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New Research on Why CRM Fails…Also Lessons for Marketing Automation

MIT Sloan Management Review (Spring 2011) published new research on CRM in an article titled, “Why CRM Fails and How to Fix It.”  This is fantastic reading; truly an energizing piece pointing to down-to-earth advice.  The four key insights that the authors drew from their research are equally applicable to marketing automation.  They are (verbatim):

  1. “If the appropriate marketing capabilities are not developed, little or no return will be generated from investments made in CRM.”
  2. “The rate of organizational learning, rather than the size of the company’s CRM budget, determines how rapidly companies can change the way they relate to a consumer, which, in turn, is linked to the length of the consumer purchasing cycle.”
  3. “Top management can provide the money, software and authority to create a CRM program, but such investment must be informed by cycles of learning from consumer insight….an organizational culture that tolerates experimentation will be more successful at building new CRM capabilities.”
  4. “Hard work and commitment are what it takes to develop marketing capabilities…far from being a black box (marketing capabilities) can be developed through conscious, goal-directed learning by those responsible for CRM.”

While some scoff at my contention that today’s marketing is harder than ever before, these insights from the research support that view. Enough of the left brain/right brain argument.  Enough of the data/experience fuss.  Enough of the processs/technology discussion.  It takes them all…along with leadership and courage.  I’ll say that again:  leadership and courage.

Back to the article.  The authors display a matrix with four marketing activities (demand management, creating marketing knowledge, building brands, customer relationship management) on the left and three marketing relationships across the top.  The marketing relationships between companies and consumers are:  transactional (from the 1970’s), one-to-one (based on the long-term relationship focus of the 1980s ) and networked (flowing from online networks, the company supply chain and consumers).”

The latter (networked relationships) is characterized by “co-creating value with a network of consumers,” marketing knowledge coming from “key network participants and shapers,” consumers encouraged to “access a networks capabilities,” and consumer self service.  How different is this from where your marketing is today?  How does this vision apply to your marketing? How will you go about building the capabilities to succeed in this networked relationship between company and consumer?

Don’t be stuck in in the 1990s.  Please read the article and let me know whether it made you want to cheer also…

(Back to marketing automation:  Today’s ClickZ piece on Marketing Automation…Far from Automatic opened once again the discussion of why so many marketing automation implementations fail to deliver expected results.  It makes good points but doesn’t go far enough into a meaty topic that I’ve covered frequently.

Who cares about marketing data?

In a recent survey conducted by Patricia Seybold Group and the Information Technology Services Marketing Association (Survey on Data-Driven Marketing, March 2011), more than 100 marketers reported what types of marketing data most interested heads of other departments.  Customer data was the hands down winner, recognized as the top choice by CEOs, COOs, Business Unit Leaders, and Service Delivery Leaders.  The findings (see below), while not statistically significant, do raise some questions worth pondering.

Type of Data Top Choice For:
Customer Data CEO, COO, BU leader, Service leader
Sales Accepted Lead Data Sales leader
Markets Data CTO (2nd choice for CEO)
Marketing Programs Data CFO
Competitor Data None (2nd choice for Sales, Service, CTO)
Contacts Nurtured by Marketing None (4th choice for Sales)

Consider first, the kinds of data needed to understand sources of future growth (markets, competitors, customers) and the kinds of data needed to understand short term opportunities (customers, competition).  Then consider what is needed to forecast short term success (sales accepted leads, contacts nurtured by marketing).  Finally, what is needed to allocate budget dollars (marketing programs data).

It occurs to me that marketing has started its measurement activities in the area of least value to the company (marketing programs data).  It is, fortunately, moving higher in the food chain to using contacts nurtured by marketing to forecast revenue.  But still that is mechanics — can’t be ignored but not the source of the real value to the company.  It is time for marketing to set its sights on growth and provide credible information to the rest of the organization on customers, markets, and competition.

Approach this like any other project — understanding what other departments are trying to accomplish and then providing information that helps them do that better, faster, more easily, more expertly.  Providing credible marketing data to the rest of the company requires organizational outreach — crossing departmental lines, understanding needs, communicating effectively, and building relationships that foster mutual achievement.

That said, it is not all about the rest of the organization using the data…it is also about marketing’s uses of data to find new opportunities and capitalize on known opportunities.  Be just as disciplined about the needs analysis for the marketing department.  Afterall, you are/should be leading the charge.

Three Ways Data-Driven Marketing Improves Performance

Data-driven marketing and sales performanceAccording to a survey just completed by ITSMA and Patricia Seybold Group, today’s B2B marketers recognize the importance of data-driven marketing.  So what?  Well, now we have statistically significant findings supporting that view. 

Data savvy organizations outstripped the others in “significantly or somewhat” improving their market share, average time to revenue, and sales costs per order dollar over the last two years.  That’s hard data that associates leadership in data-driven marketing with market and sales performance increases.  While we found no such relationship to revenue or profitability, that may come in time as marketing data gets more widely used in organizations.

There is a thoughtful post by Neil Mason republished in ClickZ this week on this subject.  His title: The price of light is less than the cost of darkness.  The cost of darkness (i.e., not knowing information gleaned from the data) is getting higher.  As more companies invest in the technologies, processes, and leadership needed to excel at data-driven marketing, the harder it will be to compete if you haven’t adopted new practices. 

The ways that marketing organizations get data savvy, is the topic of an upcoming webcast by ITSMA and Patricia Seybold Group.  It answers the question, “what does it take to become a data savvy marketing organization?” and addresses survey findings on technology, processes, organization, and more.  Mark your calendar for May 17, 2011 at 11 a.m.  Complimentary for ITSMA members. Register here.

If you want to learn more about the results and can’t make the webcast, send me an email.

The marketing audit…who is asking?

Posts on the marketing audit abound.  Some go to great pains to differentiate the marketing audit from the marketing plan.  Others focus on strategy and performance, but give no attention to marketing processes and skills.  To me, the crucial question is: who is the audience?  There are multiple types of marketing audits depending on who is asking.  Each executive has a slightly different question, as follows:

For the CEO:  is marketing effectively setting and driving the short and long-term growth strategy for the company?

For the VP Strategy: is marketing actively and effectively anticipating and responding to changes in the economy, the  industry, competitor activities, sociopolitical actions, and technological opportunities?

For the CFO:  is marketing delivering on its plans and holding itself accountable for its pricing and investment decisions?

For the VP Sales:  is marketing creating awareness, generating leads, nurturing prospects and enabling the sales process?

For the VP Customer Service:  is marketing actively and effectively setting customer expectations, building customers satisfaction and paving the way for repeat business.

For the VP Product Development:  is marketing accurately and fully understanding customer needs and collaborating effectively in translating those into product opportunities?

For the VP Manufacturing:  is marketing providing full and accurate discernment of customer priorities that enable simplification of processes.

For the VP of HR:  is marketing empowering employees with knowledge that makes them emissaries of the company?

For the VP Marketing:  are the right people, processes, and technologies in place and applied strategically to cost-effectively achieve marketing objectives?  Are performance measures tracked, diagnostic metrics analyzed to find improvement opportunities, and a culture of experimentation fostered?

Think about it.  Do you agree?

How to tell if your marketing department needs a digital marketing makeover

  1. Have one value proposition and message you send to multiple buyer types
  2. No/little evidence to support value proposition
  3. Drip campaigns regardless of target’s response (on, off rather than behavior/response driven)
  4. Don’t track who is looking at your website, what they are doing and incorporate that data into profiles.  Don’t use progressive profiling on the site to gather information.
  5. Don’t use information collected about visitors to serve content that is most likely to interest them
  6. Don’t know your buyers digital behavior and have strategy to engage online:  Where are buyers hanging out on the web? Who are their key influencers ? What devices do they use? What preferences for video, email etc?  How are you inspiring communities of buyers?
  7. Don’t have a marketing database integrated with CRM system and a means of making it easy for sales to access and make sense of the behavioral data marketing has collected.
  8. Don’t have a closed loop lead management system with behavioral as well as demographic lead scoring implemented
  9. Haven’t adopted a process of test and refine (landing pages, offers, emails, lead scoring, segmentation) and acquired the tools to make this easy to do.
  10. Haven’t moved the culture from one of intuition to one of experimentation.
  11. Don’t know the information buyers/customers need at each stage of the buying cycle and how they prefer to receive it.  Haven’t developed relevant content to address those needs.
  12. Don’t know what is being said about your company on the web.
  13. Haven’t implemented self-service repositories a) for customers and b) for prospects.
  14. Aren’t measuring end-to-end performance, don’t know relevant benchmarks, don’t gather metrics to that can provide insight into ways to improve. 
  15. Aren’t optimizing marketing spend…moving resources in response to returns obtained
  16. Aren’t meeting regularly with sales to review revenue and sales forecast, identify problems, successes and brainstorm solutions.
  17. Aren’t sharing marketing forecasts with the CEO/CFO and sales VP
  18. Aren’t getting CFO signoff of your justifications of marketing spend
  19. Can’t easily make changes in website, create microsites, create landing pages.
  20. Aren’t collaborating with customers in creation of new products, improving current products.
  21. Aren’t implementing campaigns consistently over multiple channels (including offline).
  22. Aren’t working your SEO hard.
  23. Haven’t thought about social media management as a process.

What would you add to this list of symptoms?

Digitally empowered marketing

In last fall’s survey findings from the CMO Council and Accenture (The CMO-CIO Alignment Imperative) the CMO Council specifies five components of  “digitally empowered marketing.”  The five points are well taken and got me thinking about what it takes to achieve digital empowerment.  My thoughts are shown below in bold after each of the Council’s five points.

1.  Delivering personalized and relevant experiences to customers through whatever channels and whatever format they most value.  This requires marketers to know much more about the buyer, the value provided,  and the information needed at each stage in the buying process.  For many it’s time for a refresher in core marketing skills.

2. Achieving consistency of communications and brand experience across both digital and offline channels.  This requires effective governance of the marketing function and alignment of communications across the organization. 

3. Having the capacity to track and respond to customer behaviors across every point of interface.  This is the marketer’s dream and impossible to envision without implementation of streamlined, repeatable processes and effective use of technology.

4. Becoming a more data-driven, measurable, and transparent function where strategies, campaigns, and budgets are based on verifiable insight into markets and customers.  Data is verifiable.  Insight is supported by facts but multiple interpretations are still possible.  Marketing must make a fundamental shift from “understand and act” to “hypothesize, test, evaluate, modify actions, repeat.”

5. Having systems and processes with the agility and flexibility to respond to changing customer preferences.  Multiple functional areas must collaborate to establish systems and processes focused on the customer and then to recognize customer changes and implement the adaptations needed.

These are all steps toward greater accountability and improved customer focus.  It’s better marketing regardless of digital empowerment.