How Martech providers can master the slow extinction of new deals

From my conversations with marketing technology experts, I can conclude that we have reached a saturation point. Net new deals are declining and the market is more like a stagnant pond than a dynamic ecosystem.

Once fueled by a relentless pursuit of innovation and differentiation, the industry’s growth is now stalling as most companies have everything they need (and if they don’t, they have to make do with it). According to Gartner’s latest annual CMO Spend Survey, average marketing budgets have fallen from 9.1% in 2023 to 7.7% of total company revenue in 2024. CMOs live in an era of less.

Their purchases are more about adding a dash of flavor than a fundamental change. What can a martech vendor do in this landscape where buying a martech solution is like buying spices? Let’s explore.

The current state of Martech: A saturated market

The Martech industry has grown explosively over the past decade, growing from a few hundred solutions to over 14,000 products in 2024, according to the 2024 State of Martech Report by Scott Brinker and Frans Riemersma.

This ongoing explosion in martech has equipped companies with tools for every need imaginable—from customer relationship management (CRM) and marketing automation to data analytics and personalization. But the expansion has also led to a point of diminishing returns.

Many companies now have a robust Martech stack tailored to their specific needs. The result? A market in which the appetite for new net deals has significantly diminished.

The seasoning phase: incremental purchases instead of large investments

New acquisitions in today’s martech landscape are less about fundamental changes and more about incremental improvements. Companies are looking for solutions that extend or optimize their existing stacks rather than replace them. Think of these as the spices that add extra flavor to a well-prepared dish:

• Integration amplifier: Automation and integration tools that improve interoperability between existing systems.
• Performance optimizer: Testing and optimization solutions to fine-tune campaign performance or analytics capabilities.
• Niche innovators: Specialized tools like conversational and video marketing that address specific needs or fill gaps.

While these purchases are valuable, they represent a shift from the era of comprehensive martech transformations to one of cautious, targeted improvements. Gartner’s survey found that while investments in paid media will increase to 27.9% of budgets in 2024, spending in martech, labor and agencies will decline.

Technology investments continue their downward trend and have reached their lowest level in a decade. However, another study shows the opposite: Martech spending is increasing. What can a Martech provider do?

The Martech Providers’ Dilemma: Strategies for Survival and Growth

For martech vendors, this shift presents a significant challenge. How can martech platform and tool providers succeed when the market for new net deals dries up? Consider these back-to-basics strategies.

1. Focus on customer loyalty and expansion

Nurturing existing customer relationships is paramount as new net deals become increasingly rare. Invest more in customer success teams to ensure your customers get the most value from your products.

Upselling and cross-selling opportunities within your current customer base can be more lucrative than chasing new customers. But for heaven’s sake, be consistent in your communication – don’t just call them when you want to sell them something.

2. Targeted innovations

Even if the market is saturated, there is still room for real innovation. Identify pain points that your current solutions don’t address and develop new features or products that integrate seamlessly into existing stacks.

Emphasize the unique value of these innovations to the client’s business and position them as must-have ingredients that add value to the overall martech menu. AI is a key area for innovation, as noted in the State of Martech 2024 report, and new generative AI startups are emerging rapidly. But a word of warning about AI: start with an appetizer, not a full meal.

3. Implement the ecosystem approach

Build partnerships and integrations with other Martech providers – “coopetition”. A collaborative ecosystem where different tools work seamlessly together can provide customers with added value.

By joining a broader, connected martech environment, you can increase the attractiveness of your offering. Do it. It will pay off.

4. Offer customization and flexibility

One-size-fits-all solutions are becoming less and less attractive to most marketers who have been in business for a while. Offer tailored solutions that meet the needs of different industries and company sizes. More flexibility in pricing and deployment options can also make your products more attractive to a wider range of customers.

5. Invest in education and thought leadership

Position your company as a thought leader. Offer valuable insights, research, and best practices that help clients navigate the hyper-complex martech landscape. Becoming a trusted advisor can help you build customer loyalty and attract new prospects seeking expertise.

The 2024 State of Martech report highlights the importance of composability and open architectures for customized solutions. The approach is not without its challenges, but in my view, once you make the switch to composability, there is no going back.

6. Use data and AI

Leverage the power of data and artificial intelligence to deliver more predictive and prescriptive analytics. Implementing solutions that report on past performance and provide actionable insights can provide a significant competitive advantage.

According to the Gartner CMO survey, up to 64% of CMOs lack the budget to fully implement their 2024 strategies. However, generative AI offers the opportunity to extend the impact of the marketing function far beyond their budget constraints. As mentioned in the second point, a targeted approach and a healthy dose of caution are advised.

7. Hire Martech-experienced sales talent

In a sea of ​​14,000 solutions, your sales team needs to have a deep understanding of your customers, their challenges, and your product’s unique solutions. Invest in hiring experienced salespeople who can articulate your key differentiators and value proposition with the clarity of a Tibetan singing bowl.

Require ongoing training on your product’s features, updates, and integrations so your customers can confidently demonstrate how your solution stands out from the crowd. At the very least, teach them how to sign up and use the platform. Experienced, customer-focused sales reps will help you build trust, close deals, and develop long-term relationships in this highly competitive battle for martech supremacy.

Adapting to the new normal

While the era of “fishing” in new deal volume may be coming to an end, the need for continuous improvement and optimization remains high. Martech vendors can successfully navigate this difficult period by focusing on customer success, purposeful innovation, and strategic partnerships.

Those willing to embrace this new reality with agility and foresight will succeed in a market where everyone already has everything they need but is still looking for that perfect finishing touch. In this new normal, it’s not about selling the next big thing. It’s about adding the right flair at the right time to make your solution indispensable.