89: The viability of warehouse-native martech: Insights from 10 industry experts

Humans of Martech

What’s up folks, today we’ll be joined by various martech pros sharing their opinions on the topic of warehouse-native martech.

The landscape of marketing technology architecture has been undergoing – what you might call – a seismic shift and many don’t even realize it. In this transformation, there’s a remarkable development - warehouse-native marketing technology, an innovative breakthrough that promises to reshape the entire industry for the better, but comes with plenty of questions and skepticism.

Here’s today’s main takeaway:
As we navigate the potential transformation to warehouse-native martech, the single most critical action is to prioritize achieving high-quality, well-structured data; it's the golden key to unlocking the full potential of these emerging tools and strategies.

This episode explores the various facets of warehouse-native martech and its viability, pulling in insights from industry experts, piecing together a comprehensive view of this groundbreaking shift.

What are warehouse native martech or connected apps?

In Dec 2021, Snowflake introduced a new term, 'connected applications'.

• Unlike traditional managed SaaS applications, connected applications process data on the customers' data warehouse, giving customers control over their data
• Benefits include
  • preventing data silos,
  • removing API integration backlog,
  • enabling custom analytics,
  • upholding data governance policies,
  • improving SaaS performance,
  • and facilitating actionable reporting

In other words, instead of making a copy of your DWH like most CDPs ad MAPs do today, everything lives on top of the DWH and you don’t have to pay for copying your db.

Some companies solving this for product analytics are Rakam, Indicative, and Kubit. Census and Hightouch are also doing this, being warehouse-native activation tools sitting on top of a DWH and don’t store any of your data. Some Messaging companies solving this use case natively on the cloud warehouse are Vero, Messagears, and Castled.

Revolutionized Data Handling in Customer Engagement Platforms

India Waters currently leads growth and technology partnerships at MessageGears. She explains how her company’s differentiation comes from its unique handling of customer data.

Unlike competitors such as Salesforce Marketing Cloud or Oracle, which require a copy of customer data to live within their tool, MessageGears directly taps into modern data warehouses like Snowflake or Google BigQuery. This unique approach is born out of the inefficiency and high costs of older platforms that necessitate copying and moving data into multiple marketing tools.

India vividly portrayed the challenge this old approach creates, imagining the confusion and resource consumption of working with out-of-date data across numerous tools. By not having to have a copy of customer data, MessageGears solves this problem for big companies, eliminating waste and creating a more coherent understanding of the customer's journey. Clients like OpenTable, T-Mobile, and Party City can now work with the most up-to-date data, using it as a source of truth for better analytics and customer experiences.

Reflecting on how MessageGears had to become thought leaders in this approach, India acknowledged that it took time for the industry to understand and accept this innovative method. But as awareness has grown, the approach is now seen as a logical and necessary step in the evolution of customer data handling.

Takeaway: MessageGears' refusal to follow the traditional path of copying customer data into its tools is a game-changer in the world of customer engagement platforms. By plugging directly into modern data warehouses, they've solved a problem that has plagued big companies, enabling them to use the most up-to-date data for insights and experiences. The industry has evolved, and MessageGears is leading the way with an approach that makes sense for today's data-driven world.

Rethinking User Database Size Pricing in Martech

While MG has been around since 2011, more and more startups are waking up to the idea of directly accessing brands’ first-party data instead of relying on cloud data syncs. We also chatted with Arun Thulasidarhan, CEO & Co-founder at Castled.io. They're a warehouse-native customer engagement platform that sits directly on top of cloud data warehouses.

Arun and his team set out to disrupt traditional martech to fix some of the fundamental problems as it relates to the significant disconnect between the number of users a company pays to store in their database and the actual value derived from them.

He emphasized that having millions of users doesn't necessarily translate to substantial revenue or value, especially for smaller B2C companies. He critically questioned whether traditional pricing models based on user database size were really delivering value for businesses. Arun then went on to explain how Castled.io approaches this differently, choosing a more logical and direct connection between cost and benefit.

Unlike other martech firms that charge based on customer numbers, Castled.io bases its pricing on the number of team members using the tool. Arun argues that this is a more accurate reflection of the value a company gets from the service, as more marketers using the tool likely means a more substantial investment in the platform.

He also touched on how they handle data look-back periods and the importance of data retention for retargeting and reengagement. With traditional systems, data engineers might have to wait for months, while with Castled.io, the data is readily available in the data warehouse. The integration of data warehousing and marketing tools, according to Arun, is the future of martech pricing – something he sees as a "no-brainer."

Takeaway: Traditional martech pricing models have significant inconsistencies, often failing to align the number of customers with the real value obtained. Castled.io challenges this paradigm by pricing their services based on the number of team members using the tool and ensuring that data retention aligns with business needs. This more logical and direct approach may be an essential step forward for the martech industry, promoting fairness and value over mere numbers.

Aligning Pricing Metrics with Customer Needs

MessageGears and Castled.io's groundbreaking approach in martech isn't merely an isolated occurrence. It's part of a broader trend that calls for a deliberate rethinking of pricing metrics within the industry. This movement emphasizes the alignment of price with real value and accessibility.

It’s worth highlighting the intricacies of selecting the right pricing metric. We spoke with Dan Balcauski, a SaaS pricing expert who highlights that it's not just about being innovative; it's about making choices that truly resonate with customer needs and market demands.

Dan delved into the complexities of pricing metrics and how they can be used to either aid or hinder competitive differentiation. Though he admitted that his knowledge of the s...