More growth with marketing automation

Finnish small and medium-sized businesses have been slow to take advantage of marketing automation. The seriousness of the situation will become clearer when we notice that a company's growth and profitability strongly correlate with the use of the new digital methods and tools. The technology itself is not the solution, but as a part of systematic renewal, it will help the company to stand out from its competitors. This blog will discuss the benefits and utilisation of marketing automation, especially from business-to-business (B2B) SMEs point of view.

Why marketing automation?

B2B companies, small and large ones, are facing the disruption brought by digital channels: since customers´ purchase processes more and more rely on web based information, ignoring traditional discussions with sales persons, it's much harder than before to reach them at the right time and with the right messages. In addition, customers have adopted global approach, they are looking for products and services well beyond domestic markets.
This will make room for marketing automation. It enables companies to get better visibility on what buyers really like and how they behave; thus it will be possible to boost the implementation of growth strategies, to increase sales by improving market share, to facilitate expansion to new international markets, to support the development of new products and business models or to enhance go-to-market programs and processes.

How marketing automation creates growth?

An American study found that 63% of the companies that are using marketing automation, grow faster than their competitors. Another research revealed that 79% of the top performers have utilised it for over 2 years. A study on Finnish B2B SMEs gave similar kind of results. Next chapters discuss in more detail how marketing automation supports some key growth strategy components.

Sales growth

Marketing automation increases sales, inter alia, through the following mechanisms:

• The results of marketing campaigns can be accurately tracked and thus campaign effectiveness is better: it is possible to get more results for the same money or the same results for less money. 
• The number and quality of customer leads grow: there will be more closed deals. 
• Business relationships with customers will get tighter and it is possible to identify changes in customer behaviour and needs: cross-selling and upselling opportunities with existing customers can be realised. 
• Sales and marketing cooperation intensifies: sales persons also market products and marketing persons also sell products. 

There is plenty of backing for the above. For example, a Forrester research found that B2B companies utilising marketing automation get considerably better results in their marketing campaigns and also their sales and marketing functions have much tighter cooperation.

International expansion

When expanding business into new market areas, marketing automation can ease the process, for example, in the following ways:

• It is possible to reliably assess already in the early stages of internationalisation planning, whether potential target country customers and distribution channels are really interested in the company's products: target country prioritisation and selection can be done faster, with lower costs, and the risks with selected alternatives are smaller. 
• Even before the business is launched, it is possible to get good insights on the needs and purchase processes of potential target country customers: necessary changes to offerings, as well as to marketing and sales channel processes can be done in a timely manner. 

To support this, a study on Finnish B2B SMEs revealed that digital marketing maturity clearly correlates with the relative size of international operations.

Support development of new products and business models

Marketing automation will bring more insights to new product and business model innovation and decrease uncertainties related to it. The corresponding mechanisms include e.g.:

• At an early stage, it is possible to obtain customer feedback, whether there is enough demand for a planned product or business model: return on investment of the development projects is higher, because they can either be stopped in time or the changes appreciated by customers can be built in. 
• It is possible to see at a sufficiently early stage, what customers need in order to take a product or business model into use and to then use it actively: expanding the core product with customer valued extensions, either by the company itself or with partners, will bring greater yields. 

The agile new development model has brought good results in the domain of digital services and startups and now it is rapidly spreading also to more traditional sectors.

Enhance go-to-market

Go-to-market of products or business models can be enhanced with marketing automation e.g. through the following ways:

• By finding the right ways to generate customer attention and interest, as well as by identifying the most suitable sales channels to customers: quantitatively and qualitatively enough customer leads, which results to more closed deals. 
• It is possible to find early enough marketing messages that resonate with customers and a positioning that stands out in the market: company products will get attention in the marketplace and the importance of price in purchase decisions will be reduced. 
• Marketing and sales functions cooperate effectively and aim at the same goals: sales revenues can be maximised.

What companies should do?

Utilisation of marketing automation is already in full speed also in European companies. The pioneers are technology, financial services, life sciences and energy, followed by, for example, telecommunications, manufacturing and professional services. In Finland, for example, the following small and medium-sized B2B companies are leading: Basware, Vaisala, Deltek, Metos, CRF Box, Nebula, Asiakastieto, Zeeland and SSH.

The starting point for efficient exploitation of marketing automation is the definition of company strategy for the renewal and growth; in other words, from which direction, by what means and resources, the company is trying to find a new way to prosper. Overlapping with this are company personnel and development of their knowledge, skills and attitudes, as well as implementation of processes, required by the new strategy. Only then it is the time for marketing automation as the technology and the solution, which enables and glues together the strategy, the people and their competences, and the processes.

When selecting a solution, the key is the vendor's ability to support the company's business; the key parameters include, for example, solution features, customer segments that a vendor is targeting, possible industry focus and pricing models. All these are compared in a review, which also lists Finnish company references that the key marketing automation vendors have.

Go-To-Market: more customer-centric, hungrier and more agile

Turbulent market environment is constantly changing business and competitive conditions. New technologies blur industry boundaries, shorten product life cycles, change business models - and bring new competition through globalisation. In this environment, Go-To-Market (or GTM) success is becoming ever more important - competitive advantages are less and less sustainable; instead of technology and supply factors, demand and customer interface capabilities are becoming increasingly vital.

Today, most companies already have functioning GTM processes. They are useful in commercialising a new product or business model, opening up new markets or even when a new company has been acquired. 

This paper will first introduce GTM process and its benefits. After that some of the pain points will be discussed, and we shall show, how a more customer-centric, hungrier and more agile approach will boost results.

GTM process and its advantages

GTM activities make company's business strategy concrete by delivering its solutions and their value to target clients, see also a simplified picture below. In reality, however, GTM is a process, which covers activities from definition of a product to pricing, distribution, marketing, communications, sales and customer support.

Benefits of a well thought and implemented GTM process include:

• allocation of resources to the most lucrative business opportunities
• prevention of organisational silos
• cooperation between centralised and decentralised activities
• sharing best practises and learning

Metrics need to be created for GTM processes. The intent is to evaluate product and business profitability. Evaluation of project success already in product development and, respectively, GTM phases, ensures that resources are allocated only for the most lucrative opportunities. GTM thus acts as a tool to develop company's product portfolio.

Secondly, GTM process and project objectives bring together different functions of an organisation, thus inhibiting silos. This will also ensure that all the necessary skills and knowledge is just in time and adequately available. In addition, it is easier to create new practises in domains, which are new or require very different types of knowledge-based inputs. Smoother cooperation between marketing and sales activities is often highlighted as a great example of GTM process benefits.

When a company expands and becomes more globalised, it also needs to grow certain functions on a decentralised basis, in other words, close to customers locally. These include, for example, implementation of marketing and communications, sales and first level customer service. GTM process links centralised operations, such as specifying a product and planning of marketing and communications, seamlessly with distributed ones. Also GTM project objectives, strategies and other guidelines are centrally defined. In addition, prioritisation of regions and countries is usually centrally managed. By centralising selected GTM activities, duplicate work is avoided and local implementation gets adequate support.

GTM also allows for sharing of best practises within a project and between projects. Thus the most successful ways of working of the best individuals and teams become an integral part of the entire company's expertise, which is then available and repeatable from a project to another.

Improvement needs

As such an existing GTM process does not guarantee success. Among other things, drastically changing customer purchasing behaviour, multichannel marketing driven by digitalisation and new business models are forcing GTM models for continuous improvement.

More customer-centric GTM

Company products need to resonate well with customer needs and market demands. Thus increased influence of both consumer and corporate customers in the various stages of purchase process calls for rethinking and adjustments in a way a company approaches market. It is also important to find unique customer segments, whose needs can be met better. To tackle all this, GTM activities need to be built to meet customer relationship objectives and strategies, giving possible internal legacy requirements second priority.

Market studies conducted before product development start do not guarantee that products match with customer needs. Rapidly changing markets require that development activities are closer integrated with customers´ feedback on products. Customer development, which has its roots in the startup world, is playing a growing role to facilitate parallel product development and customer testing. Especially huge progress in the development of Internet and social media tools allows for market testing and possible corrective actions already in the early stages of product development. In a similar way it is possible to figure out target market prioritisation and GTM activities localisation needs.

Hungrier GTM

Overall effectiveness, quality and cycle time can be considered as baseline yardsticks of GTM process. However, this is not enough. Tougher business metrics should also be introduced: lead generation impact, sales increase and evaluation of GTM process on the basis of return on investment (ROI). By focusing on business outcomes, we can get rid of bureaucratic way of working, where checklists dominate over hunting for results.

Digital marketing and sales methods have been at the forefront of bringing measurability. But technologies are not to be seen here as masters but slaves - or enablers at most. The key is to create GTM strategies and processes that focus on right things. Furthermore, we should not forget people, who run the process and who truly need to understand and know how to operate the new fact-based model.

More agile GTM

Although a company would have created the world's best client-centred and business metrics-driven GTM process, it does not insulate the company from changes in the operating environment. These challenges require adaptability, responding by foresight or by further developing own activities. The keywords are continuous improvement and best practise sharing.

Activity and environmental data collection and analysis, as well as test and learn principle are the cornerstones of continuous improvement. Data insights lead us to the real issues and improvement options, which will be verified for operational scaling by testing. This makes it possible to avoid costly mistakes made with non-working or outdated GTM practises, and paves way for better results. 

Shotgun tactics when selecting international markets

A business acquaintance told me an interesting story about expansion into international markets. The starting point was four Finnish companies that wanted to start international sales. The companies wanted to cooperate as much as possible to minimise costs. Experts of internationalisation as well as public support organisations suggested that the companies should start by entering a very well-known neighbouring market, Sweden - and set that as a precondition for any funding support. The companies rejected the proposal. Instead, they hired a shared export manager and began an extensive round of testing the markets, the main instrument was trade fairs in over 20 countries. On the basis of this round, one of the companies launched successful international operations in a Western European country, one in East Asia, one in the United States, and one - in Sweden. If the companies had believed advisers, it is very likely that only one of the companies would have been able to successfully launch its export activities.

This post sheds light on why shotgun shooting tactics, as it is often called, is a feasible alternative when a company is planning to enter international markets or an established company launches a new product internationally.

International market selection

There seems to be a broad consensus on prioritisation and selection of international markets among internationalisation experts and researchers:

• The first step is to select the markets for closer examination by looking at macro-economic variables
• The second studies overall market potential of the industry in the selected countries, and
• The third evaluates company´s sales potential in relation to required investments.

The most important factors affecting the selection are thus firm-specific ones and those related to target markets and their entry barriers.

The plans made according to above mentioned model are systematic but also mechanistic. They often lead to significant investments, not being able to change plans as needed, until available money has already been spent.

The main stumbling blocks of commercialisation, which can be identified only with considerable delay, include for example:

• Do targeted consumer or business segments have adequate underlying needs that need to be satisfied?
• Are company products acceptable for targeted consumer and enterprise segments?
• Is there right type of channel partners available, such as distributors, retailers and system integrators?
• Are there partners, events, communities and other necessary tools available that are needed to execute planned marketing strategy?

Of course, these things can be studied by means of desk studies, but a more in-depth view can only be found by having closer contacts with customers and markets. Traditionally, the tool has been own or outsourced market research, but its disadvantage is significant time, money and resources required. Globalisation of consumption and purchasing decisions, along with online methods, has created new, more cost-effective methods; international market selection can be made more iterative, avoiding too early choices that can easily lead to waste of resources. This means that before concentrating efforts too strictly on certain markets, it is better to shoot a little bit wider, so that really the best launch markets can be found.

Iterative development of international markets

This section primarily deals with digital marketing methods as part of an iterative process to select target markets. We shall focus on the four particular stumbling blocks of commercialisation, discussed above, which are also among the most important market criteria when selecting target markets.

Customer need - market fit

Social media is a huge data repository of consumer and business needs and preferences. Available data are also continuously updated, real-time, so decisions based on this data are likely to be more relevant than when conducting market research based on statistics or sampling methods. Also location information of potential customers is extremely important in country selections of a firm: Facebook, Twitter, Linkedin and other social networks provide information on needs at country level and, where appropriate, at regional or even city level.

Market information can also be obtained by using inbound marketing methods: compelling content that relates to customer jobs to be done, is created on company webpages and consumers or businesses are lured to visit the site. Potential clients are attracted by participating in discussions on key websites and digital communities important to them, by inviting visitors through traditional marketing messages and by optimising company website to get found by search engines. If a company needs to select, what customer jobs its products will be targeting, this can also be conveniently tested by means of inbound marketing.

A website available only in English, along with social media and market statistics, provide sufficient guidance to reduce the number of markets to be screened. The important thing, however, is that preconceptions and 'usual country priorities' should not limit choices too early. When both digital and traditional methods have been used to find a good subset of countries, it's time to go and study customer needs in these countries in more detail. If necessary, and if you have time, the content can be localised for target market languages ​​to go deeper into local websites and social communities. At this stage it is essential to find those potential markets, with customers most eagerly waiting for company products.

Product - customer need fit

In traditional commercialisation models, a product feature set is defined and almost built, before there is any wider feedback on how features fit with customer needs. Various types of limited customer testing are usually arranged, however. Although internationalisation has created customer segments with similar needs around the world, different markets often focus on different features. Iterative product development continuously tests product features and their fit with customer needs, and this testing is started as soon as possible in product development process - and at the same time it is tested, how various product characteristics resonate at different markets.

By discussing pain points that consumers or businesses are facing in their areas of interest, it is easier to understand the needs of potential customers, which in turn helps to prioritise planned features of the product. The audience can also be asked direct questions, queries that are fast and affordable to execute online. Needs for product related support and complementary services can also be evaluated using the same methods.

Seeking feedback from potential customers thus directs development and commercialisation of products to meet also changing circumstances. In addition, the feedback becomes an integral part of market attractiveness assessment and ensures that the selected target markets really appreciate the properties of the company´s product.

Channel strategy - market fit

A successful channel strategy identifies right channel partners as well as makes them strongly committed to sell company's products.

The Internet can be used to discover and explore in detail suitable partners to sell company products. Digital dialogue with potential customers and thus obtained feedback also help define the most popular purchasing channels. These methods are suitable for both online and brick & mortar stores. Similarly, also other important channel players can be found, such as distributors and system integrators. One can also study, for example, what factors are driving the business of potential channel partners or whether potential channel partners are already representing competing products.

Inbound marketing aims to get channel partners interested in a company and its products and tries to motivate partners to visit the company website. The aim is to create relationships, which can be further developed at face to face meetings and various events such as trade shows and conferences.

Understanding of customers and getting them excited to buy company products are precious tools, when trying to get channel partners committed to sell company's products. If this is combined with partner interest generated through inbound marketing, even a smaller firm is able to achieve reasonable cooperation terms and conditions.

Channel partner identification and building their willingness to cooperate should be started early enough on each of the markets relevant for commercialisation. If the process is able to identify channel partner relationships that would have a perfect fit with company business and product objectives, priority of this market should be considerably raised. If, however, a market offers only not so lucrative partner candidates, you should forget this market for the time being and seek the first references on other markets. Similarly, if the sales channel structure or its mode of operation in a market differ considerably from those of other target markets, it usually decreases the attractiveness of the market in question.

Planned marketing strategy - market fit

Here we focus on two things: availability of marketing partners and applicability of company´s marketing communications messages on studied markets.

In addition to channel partners, company marketing plans might reserve a major role for players that boost awareness and demand of company products. The most important ones are advocates, such as industry experts, Internet sites, magazines, etc., that are trusted and relied on by potential customers during various stages of their purchase process. The best and most profound way to affect advocates is by using inbound marketing activities; by offering them new information, views or other ideas related to company products, as well as by attracting them to visit company web pages for more information. Besides influencers, for example, complementary service providers, various communities and events can have a significant impact on demand increase; these can be found by using the same methods as presented earlier.

By testing marketing messages, the best arguments and ways to communicate benefits are found. Also such online content tools as pictures and videos can be tested, to find those that best resonate with potential customers.

To assess the attractiveness of an individual market, it is essential to understand how well partnering and communications, as defined in marketing strategy, can be applied to this market. If the match is great, local adaptation requires very few resources. Of course, if a market is a very interesting one, it is possible to tailor a specific approach applicable to the market by spending a lot of money. In this case, success is uncertain, as experiences from other markets cannot be directly utilised.

Marimekko digitally x-rayed

Original collections, brand and marketing that is based on own and partners' shops are traditional strengths of Marimekko. At the same time, a number of consumer brands and retailers are increasingly building their competitive edge on digital tools, the Internet and social media. This post studies how Marimekko have managed to combine these new tools with their business activities. Although some of the analysis methods give only indicative results, the main conclusions are, however, built on a solid base.

Marimekko business 

Marimekko is a Finnish textile and clothing design house with net sales increasing again, after the bottom in 2009. This is caused by international growth, which in turn has eroded the profitability of the company. The numbers of 2013 are rough estimates based on realised results of the three first quarters.

Share of search engine visitors (%)

Digital Marimekko

Number of website visitors is a good yardstick for digital popularity. Most of the Marimekko website visitors are coming from search engines, see the figure on the right. More than half of the searches are Marimekko ones, written right or wrong. Thus, by studying the Marimekko keyword frequency, it is possible to make good enough conclusions about the company's popularity in the Internet world.

Global Google searches of Marimekko

If you look at the global number of Google searches made for Marimekko (see the picture on the left), we can see that the number was at its highest early 2008. After that the search numbers have fallen and the decline is projected (dashed line) to continue. The drop in 2008 is at least partially explained by the global economic crisis. It is to be noted, however, that the revenue growth seems to be driven by the visibility caused by retail expansion, not by Internet publicity (that is becoming more and more important).

The sentiment of Marimekko tweets

There is also room for improvement in how Marimekko use social media: the current effect is mediocre, and the company websites are not promoted enough. The sentiment of company's social network attention can be examined, for example, by means of tweets. There were not a lot of Tweets concerning Marimekko before April 2011. Since then the sentiment has been consistently positive, until since June this year apparently the copy scandal changed the tone much more critical. It seems reasonable to assume that the company, without further publicity problems, will soon be able to normalise the situation.

Engagement of Marimekko website vs. some benchmarks

When Marimekko get consumers to visit their website, they are out there reasonably well, see the picture on the right. Engagement of websites in Finland and in Japan is quite good, compared e.g. with fabrics and women's clothing benchmarks.  This is also confirmed by Hubspot evaluation of the Marimekko website, which gives 76 points out of one hundred possible. The main problems are the lack of regular blogging and partially website optimisation for search engines. Marimekko does not provide an application for smartphones and tablets to access the website conveniently.

In addition, the website has very little text (2.72 % ) relative to HTML code. This slows down page loading, which in turn affects e.g. result positions of Google searches. More broadly, Marimekko seem to have problems with content marketing, the low level of blogging is just a sign of it. Publishing compelling content for customers and thought leaders would help to get coverage on other websites and that would correspondingly feed visits to Marimekko's own website. The graph below highlights the number of inbound links to the company website. The number of links, both to the Finnish site and the international one, has since 2011 grown very slowly. It remains to be seen whether the good performance of 2013 is only the result of negative news.

Inbound links of Marimekko Finnish and Japanese websites

Business by market areas

Marimekko report their business by market areas, see the graph on the right. More detailed information is not available, but the analysis will attempt to go to the country level whenever possible. The numbers of 2013 are estimates.

Own stores

The table below shows the amount of Marimekko stores (own, retailer owned ones and shop-in-shops) by market areas. The revenue figures generally correlate well with the number of stores, especially in North America and Asia-Pacific. In Sweden, the option for online purchasing raised own sales; it remains to be seen, if possible online shop launches in other areas will affect in the same way. 

Marimekko webpages

Origin of Marimekko website visitors

Marimekko have their own websites in Finland, Sweden, the United States, Japan, China and South Korea. Swedish site is in English. In addition, there is an international site in English. The fact that there are no sites with local language available in some major market areas is a serious problem; France, Germany, Spain and Italy are good examples.

Global website ranking of Marimekko

There is no information available about the traffic volumes of the Far East websites. According to Sitetrail, Finland and the United States are leading the visit statistics of the rest of the world, see the picture above. The development of company´s global website ranking is shown in the figure on the left: despite of international expansion, the company ranking has not greatly changed. Finland is by far the most favourable country, Marimekko's rank is currently 615.

Marimekko searches

Google searches of Marimekko in Finland

Development of Google searches in Finland is shown in the adjacent graph. After 2011, there has been on a slight upward trend, surpassing even the sales and store number growth. Dashed line shows the forecast.

Marimekko searches, Sweden and Denmark

In Scandinavian countries, searches are, in turn, been on the decline, see the graph on the right. Interest to make Marimekko searches is thus not following the number of stores or even revenue growth.

The situation in biggest Central and Southern European countries is presented below. The trend is slightly positive in Germany and negative in Italy and Spain. United Kingdom has remained unchanged. In spite of the growing sales, the share of Marimekko´s store sales has been on the decline, which is also reflected in the search statistics. In all countries, the Google one day Marimekko promotion (Google Doodle) in 2012 has created a clear peak.

Google Marimekko searches in Central and Southern Europe

USA and Canada, Marimekko searches

Searches in the United States have roughly remained at the same level, only slight decline this year. In Canada, there is a slight increase. Although the number of stores and company own sales have grown up in a relatively fast pace, this does not appear to have an impact in the search statistics.

Japan and Australia, Marimekko searches

In the Asia-Pacific region, both in Japan and in Australia, business expansion, the opening of new stores and the popularity in the digital space have gone hand in hand. This has resulted in a brisk revenue growth. In Japan, the concern is that during the last couple of years, the trend is downward. There is no information available about China, due to the central role of the Baidu search engine in the market.

Inbound links to Marimekko webpages

Geographical origin of inbound links to Marimekko webpages is illustrated in the map below. At least China does not yet pop up with the weight corresponding to its value in Marimekko's strategy, and also in the United States the relative visibility is quite poor. In contrast, Finland and the rest of North and Central Europe are relatively well represented.

Inbound links to Marimekko webpages

Marimekko in social media

The origin of Marimekko tweets are shown in the map below. The United States and Japan are by far the biggest tweeting countries - the number of tweets in these countries is, however, always large compared to smaller countries. Other notable countries, as regards to Marimekko related tweets, include Finland, Australia, Canada, United Kingdom and Italy. There is a surprisingly weak popularity for example in Sweden, Denmark, Germany, and France.

Marimekko tweets by country

Business by product lines

The company business is divided into three product lines, Clothing, Interior decoration and Bags, see the picture on the right presenting their revenues. The numbers of 2013 are estimates.

Digital footprint and marketing of the product lines can be evaluated using Google search statistics. This is best done by comparing Marimekko related searches with suitable benchmarks.

Marimekko searches vs. women´s clothing ones

Women´s clothing is perhaps the most important segment of the Clothing product line. The trend of Marimekko searches has clearly fallen behind women's clothing category that serves as a benchmark. The thick horizontal line describes the zero-level development of searches  and Marimekko's line is a lighter blue, see the picture on the left. While Marimekko's Clothing sales has recovered slightly after the drop that started in 2008, this does not seem to appear in the digital popularity.

Marimekko searches vs. home-making & interior decor ones

Google searches of home-making and interior decor category are a good benchmark for Marimekko´s Interior decoration product line. Again, Marimekko has fared less well than the benchmark. Also the recent sales growth is not seen in Marimekko searches, compared with the benchmark.

Google Marimekko searches vs. clothing accessory benchmark

Clothing accessories category of Google searches are used to benchmark Marimekko´s Bags product line. The growth of the product line that started in 2010 was first visible also in search statistics, but after that Marimekko has fallen behind their benchmark.

Conclusions

It is clear that Marimekko are not effectively enough using available digital marketing tools alongside product portfolio renewal, expansion of retail and the brand. There is a risk that with changing consumer purchase behaviour, relying more and more on digital channels, Marimekko´s relative competitiveness will suffer.

Marimekko is not visible enough on the Internet. The websites are clearly not interesting enough, and the company messages do not reach other websites. In addition, in many major market areas, there are no company websites available in local languages. In social media, Marimekko is not sufficiently benefiting from word-of-mouth and the company websites are there not promoted enough.

The worrying thing is that Marimekko´s new stores and other major investments in new market areas do not seem to get enough support from digital activities. Although some promising examples can be found, this means inevitably only half-hearted success. All the three product lines seem to have a declining trend in the digital world compared with the benchmarks. 

Besides customer acquisition and retention, digital tools offer a great promise for in-depth identification of customer needs, rapid customer feedback of new products, as well as customer-oriented testing and improvement of marketing plans. Marimekko will face the threat of missing these potential benefits, unless they fully utilise opportunities of the Internet and social media.

Quo vadis, Sports Tracker ?

Sports Tracker application is like an old friend. I have used the fitness application from the time it came to market in 2005. I have no closer relationship with Sports Tracking Technologies, the company that is currently responsible for the business.

I was amazed when I read that a Sports Tracker competitor, Endomondo application (which I have also used), is used five times more when counting sport use kilometers. This aroused my curiosity. Are Sports Tracker really trailing Endomondo so badly? What factors have contributed to the development? What is Sports Tracker´s future and how could they improve the business? I did a little bit detective work. By using only public and free sources and tools, the picture became considerably clearer. This research trip is also a good example of how companies can analyse businesses and competitive situation, and thus develop more successful strategies.

Sports Tracker vs. Endomondo

Sports Tracking Technologies (hereinafter referred to simply as Sports Tracker) are a Finnish company with Nokia Corp. roots. A Nokia project launched the first version of the fitness application in May 2005. Endomondo are a good benchmark, because they are coming from another small European country, Denmark, where they were founded in November 2007. Apart from these two, a number of other competitors have emerged, such as Nomad, Skimble, Strava and Runtastic. They are not discussed in detail here.

Number of users

The Sports Tracker application has been used for 230 million sports kilometers, and the Endomondo one for about 1600 million. Various sports kilometers do not match, so this does not clarify the situation. If the number of users would be available that would help a lot. But only Endomondo have published the information that they have cumulatively 20 million registered users. AppAnnie give estimates on application downloads and they provide, inter alia, the following information:

• In Apple App Store´s health and wellness category the free Endomondo application was in top five in eight countries and in top ten in 23 countries
• Correspondingly, Sports Tracker were in top five in three countries and in top ten in 13 countries
• In Google Play´s health and wellness category Sports Tracker were in top five in two countries (Endomondo in eight) and in top ten in six countries (Endomondo in eighteen)

Although AppAnnie do not evaluate Sports Tracker´s traditional area of ​​strength, Symbian, currently Endomondo seem to have a clear lead in download volumes.

Product features

We shall not make any product reviews or comparisons, they are already readily available from multiple sources. Instead, we shall first focus on expert views that are affecting potential customers and also on how users are seeing the two companies´ products.

In various expert reviews Endomondo would appear to get generally higher marks than Sports Tracker. The former have an extensive feature set and well-functioning web services, the latter have a praised mobile application. Sentiment analysis of user tweets is one way of measuring user perceptions, see also the picture below. Product usage experiences are likely to be the most important factor affecting the sentiment of messages. The companies´ products seems on a par till autumn 2011, after which Endomondo reputation is a little bit better.

Characteristics of company products do not explain differences in popularity, so we need to have a look at the reach of potential customers. The most important factor affecting it is the range of operating systems supported. Sports Tracker support extends to the following: Symbian, iOS (Apple), Android, and MeeGo (Nokia N9). Endomondo again support all the previous except Meego, plus they support also RIM (Blackberry). In addition, it is important to understand when the most important operating systems got the support, see the picture below. The picture also shows smartphone sales per Symbian, iOS and Android.

It is clear that Sports Tracker were too long stuck with Nokia and Symbian, and as a consequence, came too late on the tremendously crucial iOS and Android markets. It is difficult to assess whether this was due to not understanding the markets, long-standing links with Nokia, lack of resources or something else.

Marketing

Use of the Internet and social media have certainly been the key of both companies´ marketing efforts.

Google search statistics dramatically reveal how Sports Tracker have not been able to improve after the year 2009. Endomondo overtook them in the beginning of 2011 and have since then continuously been able to increase their attractiveness. The picture on the left shows also projected searches with dashed line. The number of searches correlates well with overall marketing efficiency and thereby also with interest in company's products.

Web service is an essential part of the overall service offering as perceived by a user. Company website is also an important part of digital marketing assets. Hubspot tool gives Sports Tracker website a score of 54 (scale 0 - 100) and Endomondo get a much better grade of 81. The main problems of Sports Tracker are blogging, mobile use of the website, lead generation and optimising pages for search engines.

Endomondo also have a clear advantage when measuring website visits, see the pictures on the left, Endomondo at the bottom. The pictures illustrate companies´ global ranking of website visits. Again, the Endomondo trend is positive, whereas the Sports Tracker position has not really improved over the years.

Popularity of company's websites is also greatly affected by the number of incoming links. The picture below shows that till the summer of 2011, the companies were equal; but after that, especially since summer 2012, Endomondo have improved much more. This can be partly explained by product features and partly by website attractiveness and success in content marketing.

Problems with Sports Tracker website content become also visible when looking at search results (SERP) of keywords that are important for fitness applications. The two companies occupy the top positions when searching the respective company names with Google. But for example, when searching  'GPS sports tracker', Sports Tracker occupy only the position 3, whereas Endomondo get positions 2, 4, and 5.  'Social Sports Computer' is the central Sports Tracker website tag line, but the positions are not better than 5 and 6.

The most worrying thing is that even when Sports Tracker are able to attract visitors to its website, these visitors do not find the pages interesting enough, see the Alexa picture below.

More than half of the visitors only visit one page, and others do not find a lot of compelling content.

Also in social media utilisation, Endomondo seem to be more skillful. For example, already in 2010 they were more popular than Sports Tracker in Twitter messages, and after that differences are even more remarkable, see the picture below. As regards to Twitter followers, the two companies are almost on a par: Sports Tracker are followed by almost 18000 and Endomondo by almost 21000 persons. This indicates that Sports Tracker still have, however, loyal core group of followers, which are constantly interested in their products.

Business Model

Product development and marketing are of course closely linked to the resources available. Resource availability, on the other hand, is greatly affected by the business model and especially revenue streams.

After Nokia years, Sports Tracker became an independent company in May 2009. The company's turnover in 2012 was 702 000 euros, it was making heavy losses and the equity was negative. The fitness application is downloadable free of charge, and there are no fees related to usage of supporting web service. The company seem to be receiving their income by selling heart rate measurement belts, iPhone bike mounting accessories, headware and socks. Long Nokia connection seems to have affected on the company mindset and implemented business models - when the company was a part of Nokia, the role of their service offering was mainly to support primary equipment business.

Endomondo have been able to take advantage of the emerging business opportunities. When Apple launched App Store in July 2008, and Google store opened in September 2008, they were able to rapidly grow their user base. Alongside the free application, a paid PRO version was launched in December 2010. App Store made it possible to make in-app purchases, i.e. to buy extra features for free apps, in August 2009, and Google Play store started to offer the same option in February 2011. Endomondo began to take advantage of these opportunities in 2011. The company also began to show advertising in connection with its applications and website services in September 2012. In addition, the company have partnered with another company to sell a variety of sports-related products. Endomondo revenues are already sufficient to cover operational costs.

Financing

In order to build operations and products as well as to acquire users, both companies have needed to seek external funding.

Sports Tracker financing was handled by Nokia for a long time, but after the establishment of the new company, they have been funded at least by Nokia-Technopolis Innovation Mill, Tekes and the City of Helsinki. Amounts of money have not been published.

Endomondo have received undisclosed amount of seed funding in December 2010, $ 800,000 in March 2011 and $ 2.3 million in September 2011. The company claim that they do not need any external money to continue operations.

It is noteworthy that Endomondo´s external funding has always been linked with company's reported product improvements, measurable improvements of market position and business model enhancements - see also the facts presented earlier. There is no detailed information available about Sports Tracker´s financing projects, but the presented facts tend to imply that attracting new money is much more challenging than in the case of their competitor.

Conclusions

Sports Tracker seem to have a lot of work to further develop their product and marketing as well as to improve the business model. It is most likely that unless the company is able to get external funding, it is not possible to make sufficient investments.

There are, however, substantial and growing markets for the company's expertise and products: fitness and well-being are increasingly important future trends. And the markets have certainly not been shared, yet. According to Alexa statistics, both Sports Tracker (below left) and Endomondo (right) site visits are dominated by small or medium-sized markets; it is still possible to significantly change competitive positions both on current target markets and on many of the biggest markets, not deeply penetrated today.

It is vital, however, that Sports Tracker are able to find again an agile way-of-working, where new emerging business opportunities are boldly and rapidly utilised. This will create constantly renewing competitive advantages upon which to build a successful business.