How marketing automation is helping Xero achieve real-time and personalised communication

Accounting software vendor shares how its adoption of marketing automation, a new CRM platform and digital experience management are combining to help drive behaviour-based customer interactions

Identifying and using behavioural insights on prospective and new customers to tailor communications is becoming a reality at Xero after adopting marketing automation globally.

Over the past year, the small business accounting software vendor has rolled out Marketo’s marketing automation platform and Salesforce CRM to improve how it interacts with end-user customers. The work has not only impacted email-based communication, it’s also extending through to digital experiences and ad buying.

Global marketing operations and automation director, Andy Schick, told CMO that up until recently, the business had been explicitly sales-led and used MailChimp for its email marketing activities.

“We have turned that corner of doing lots of one-off blasts, to identifying potential customers and what they’re doing, and how we respond to it,” he said.

Xero maintains a global marketing automation and operations team, which Schick is part of, and which manages back-end infrastructure as well as brand creative through an internal agency. The company then has regional marketing units.

Schick said the starting point was getting marketing automation in place quickly in order to see benefits within the first 90 days.

“At Xero, we have a culture that doesn’t wait until tomorrow to do something you could do today, learn from and do better tomorrow,” Schick commented. “We were comfortable with accepting that there would be some downside to that, but the upside outweighed that.”

Alongside this, Xero’s IT operations migrated the business to Salesforce. In the last couple of months, Marketo and Salesforce have been married up to ensure a two-way customer data exchange.

In the short term, Schick expected Xero’s automated email efforts would see regional teams doing fewer one-off campaigns at the end of the month aimed at converting as many leads as possible.

“They can trust the work the automation platform is doing is identifying the right time to try and close those leads or handing them off,” he said. “They’re getting the benefit throughout the month, therefore there shouldn’t be anything to mop up.”

Finding the right next-best action

To do this, Xero is tapping data insights and coming up with a next-best action plan in order to tailor digital messaging and content put in front prospects. Schick said the priority is on the first 90 days of activity, and an initial focus is those prospects undertaking a 30-day trial of its accounting product.

“When someone starts a trial, they log in and we start seeing behavioural metrics and can respond to those straight away,” Schick explained. “This helps us make decisions on what parts of the customer journey we need to focus on first.

“Our aim is to also do that same thing even before they start a trial with us.”

Another work in progress is identifying in real-time when Xero’s direct sales team should call someone undertaking a product trial.

“It could be when they’re logged in to that website at that point in time – that tells us the customer is already giving us their attention andis engaged,” Schick said. “It also creates those ‘serendipidous’ moments. I like the idea of automating the online and offline world, and creating opportunity for those two worlds to meet and collide.”

Marketing automation also has a role to play in how Xero targets customers more likely to churn from its product offering. Schick noted insights gleaned by the organisation around mobile propensity for example, showed customers using its mobile app are 19.43 per cent less likely to churn in the next year.

“Another example we’ve found is if they’re using our platform for accounts but not doing invoicing, there’s a 10 per cent higher chance of churning in the next year,” he said.

It’s not just email communications that are changing as a result of these insights and next-best recommendations, either. Xero is looking at using real-time bidding engines to change the Web experience a customer or prospect has.

To do this, Xero has connected up automation with its CMS (Adobe Experience Manager) and digital personalisation engine (Adobe Target). The idea is that once the business defines certain groups of people and a next-best action, Xero can start surfacing relevant content via its digital properties, including login screens.

“We’re at the beginning in terms of getting real-time personalisation and Adobe Target working well together,” Schick said. “But the plan is that every element of the Xero website can be changed depending on which bucket that customer sits in.”

If a customer is using the Xero mobile app or has produced their first invoice, for instance, the next two actions might be to hook them into the company’s ecosystem of partners, Schick said. This could be done through a pop-up message or ad via the login screen. If the next-best action is to educate a user about invoicing features within the platform, emails for several weeks could provide related content tailored to that need.

Schick is the first to admit it’s early days, and said his team is just starting to get visibility into the impact automation is making to Xero’s customer engagement efforts. One initial campaign that’s halfway through has already resulted in a 0.93 per cent reduction in customer churn.

“We’re starting to attribute full percentage points of churn reduction and direct attribute to direct campaigns, which has been really exciting for us,” he said.

Overall, Schick hoped to increase in-funnel conversion by 10 per cent this financial year, while reduce churn by 5-10 per cent.

The biggest challenge for Xero so far has been technical and around data management, Schick continued.

“I’d say this generically of companies: The biggest challenge is just getting the platforms working nicely together,” he said. “Data doesn’t want to be in a polygamous relationship or authored in two different places. Even if you have it end up in five different places, you still have to get the data at exactly the same time, or else different systems are telling you different things.


“You need to know that the data has changed as the person did something, not 24 hours after it happened. Otherwise you’re just being an historian, not engaging. It really frustrates me that this is the biggest challenge, I had thought the bit we’d bump up against is having better and better creative ideas.”

Extending marketing automation to media

Marketo automation may have its foundation in branded email-based communication, but thanks to new capabilities like Marketo’s AdBridge technology, brands can also now pull customer insights from first-party data into their media activities. And this is also in Schick’s sights.

Xero is currently producing its first hypertargeted customer campaign on Facebook by augmenting third-party data with insights from its internal platforms. This will allow Xero to recognise if an individual is in the last three days of their product trial, bringing a whole new level of personalisation to life through advertising, Schick said.

“That’s where you get different opportunities too,”he said. “The idea of personas in my personal opinion is a bit broken – a customer might be a mum from 6am to 8am, then a commuter from 8-9am, but at 7pm or 8pm, she is her own person watching TV or on Facebook. You don’t expect someone to have adopted the small business owner persona when they’re sitting down, watching Home & Away, for example.

“That means that while we know who you are, what stage you’re in and what we want you to be doing, if we’re targeting you on Facebook in that window, we need to be cognisant of the fact that it’s probably the ad break or you’re just about to go to bed. In this case, let’s deliver more experiential creative, rather than a hardcore product marketing feature release. We want you to feel wonderful things about Xero, rather than handing you the next top five things you need to be doing as a small business owner.”

It also opens up the opportunity to reduce the number of campaigns with a promotional discount attached to them upfront, Schick said.

“Then it’s not just about how many people you’re closing and converting, it’s the RPU of those people right at the beginning of those journeys with you,” he said. “You also don’t have that next hurdle of going from a 50 per cent discount to paying 100 per cent next time – those customers have to almost decide anew to stay with you.”

Building agility and responsiveness

Schick agrees capabilities like this are only as good as the team using them. To ensure agility of its marketing teams, Xero has been working to improve collaboration and operational processes.

In April, the company held its first ‘hothouse’, an initiative aimed at taking a different approach to how teams address and create appropriate customer experiences based on a recent stage or action undertaken. Traditionally, behavioural experts analysing customer insights would work separately to creative teams, who in turn would then have to liaise with technical teams to work out what was possible.

In the hothouse scenario, behavioural experts, automation technology specialist, a graphic designer and a copywriter all holed up in a room for a week, contributing to the end-to-end process simultaneously, Schick said.

“Not only did we go a whole lot faster, we managed to come up with much better creative ideas because technology was part of the conversation,” he said. “They didn’t need to think whether something was technically possible.”

In addition, trial and error is vital in how Xero’s marketing campaigns are produced. Schick said Xero encourages regional teams to do A/B testing in their market, sharing results in an ongoing feedback loop so the brand is constantly iterating and improving its assets.

“That’s been largely because we’re getting the team to understand something is better than nothing,” Schick added.

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