The year 2002, I believe, will be remembered as the year "the bill finally came due." For a number of years, marketers have invested heavily in channel development and new marketing programs, from e-mail marketing to Web site personalization to call center contact strategy. In 2002, as heralded by the difficult end of 2001, executives finally heard the wake-up call and asked, "What are we getting for the marketing money we invested?"
The answers they received were frequently less than optimal. Difficulty in tracking investment results became unacceptable in many companies last year, which led executives to curtail non-trackable investments. Clearly the message was received that results were "in" (the sooner the better) and long, complex, ineffable programs were "out."
At the same time, marketing and channel investments did not disappear in 2002; they were redirected. Even in this difficult time, some marketing budgets actually increased, as companies piled resources behind initiatives that did contribute measurably to the bottom line. The coffers were still available; however, measurable meaningful results were the only way to gain access to the key.
As we enter the New Year, I believe management’s message has been heard, at least in part. Marketers have begun restructuring resource requests "Make more with what you have" is an often-heard refrain. However, while marketers may have successfully reduced expectations and budget requests, the opportunity to review and restructure available resources has largely been missed. Since this is the New Year, a traditional time to reevaluate and assess, we should give our marketing department the same thoughtful reflection that we give our personal lives.
"What works and what doesn’t" is one place to start. Often marketing campaigns are executed in rapid-fire sequence sufficient time is not available to assess strengths and weaknesses of past campaigns before executing the next. January is a good time to evaluate what campaigns work best and begin to funnel budget from less productive programs into new opportunities. The process of separating revenue-producing efforts from revenue-detracting ones will drive consistent measurement. As a result, campaigns can be better forecasted and the results tracked vs. those forecasts. The end result will be an enhanced marketing plan that should yield a higher ROI than the prior year’s plan.
However, addressing this question does not speak to the heart of the matter. This time of year presents a chance to evaluate not only how we are doing, but also what we are doing. If time is our most scarce resource, particularly time of the marketing staff, then the allocation of that resource is a decision that must be made wisely. Let’s step back, and review marketing’s mission in an organization and evaluate how well traditional marketing programs and campaigns fulfill that mission. Then we can ensure that not only our money, but also our time is most carefully allocated.
Marketing plays a unique role in many companies. It spans the range from line management to staff and everything in between. By that, I mean that marketing is tied closely to sales (by supporting sales through advertising, direct mail, packaging, etc.) and, therefore, is considered part of critical revenue-producing activities. At the same time, marketing also includes non-sales activities, such as public relations, events marketing, etc. that are important but are not directly linked to revenue. Through a broad range of different tasks of both kinds, marketing seeks to create a bond with customers through a consistent message and branding across all customer touchpoints.
In addition, marketing is usually considered the keeper of the customer database, one of the most valuable assets a company holds. That database, which contains customer enrollment, purchase and behavioral data as well as the marketing contact history for each customer, is critical to the successful targeting of marketing activities and results analysis at the customer and segment level.
But the customer database plays more important role than simply providing fuel for direct-to-customer marketing programs (which is not such a small roll by itself). The customer database is the information source for customer behavior across all channels, and, if analyzed carefully, can lead to company-changing initiatives. By identifying behavior patterns of best customers and potential best customers, a company can better allocate investments and determine customer strategies at the segment level. For example, if best customers are heavy call center users (typical when best customers tend to be older), then the company may wish to create an elite call center team to enhance support and cross-sell for those customers. Or if best customers are more likely to be found in specific stores or purchasing specific product categories, additional resources can be provided to increase retail outlets and the available products in that category. The end result should be an improving customer relationship, increased revenue and increased business stability.
Now the question of what we should do in marketing is partially answered become the "voice of the best customer" throughout the company. This year, I believe, will be the year when customer insight becomes an integral part of marketing, if not the company as a whole. However, in order for customer insight to become core to marketing, resource allocation issues must be addressed. If time is our most scarce resource, then we must begin to make hard choices, not just between different types and targets for database marketing, but also between time spent on database marketing and on company-changing analyses driven from the marketing database.
I would never be so simplistic as to suggest that the decision is "either/or" to such a question. Rather, the point is that customer database implications are so far-reaching that resources should be allocated to include that critical effort in addition to direct marketing program development. Such analyses can impact the way the company treats customers across all channels, and, as a result, have the potential to result in company-changing revenue as well.
But if that were the case, why don’t marketing departments simply become customer analysis departments instead, focusing all of their attention on company-changing strategic analysis of customer behavior? A number of reasons:
- Customer analysis is meaningless without the ability to act on the results. Many actions involve the development of customer communications, either outbound to the customer or in response to a customer-led interactions. Developing consistent communications to customers has been, and always will be, a key role of marketing.
- Company- changing customer analysis is difficult and often involves many fruitless investigations before insights appear. During that time, the company must still contact customers and provide communications and incentives as the foundation for sales. That activity set will not disappear, but will be refined from new database analysis. Marketers cannot forget, especially in this difficult economy, that sales must always take precedence, and everything in support of sales must have priority for the company to continue to live and grow.
- Direct-to-customer marketing is in the midst of a revolution, as new delivery methods (e.g., real-time personalization on Web sites, enhanced e-mail marketing) are coming of age. These channels and tools possess potential to dramatically reduce communication cost and increase profitability and potential communication frequency, hopefully creating stronger relationships and consistent, growing revenue streams. Marketing must continue to build out those tools and the skill set to manage them, in order to realize the returns on investments already sunk.
Marketing in 2003 is left with difficult choices between the most urgent and important activity of creating consistent revenue and the important but not urgent activity of mining the customer database for company-changing insights and translating those insights into actionable, sponsored initiatives. However, the chance to reassess at the end of 2002 does present clear opportunity opportunity to become the true "voice of the customer" across the company and then to drive the implication of customer-specific learnings into actions both in actions of the marketing department and in actions for other departments, such as customer service.
By combining the two assessment activities, 1) the role of marketing as a whole the opportunity to become the "customer advocate" across the company by leveraging the customer database, and then 2) development of a consistent measurement approach and culture for marketing programs and campaigns, marketing can capitalize on this difficult environment and become a credibility force for strategic changes at the highest levels. The end result will be increased budgets, but most importantly, an increased reliance on marketing knowledge and approaches to growing the business.
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