a two-part series on essential areas for consideration when assessing technology solutions. For Part 1, click here. Modeling & MetadataDefinitionDescribes the internal structure of data after it has been ingested; this is how one stores data in the system for downstream use.Why is this important?Choose your data models carefully — they must serve a purpose, a desired downstream outcome. The model needs to serve you for ingesting data, segmentation, targeting, content, reporting, et al. And the data items must be consistently available to you across the stack. Of course, there will be times when you need to assist the solution in understanding the semantics behind your data. Providing this information in the form of metadata annotating your underlying data model allows general-purpose marketing tools to be brought to bear on your bespoke data model.Questions to ask of the technology solution:

1. How are you enabling business users to contextualize data for better reporting, insights, and core marketing utilization (e.g., tagging of sources as paid or organic)?
2. How are these insights reflected in downstream reporting that shows conversion rates broken down by each segment?

Customer targeting & segmentation ownershipDefinitionBuilding audiences for targeting with marketing campaignsWhy is this important?The exploration and understanding of target audiences cannot be a function of your data engineering teams. It has to be put in the hands of the marketers who will ultimately define and execute marketing campaigns over the segments.The key is to enable data engineers to get data into the system quickly and easily while empowering marketers to quickly build intuition and to experiment with various ways of slicing and dicing audiences. If marketers are waiting 2 weeks for the data team to come back with a new segment they're interested in, only to find it contains 5 users, you are not effectively unlocking the potential of your data.Questions to ask of the technology solution:

1. At the core of marketing is audience selection, for which proper data underpinnings are critical, so how do segmentation tools integrate into core data and systems?
2. To what extent can marketing, product, or growth teams own and maintain these tools?

Content & personalizationDefinitionThe use of personalized attributes of contacts, and potentially joining in additional data, like that from a product catalog, to produce content and copy for marketing messagingWhy is this important?The days of spray and pray are over. Every time one company improves upon its personalization abilities, the bar is raised for every company. There are many things that fall under the umbrella of “personalization.” The first thing that pops into your mind is probably product recommendations. Personalization can also include triggered content flows, automatically adjusting email cadence when the system notices exceptionally high or low open rates, geo-located promotional offers. Questions to ask of the technology solution:

1. How do your content management tools integrate with marketing systems?
2. How does personalization tech (recommender systems, etc) integrate?

ExperimentationDefinitionRunning controlled tests that can measure the lift for marketing variants across dimensions including timing, channels, content, and more.Why is this important?Fundamentally, marketing is about changing behaviors, and experimentation is the cleanest way of measuring attribution and ultimately, causality. To holistically test the full customer experience, experimentation solutions must work across all channels of communication.Questions to ask of the technology solution:

1. How can you run coordinated, multi-channel experiments across all of your customer-facing systems? This should include systems that control on-site personalization, email, direct mail, ads, and more.
2. What do workflows look like to configure, deploy, and then measure experimental results? How much can be done in a self-serve capacity, and what needs custom or engineering support?
3. How are you going to educate and promote good experimentation culture? How is experimentation part of your company strategy? How do you plan on educating the business around when to run an experiment?

Insights & reportingDefinitionData analysis in the form of standing reports that indicate marketing campaign operations and performance as well as exploratory tools for understanding factors driving those outcomes.Why is this important?Best-in-class marketing is iterative and requires a tremendous amount of hypothesis testing. But you can’t formulate hypotheses in a vacuum. You need to be able to find patterns and trends in data to inform your hypotheses, making insights and reporting a fundamental cornerstone in both the front and back end of any experimentation approach.Questions to ask of the technology solution:

1. How are you building analytical tools and support?
2. How much are you leaning on full-service models (with analysts/BI resources who assist with requests) vs investing in self-serve tooling?
3. To what extent are reporting and insights integrated into workflows?

If you have questions about these lines of thinking or would like to go deeper into understanding how to address these issues, don’t hesitate to contact us here.

In case I forget, I have to say the words “we’re living through a global pandemic” out loud daily.

I’ve heard this moment we’re living through called “sensitive” or “unprecedented” or “difficult,” spoken with the same tone as those tear-jerker ASPCA commercials. On top of washing our hands every hour, we’re being called on to care about other people’s well-being. The Zoom Happy Hours have tapered off since COVID quarantine started, and we no longer start calls with the obligatory, “How’re ya holding up?”

I miss going to an office space — not just for the change of scenery, but those watercooler conversations, lunch-time catch-ups, and meetings that get derailed to talk about that hilarious thing your kid did or your coworker’s band practice. I miss those conversations the most because those are the interactions that taught me the value of empathy as a workplace superpower.

In a past life, I glorified the self-imposed “paying dues” stage of starting a new job, obsessed with perfection. My job was to drive business at any cost, which meant that I would exhaust myself and every resource at my disposal before asking for help out of fear of being wrong.

Years later, I’d learn that not knowing everything and asking for help would make me better. Sharing stories and details about my life outside of work would make my peers trust me and relate to me. The value that I got from those interactions would keep me motivated and, ultimately, push me to proudly win for my team, not just for my pride.

I’ve outgrown being the kid who has to own the whole team project because I refuse to believe anyone else’s way could work.

While the workplace may not be a place for the touchy-feely stuff, the “greatest hits” of my career came from feelings — how people made me feel and vice versa: Running with someone else’s genius idea that I could help bring to life or making someone feel included, starting a challenging conversation, taking time for the small talk and, ultimately, contributing to a culture of collaboration and empathy.

Empathy is the company benefit that doesn’t usually get highlighted in the HR welcome handbook. It’s what happens when we:

Listen to what people want to say and respond with understanding, whether that’s an idea for a team project or something personal that helps us put ourselves in someone else’s shoes. It’s something so simple that so many of us forget.

Share and make people feel welcome to share. Our experiences overlap and compare in so many ways, and we feel less alone when parts of our experience sound like someone else’s. In company cultures where I felt other women were my competition, I got comfortable sharing my struggles and quickly learned that “fake it ‘till you make it” is not as productive as “this is hard for me too.” My less robotic (human) qualities made me an ally to anyone who also assumed I was their competition.

Understand: Understanding is creativity-kindling: this was a newsflash for me: someone can have a valid opinion that is very different from my own. Two ideas don’t mean there isn’t space for both of us to be right. Or one could convert to the other side. Or, even better, we find how the ideas interlock and add value to each other. The projects I’m most proud of came from openness to take a half-baked idea and make it better with combined brainpower.

Lift Others: Positive recognition goes such a long way. Motivate your peers, celebrate big and small milestones as a team, share personal experiences, and consider how your company celebrates wins to make people feel appreciated.

Create change: Diversity and inclusion mean everyone. Create programs and practices that give employees a platform to share what’s essential to feeling valued. Amplify forums for diversity. Give people a safe space to share how the internal dynamic you’ve created makes them feel. Be open to letting feedback influence your company culture.

Acknowledge unique perspectives: In a genuinely empathetic culture, no single person is right. Get comfortable with having the second-best idea in the room and get comfortable with being wrong. When I feel myself getting hell-bent on proving I’m right, I choose curiosity instead.

As soon as I was part of an empathetic company culture, I felt myself succeed. I was more proud of my ideas, and I stopped feeling a sense of competition to prove myself or fight to be the smartest person in the room. I had permission to be wrong. I had permission just to be a human being around the people with whom I spend the majority of my week.

Our channels to create an empathetic environment may change under the current global circumstances, but it’s more important than ever for leaders to make empathy part of their company culture. Business is literally in people’s homes now. However, there’s still a significant risk of disengagement because we’re not physically present and because we’re in a “Zoom Zombie” state from being on calls all day.

Empathy is a superpower because it keeps your employees inspired, motivated, and eager to learn and collaborate. And ultimately, it’s what keeps your people happy and committed to your organization for the long haul. It allows employees to bring their whole selves to work and know that they will be met with understanding, curiosity, and may even incite change to make your company a better place for everyone.

I work harder when I’m heard. When I’m heard, I’m engaged, and when I’m engaged, I produce my best output. Chances are, this formula applies to your team too.

From “One-for-All” to “All-for-One”

Historically, marketers sought to implement a single, wide-ranging technology solution (e.g., marketing clouds) to solve their challenges. But over the last few years, marketers have rapidly begun migrating to best-of-breed technology stacks. According to Gartner, 64% of enterprise marketers now prefer best-of-breed over all-in-one solutions — an almost perfectly inverted ratio from 10 years ago.

This is primarily due to two reasons:

1. There is growing marketer disillusionment with all-in-one solutions, which have been cobbled together through years of M&A activity and rarely come close to fulfilling the capabilities or outcomes they promise.
2. Today’s marketers have increasingly complex needs due to the expansive activity modern marketing requires: more channels, more data, more use cases — all of which are poorly handled by older, all-in-one technology platforms.

Instead, as new use cases and challenges arise, marketers want to choose a piece of technology that is fit for purpose. Often, this means working with a smaller, emergent vendor with particular expertise suited to a marketer’s specific business and problem. Companies realize significant benefits on the back of this trend: eliminating technology redundancy in their stacks, reducing unnecessary spend, unlocking net-new capabilities from niche providers, and seeing significantly better customer relationships.

In practice, this means an enterprise marketing technology leader will now choose an independent SMS vendor, like Attentive, and pair it with a provider like Braze for push notifications while remaining committed to Salesforce Marketing Cloud for email. The same leader might opt for Looker over Tableau, leverage Google Analytics for ad performance while using Amplitude for mobile analytics, and implement MetaRouter over Segment for tag management.

In parallel, this marketing technology leader will have an engineering counterpart that will make major architectural decisions to solve half of the “customer management challenge.” She might choose Snowflake for data warehousing and pair it with Fivetran, Databricks, and dbt, to ensure consistent data flows and support collaborative data science work.

While procurement might have complaints, the above scenario unlocks significant incremental capabilities for the business, providing opportunities that would not be available if they had stayed within one martech ecosystem. It also presents new challenges.

Which “Breeds” Are We Talking About, Anyway?

Before we dive into these challenges — and how to solve them — it’s essential to define the new category landscape for martech. We use the term “best-of-breed” above, but what are the breeds in question? Despite some confusion, there is an emerging consensus as to which categories comprise a modern marketing stack.

In our experience, the typical best-of-breed marketing technology stack consists of 8 categories:

• ELT (extract, load, and transform) tools to stream data into a data warehouse via pre-built data connectors.
• Leading vendors include Fivetran, Talend.
• Data cleansing tools to transform data within a data warehouse.
• Leading vendors include dbt, Airflow.
• Data warehouses to act as the central repository of data.
• Leading vendors include Snowflake, Redshift, BigQuery, Azure.
• Tracking tools (i.e., tag managers) to manage and deploy tags (tracking pixels) on a website.
• Leading vendors include Segment, mParticle, MetaRouter, Rudder Stack.
• Web analytics tools to track and analyze web activity.
• Leading vendors include Google Analytics, Amplitude.
• End channels to communicate with audiences, e.g., SMS, direct mail, email, push, social, ad channels, customer service, etc.
• Leading vendors include Twilio, Optimizely, SendGrid, Zendesk, Facebook.
• Data science tools for statistical analysis of data via programming languages.
• Leading vendors include Databricks, DataRobot.
• Business intelligence tools for data analysis and visualization.
• Leading vendors include Looker, Tableau, PowerBI.

This classification helps guide the digital transformation — or evolution — for many of the most progressive companies with whom we work.

These vendor types represent a modern “reference architecture” for customer engagement, providing all of the capabilities a business would want to deliver a best-in-class customer experience. Well, almost.

As companies shift towards this new reference architecture, they see firsthand what happens when disconnected technologies hinder customer relationships.

The Challenge: Connecting

The entire marketing stack mentioned above aims at one objective: maintaining excellent customer relationships. Each of these best-of-breed tools has a “superpower” that it provides in service of that objective.  

Technology teams need to connect these siloed systems to harness their superpowers, an integration process that is fraught with challenges.

Consider the diagram below:

Here, we see the eight categories of tools, connected in a way that’s typical for an enterprise. As technologists implement these solutions, we can observe that the flow of customer data between them becomes more complicated. This complexity leads to:

• Data Gaps
• Disconnected Customer Profiles
• Broken Connections
• Duplicative Flows
• Data Latency & Scale
• Compliance Failure
• Maintenance Burden

It also creates a tremendous burden on the marketing team:

• Tech Cost: money that could go toward media or content that flows straight to the bottom line is wasted on duplicative and sub-optimal functionality (e.g., each channel has its journey builder).
• Effort and Agility: since customer experiences are maintained across many systems, changing tools or adding new end channels is more time-consuming, expensive, and risky.
• Customer Experience: customers have disjointed experiences and offers since it is impossible to perfectly coordinate end channels without unified orchestration, leading to churn and missed opportunities.
• Reporting: analytics and reporting are significantly more challenging, as conversion and engagement data often live in siloed tools with different identifiers.
• Results: validating attribution is impossible, and experimentation can’t be adequately controlled, leading to false certainty.

Notice just how many connections a modern marketing architecture requires. The obstacles to integration don’t just come from the sheer number of connections, but also the nature of the data they must pass.

So what’s the answer? How do we unify these systems? Through a Smart Hub.

The Smart Hub: Your Martech Nucleus

A smart hub centralizes customer data from disparate “best-of-breed” solutions. It amplifies their power through seamless orchestration so marketers can unlock the true potential of their best-of-breed solutions.

The smart hub acts as the central node ingesting all relevant data sources and orchestrating actions across channels while maintaining a consistent customer profile through a seamless workflow. In essence, it becomes the nucleus around which all other marketing technologies revolve.

The Key Competencies of the Smart Hub

Data Ingestion and Customer Profile Management

A smart hub creates and maintains a customer profile based on numerous identifiers (e.g., email, phone number, name, web cookie). As new identifiers surface in a customer’s profile (e.g., device ID), they are seamlessly joined together, ultimately defining how to stitch all customer behaviors and characteristics.

Data Centralization

Centralization fuels transparent segmentation, downstream orchestration to end channels, and experimentation.

Orchestration

This includes a range of actions, such as syncing a contact list to a customer service tool or triggering a personalized message to an email-service tool. Since all customer data is centralized, dynamic personalization is seamless based on customer events and characteristics across channels.

Experimentation

The ability to launch experiments and seamlessly integrate learnings is essential for any enterprise to continue refining its content for acquisition, retention, and reactivation. Within a smart hub, experimentation is easy to manage by splitting segments into test and control groups and maintaining those groupings across downstream end channels, giving a unified view across touchpoints. All end channel and downstream engagement data feed into the smart hub for reporting and further segmentation.

Centralizing data from best-of-breed tools within a smart hub powers seamless orchestration, producing personalized, relevant, and consistent messaging to customers throughout their lifecycle. As specialized martech solutions and mile-high marketing stacks grow, companies looking for real digital transformation turn to smart hubs to manage their best-of-breed tools, unlocking all of these tools’ capabilities.

The Smart Hub’s Value Drivers

The value of building a seamless customer architecture with a smart hub spans a variety of dimensions.

Revenue Growth & Spend Efficiency

A smart hub can lead to revenue growth and spend efficiency through many avenues, but the two primary drivers are campaign optimization and leveraging net new channels. Campaign optimization produces personalized content to customers at the right time. Net new channels allow marketers to meet their customers wherever they are.

Combining these avenues facilitates coordinated, personalized, cross-channel messages that reach customers at the right time in the right place to drive conversions and improve customer-acquisition costs.

Relationship Growth & Better Customer Engagement

Relevant and personalized content builds a strong relationship with customers. Customers that build strong relationships with brands become compelling brand advocates. These customers will spend more time with the company’s products — using a subscription service (e.g., cooking with a Blue Apron kit or riding a Peloton bike), browsing the company website (e.g., Allbirds’ shoes), or engaging with content (e.g., responding to a TripAdvisor blog).

Cost Reduction via Tech Stack Consolidation

Since a smart hub can act as the brain for marketers’ tools by managing audience creation, orchestration, and dynamic content, robust end channels are unnecessary. Companies can replace legacy “do-it-all” end channels with less expensive, a la carte end channels. A leaner tech stack will reduce technology costs, FTE hours, and agency costs associated with supporting those tools.

Increased Workflow Productivity & Expedited Time to Value

A smart hub reduces manual workflows, reducing the steps needed to launch a campaign. Marketers can launch a campaign without waiting for IT or data engineering to pull data assets and stitch them together.

Reduce Personal Pain

Workflow problems — such as manual journey creation and no single tool to run campaign orchestration — are solved with the integration of a smart hub. Marketing teams can be confident in their ability to streamline superior customer experiences throughout a customer’s lifecycle.  

The integration of a smart hub will help marketers drive better customer experience and grow strong customer relationships. Not only will customers benefit from thoughtful, personalized, and timely content that a smart hub can provide, martech and IT professionals will benefit from consolidated technology stacks and seamless end-to-end marketing processes.

Conclusion

The introduction of a smart hub is an essential shift in the fractured martech ecosystem of endlessly proliferating solutions. Marketers feel an enormous amount of pain, trying to wrangle data and streamline their workflows across so many tools.

A smart hub doesn’t replace best-of-breed technologies and point solutions. A smart hub centralizes and amplifies each solution’s capabilities by allowing marketers to build a modular but seamless stack built to manage customer experiences and help marketers get back to providing a more human customer experience.

Brands turning fallout into fertile ground through accelerated digital transformation

We’re proud to announce that Simon was named a Cool Vendor in Multichannel marketing by Gartner in their 2020 Cool Vendors report. Each year, Gartner selects a few vendors that are innovative and impactful.For so many enterprise brands, customer engagement remains fragmented: data is captured but not usable; channel-specific marketing tools have no visibility into the broader messaging ecosystem; and marketers too often find themselves reliant on the support of engineering teams to accomplish their goals. Our technology solves these problems at enterprise-scale.Being named a Gartner Cool Vendor is very exciting for us. We have put a lot of work into building a platform that breaks down the barriers between data and marketing in a way that has resonated with those that have a broad, experienced view of the market: our incredible customers, and now Gartner.What makes Simon different:

• Great multichannel marketing can only happen when you know your customer. We believe that our innovative, no-code approach to an integrated identity model allows for more trustworthy, and ultimately more successful multi-channel orchestration.
• Now more than ever, we feel that martech should reduce waste without sacrificing results. Simon has been consolidating martech tools, improving multichannel performance, and reducing operational expenses for our enterprise clients for many years and only continues to improve.
• Gartner categorizes Simon as a “Smart Hub,” and we believe that centralized coordination is the only way to enable our customers to consistently serve cohesive, responsive, and personal experiences for their customers on any channel.

Want to learn more about Simon? Schedule a demo with our team today!Gartner, Cool Vendors in Multichannel Marketing, Noah Elkin, Benjamin Bloom, Joseph Enever, 17 April 2020The GARTNER COOL VENDOR badge is a trademark and service mark of Gartner, Inc. and/or its affiliates and is used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s Research & Advisory organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

How an integrated marketing team can drive transformation

The idea of a “modern marketer” is always a moving target. New channels and new technologies fuel an ever changing set of customer expectations. What’s clear is that in a world where no consumer is untouched by data-driven giants like Google and Amazon, the modern marketer needs a modern marketing team–one organized around producing holistic, data-driven, customer-centric experiences–to compete. But whether you’re a digital-native challenger or an iconic legacy brand, building the type of team that can deliver these types of experiences presents a challenge. At Simon Data, we focus on supporting great customer experiences everywhere. Along the way we’ve learned what it takes to build a team that can deliver.

Let go of legacy structures

At Simon, we’ve worked with numerous emerging and legacy brands. While it’s clear that they come at the challenge of building a modern marketing team from different places, they nevertheless encounter similar challenges. For established brands with legacies that extend to the pre-digital era or even simply to the pre web 2.0 era, the marketing function likely didn’t spring into existence in a fully integrated form. Instead, as new channels emerged, marketing teams added new roles and functions to accommodate them, creating silos. For example, a team responsible for email communication may have no communication with the team creating advertising content. Even if those digital functions sit under the same umbrella, it’s possible that they have no meaningful contact with the group responsible for creating in-store experiences at a physical location and no way to share insights gathered from their respective efforts.

However, while much has been made of progressive brands’ talent for adapting to new channels, many of today’s digital-native challengers still struggle to integrate new channels and functions as they grow. In some cases this might mean learning to buy more traditional forms of media, or linking a digital experience to a newly launched physical retail space the siloing of new functions and new data channels is still common. In many cases the pace of progress means it’s hard enough to plug in a new capability let alone find a way to fully integrate it into a team.

Overcoming this history can be difficult since it requires taking on institutional inertia to rethink the marketing team org chart. But changes to team structure can often spur new ideas, facilitate better communication, and enable the kind of cross-functional data sharing required to execute a multi-channel campaign. Technology solutions can also play a role, using a customer data platform to unite and make actionable all of your customer data from new and legacy channels.

Build a team around experiences, not channels

Once we break down the silos between marketing functions, we’re still left with an open question; namely, how should the resulting team be structured to best take advantage of its newfound openness and cross-functional accessibility. The answers, for many of the most progressive brands that we’ve partnered with, is to build their new marketing team around customer experiences and using stages of the customer lifecycle, rather than broad messaging channels, as their key organizing structure.

Instead of channel-based teams, these progressive brands create cross-functional pods set up around moments in the customer journey. For instance, a marketing organization might feature a pod solely focused on the experience of new customers. This group, encompassing advertising teams, performance marketers, brand strategists, creatives, data scientists, engineers, and in-store experience experts, would be responsible for all aspects of the new customer experience ensuring that all aspects of the onboarding process are consistent and oriented toward the way consumers are interacting with the business at that stage. Data collected from these similar interactions can be used to optimize for retention, upselling or moving customers into the next phase of their relationship.

Orient yourself toward behavior,not demographics

In the past it was useful to view customers demographically, as men or women, as 18–34, as urban or rural. Those descriptors spoke to customer behavior in a meaningful way, and marketing teams were built to think of customers as demographic segments. But modern consumers don’t fit so neatly into boxes. The rise of personalized experiences–from the Netflix queues to Amazon recommendations–has changed the way consumers experience commerce and reset their expectations. Regardless of age, gender or location, customers are increasingly expecting experiences to be tailored to their individual needs and preferences.

Many businesses are finding it more advantageous to orient themselves toward a psychographic view of their customers. Looking to the way individuals interact with content rather than trying to form wide customer buckets based on external characteristics. It’s often more advantageous to think of customers as browsers with an interest in skincare products than as women aged 18–34. However, understanding all of these interactions requires a holistic view of your customers and a team that’s able to understand and apply data across all your channels and touchpoints.

Prioritize communication

Successful modern brands are more communicative on a one-to-one basis than ever before. They ask you, “What’s important to you? What information or experience is most valuable to you?” Asking these questions early and often, especially of new customers takes some of the guesswork out of marketing communications. This questioning could take the form of explicit customer surveys and requests for feedback, as well as through testing and experimentation to determine which types of information and offers customers respond to. Regardless of the collection method, an agile modern marketing team can communicate with customers across channels, collect the right information, and use it to inform how and what each customer is served.

This type of responsive, real time communication with the brand is now possible at scale. You don’t need to call customers individually or survey them in the store. Everyone had access to websites and apps in their pocket that enable use to keep human customers in the loop and collect real-time feedback. And if you can’t get your customers the information they need, a real human contact can be a single touch away. The brands that are able to offer and clearly articulate this blend of automation and human interaction will be the most successful and creating fully integrated experiences.

Transformation is continuous

Finally, it’s important to remember that transformation is an active process, not a single end goal. . Building a centralized plan isn’t enough to ensure that you continue to see the benefits of transformation. . Modern marketing teams should be designed to test, experiment, pilot new programs, and iterate on an ongoing basis. For a modern marketing team the ideal state isn’t one of endlessly future-proofing by adding new channels tools, channels, and skills, but rather on of consistent reinvention which delivers consistent results. .

We’re excited to announce our $30 million Series C funding round! This round was led by Polaris Partners with continued participation from .406 Ventures and F-Prime Capital. It’s an exciting time here at Simon and we’re thrilled to have the opportunity to expand on our mission of unlocking the power of data to deliver the next generation of customer experiences.

The modern customer expects personalized customer experiences across the channels they’re on every day. At Simon, we understand that. Data is the key to unlocking the insights and ideas that can drive outstanding customer experiences. However, most CDPs either integrate crudely into enterprise data environments or poorly into existing marketing technologies, making it difficult to truly unify and act on customer data.

We believe there are three things that make a true enterprise CDP:

• It integrates seamlessly into all of your customer data
• It uses that data to orchestrate campaigns across channels
• It leverages machine learning in a way that is cohesive with data and orchestration

Simon is the only enterprise CDP that truly does all three, and we’ve dedicated the past 5 years to building a platform and partnership-oriented company that truly serves the needs of our clients.

Looking Ahead

There’s a lot to be excited for here at Simon. Our company is growing incredibly quickly and we’re looking forward to further scaling our team across almost every dimension — check out our careers page for more information on some of the roles we’re looking for. We’ve been lucky enough to power customer experiences for some of the world’s best brands; this next phase is all about continuing to scale our business while staying true to the values and vision that got us here.

We’ll also be focusing specifically on expanding our data science offering by growing our team of experts. We spent the last four years building a unique data and orchestration foundation that can fully-integrate AI to power comprehensive experiences anywhere. The next step is extending that data science offering further, delivering an incredible platform for predictive personalization.

This could not have happened without our amazing customers, partners, investors, and the Simon Team. Thank you for your continued support — and don’t hesitate to reach out to us if you have any questions, or if you’d like to learn more about our vision, product, or partnership approach.