In the gold-rush mentality of today's software industry, being first in a new territory is the accepted key to riches. Once developers decided that marketing departments were the next, and maybe last, major non-automated business area, hordes rushed to stake their claims. Marketers, who until recently had little to work with beyond a spreadsheet and word processor, are now being offered a confusing jumble of shiny software baubles. The new challenge for marketers is telling the different systems apart and figuring which system comes closest to meeting their particular needs.

Popular Terms

Industry terminology provides little help. The most popular umbrella term, customer relationship management, has been applied to just about everything from call center systems to data mining algorithms. The next most-popular label, marketing automation, is barely more specific. While software vendors have many good reasons to apply these labels to their products, helping buyers to make informed purchasing decisions is not among them.

Fortunately, once you look past the labels, it is possible to discern meaningful differences among today's various marketing-related software products. After analyzing dozens of these systems, seven distinct groups emerged. Each group has its own unique specialty, although individual products may straddle more than one category. It is even possible to arrange the groups on one of the two-dimensional matrices so popular with industry analysts.

Marketing Systems

But let us save the matrix for dessert and hold off on the categories themselves until we establish a broader framework. Marketing systems do not exist in a vacuum. They are generally acquired to support some larger corporate strategy related to the treatment of customers and prospects. Of course, since just about everything an organization does is somehow related to customers and prospects, a description of this larger group of systems looks a lot like any other description of the overall corporate information system architecture ­ a topic that others have discussed in great detail. Still, and with apologies to the cognoscenti for necessary oversimplifications, it's worth taking a look at Figure 1 which presents a marketer's-eye view of the corporate information structure.

Figure 1: Marketer's View of the Corporate Information StructureMost pieces should look familiar. On the left are the front-office or customer-facing systems such as sales force automation, point of sale, call centers, customer service, help desk, Web sites and e-mail. These are systems that come into direct contact with customers and prospects. For some (an e-commerce Web site or automated teller machine), the customer does the actual data entry. For others (a telephone call center), the customer talks to a company employee who punches the keyboard. But in either case, the system is accepting and reacting to inputs as a transaction occurs. In other words, these are real-time, online systems that are at least theoretically capable of affecting the interaction between the customer and the company as it happens. Because these are real-time systems, their technology is similar to other transaction processing systems typically using a highly normalized relational database structure designed to process individual transactions quickly.

In the past, each of the front-office systems would have functioned independently, maintaining its own database of customers and transactions. But today, these systems are increasingly integrated in the sense of using a common database (represented in Figure 1 as the single vertical box they are all plugged into). This configuration ­ various front-office systems sharing a common database ­ is the domain of vendors such as Siebel, Vantive and Pivotal, which are pretty much at the heart of the customer relationship management market. So, even though the term CRM has today been stretched beyond almost any specific meaning, it is probably useful to call to mind this configuration when the term appears.

In the center of the diagram are the back-office systems including manufacturing, distribution, finance and human resources. These are also online transaction processing systems that today are often tightly integrated in ERP packages such as SAP and Baan. As the double-headed arrow indicates, they may exchange information in real time with the front-office systems for tasks such as checking prices or inventory availability during order entry.

Moving up the diagram, both the front-office and back-office systems feed the data warehouse. The warehouse, in turn, feeds analysis systems; and analysis systems feed into database marketing. This is oversimplified and others may feel strongly about some of the details. These systems are mostly updated via batch rather than real-time processes, and they are structured for analytical rather than transaction processing. This distinguishes them quite sharply from the front-office and back-office systems.

Within this group, the "database marketing" label may need a little clarification. This is another term that has lost much of its specific meaning. Here, it refers to what is sometimes called first or second generation database marketing, which by definition involves creating lists for noninteractive marketing efforts such as direct mail promotions. Such systems are updated through batch processes and, therefore, do not allow for real-time interactions. At best, they approach near real time through updates that occur nightly or several times a day. More about this later.

The very top of the diagram also shows external data sources, such as third-party demographic data. This can feed into the warehouse or analytical system or sometimes directly into a front-office database. Such data is increasingly important, although it is not particularly relevant to the current discussion. It is included only for the sake of thoroughness.

The database marketing box has two outbound arrows ­ and here is where things again get interesting. The lower arrow, heading off into the market, refers both to traditional, outbound promotions and to slightly interactive marketing delivered through front-office systems. "Slightly interactive" seems to make as much sense as "slightly pregnant." It refers to messages that are generated in advance and then delivered via a front-office system ­ but without regard to the nature of the current interaction. Think of a bank database marketing system that decides, "The next time this person calls, offer her a home equity loan." While that may be the right thing to do when the analysis is run, it could be utterly inappropriate if the next call is to close all accounts because the customer is selling her home. Even if the list of recommended messages is updated several times a day, such an approach will never be truly interactive. However, it is still rightly considered to be sophisticated database marketing.

The other arrow out of database marketing leads to something labeled "interaction management." This describes systems that are specifically designed to guide transactions as they unfold. This truly is a real-time system, gathering input from both front- and back-office systems as they execute transactions and providing them with instant feedback that reflects customer-specific marketing considerations. A typical front-office application would be providing a product recommendation during order entry; a typical back-office application would be determining whether to waive a penalty fee for a late credit card payment as statements are prepared.

At the core of interaction management systems are business rules that determine how to act in particular situations. The rules may draw on customer strategies or segments defined in the database marketing system and on data taken from the warehouse. This is why the diagram shows both systems providing inputs. The application of the rules happens within the interaction management system itself. For clarity, it's worth stressing that the interactions actually execute outside of the interaction management system in the front- or back-office systems. The interaction management system only provides those systems with some marketing-oriented advice.

The reason for going through this diagram is to provide a context for understanding how the seven types of marketing systems fit into the larger information architecture. Next month's column will look at the definitions of the systems themselves.

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