Tools
You Can Use—Seriously
Faster,
cheaper, more effective
— is this really
marketing
technology we're
talking
about?
CMO Magazine, January 2006 By Michael Fitzgerald
On demand. Real time. Predictive. Consumer generated. Those are the technology
buzzwords that
marketing executives
should resolve
to learn more about
in the New Year.
Here are four trends
that should be
on any CMO's "get smart" list for 2006.
On-Demand Software
The
CMO controls his
company's
marketing
initiatives, but
rarely
does he exert
such
authority
over the technology
his charges
use to manage
those
projects.
Most
marketing
chiefs leave technology
decisions
to
the CIO — and then bristle
when they
get
saddled with
systems that
don't meet
their needs.
The
winds are starting
to shift, however,
with an emerging
class of "on-demand" or "hosted" software that gives marketing departments more flexibility for deploying technology
to improve their
effectiveness,
both internally
and in their customer
outreach programs.
Areas such as CRM,
campaign management
and business intelligence
are particular
hotbeds of on-demand
activity; hosted
CRM revenues grew
105 percent in
2004, according
to AMR Research.
"The
proliferation of
players and tools
is unbelievable," says Larry Emond, CMO at The Gallup Corp. "It's a good thing for us — it's easy and it's low risk."
The
abundance of tools
may leave a CMO
feeling like a
kid in the on-demand
candy store. Salesforce.com
offers more than
two dozen marketing-related
on-demand applications
on its AppExchange
online marketplace,
which opened in
September.
"This
changes the world
CMOs live in," says Phill Robinson, salesforce.com's senior VP of marketing. "They can do things [through AppExchange] like integrate with their Web site and
do customer-selling
directly from the
Web site without
the need to buy
a big system that
sits behind it."
CRM
leader Siebel is
also moving to
an on-demand model. "We're migrating toward one code stream that can be deployed on-premise or on-demand," says Bruce Cleveland, senior vice president of products at the company. "They'll share the same feature sets. The only difference will be that we'll host
the on-demand version,
you'll host it
on-premise."
Cleveland,
who was Siebel's
CMO before moving
to the products
group, believes
that on-demand
is in demand for
two main reasons.
First, broadband
access is far more
affordable than
it was five years
ago, making Web-based
applications more
feasible. Second,
it's clear that
the on-demand model
helps solve the
central problem
of CRM: getting
marketers to use
it. "What salesforce.com has shown us is if you can give people a more intuitive interface,
they'll adopt it
faster," Cleveland says.
So
where does the
IT department fit
into this on-demand
model? There's
an inherent risk
in deploying technology
across marketing
without IT's involvement
— especially if
the software must
integrate with
existing enterprise
applications. For
big projects, IT
must be involved
in the planning
and integration.
But that's not
keeping some CMOs
from taking more
control over the
purchase and deployment
of marketing tools.
Marc
Prosser, CMO at
Forex Capital Markets
LLC (FXCM), a fast-growing
futures commission
service, began
using on-demand
software in 2002
for e-mail management
and now uses four
on-demand applications:
salesforce.com
for CRM, marketing
management software
from Eloqua, Hitwise
analytics tools
from WebSideStory
and a live chat
program from LivePerson.
Only in the past
two years has IT
become involved
with these applications,
primarily to assist
with integrating
data into the on-demand
CRM system.
The
on-demand model
gives Prosser more
flexibility and
a faster way to
deploy software
to his team. He
cautions, however,
that CMOs shouldn't
confuse "easy to install" with "easy to manage." In that regard, "on-demand is no different than any other kind of software," he says. For each of its on-demand products, FXCM employs a full-time business
analyst dedicated
to tuning the software
for FXCM's marketing
needs. Tailoring
on-demand software
to meet internal
requirements also
means additional
investment — of
both time and money
— with the software
provider, Prosser
adds.
In
general, however,
that investment
pales compared
with traditional
enterprise software
installations.
With on-demand
software, "you get [the costs] out of the capital budget and into the expense budget, which
gives people a
lot more flexibility," says Thor Johnson, VP of marketing at Eloqua.
That
flexibility also
makes it easy to
walk away from
a product that's
not delivering
the desired effects. "The hosted delivery model lets people do a pilot, measure the results, and then
decide whether
to proceed," says Greg Gianforte, CEO of RightNow Technologies, a developer of on-demand
CRM applications.
In
this new world
of on-demand technology,
CMOs may find they've
never been so in
control.
Campaign-management applications
Over the past six
months, Matt Tormollen's
marketing team
has doubled the
number of campaigns
it runs, while
adding zero staff.
That's because
the team has moved
from spreadsheet-driven
campaign management
to automated software from a small developer
called Eloqua.
Tormollen, CMO
at Pavilion Technologies,
a maker of manufacturing
process software,
says the software's
automated lead-generation
and tracking features
help Pavilion's
sales force "sell
smarter" and enables the entire management team to see which marketing initiatives are
having the most
impact.
"The
value of the product
is unambiguous
— I can see how
specific marketing
dollars spent on
specific campaigns
work, and so can
other corporate
managers," says Tormollen. For example, his team has set up rules so that visitors to the
Web site can trigger,
based on their
behavior, a salesperson
to begin an online
chat, generate
a personalized
Web page or follow
up with an automated
e-mail response.
Campaign-management
software is emerging
from its direct-mail
niche to become
a tool CMOs use
for all of their
marketing channels,
driven in large
part by the software's
ability to automate
processes, tailor
messages more effectively
and quickly measure
the results.
These
tools fit under
the header of "marketing automation," a space grown crowded with vendors whose focus ranges from broad-based campaign
and project management
(Unica, Aprimo)
to database marketing
(Alterian) to demand
generation (Eloqua)
to e-mail marketing
(ExactTarget).
Although the functionality
of these tools
varies greatly,
they all tout a
common objective:
the ability to
track customer
behavior across
multiple channels
and help tailor
marketing efforts
more effectively,
then show the results
campaign by campaign.
That
ability to justify
spending is the
key, says Michael
Sadofsky, senior
VP of marketing
at Republic Bank. "There's only so much money management has to invest," he says. "Stuff has to have a payback."
Analysis tools
The
success of the
CMO in today's
corporation often
comes down to
cold, hard numbers.
Get
fuzzy on those
and you'll soon
be marketing
yourself to your
next employer.
"Numbers
don't lie," says Amanda Duckworth, CMO at law firm Morrison & Foerster. "If the numbers say you're growing with a client or declining with a client, that's
telling you a powerful
story."
There's
no shortage of
data to sift through
in attempting to
craft a compelling
story for top management.
The decrease in
the price of computing
storage, combined
with the exponential
rise in processing
power, has in fact
created a monster
in many marketing
departments: piles
and piles of customer
and business data.
That's not counting
the myriad forms
of unfiltered content
billowing across
the Web.
The
ongoing challenge
for CMOs is mining
this mountain of
data to better
understand customer
and market trends
and activities
in order to more
effectively position
their marketing
resources. Traditionally,
the tools to provide
this type of analysis
were highly customized
programs that required
the expertise of
data geeks or — gasp — consultants.
Now, however, even
as the sophistication
of these tools
increase, many
of them are getting
easier to use.
Analytics vendors
are dumbing down
the interfaces
of their products
in a way that masks
the underlying
algorithms to make
them more usable
to the marketing
masses.
In
other words, CMOs
no longer need
to know the difference
between a Markov
decision process
and Markov vodka
to use them. "Anybody can do this stuff now," says Mark Bryant, a market analysis manager at Patterson Dental, a distributor
of dental supplies.
The
user-friendly design
doesn't make these
tools any less
powerful. On the
back end often
lie massive databases
— hosted by the
software provider
— and a complex
series of algorithms
that help marketers
uncover trends
and predict future
behaviors with
increasing accuracy.
The additional
insights Patterson
Dental gained,
for example, using
a Purchase Probabilities
Analyzer tool from
Loyalty Builders,
a small developer
of predictive analytics
software, convinced
the marketing team
to shift $400,000
in ineffective
direct-mail spending
to other areas.
Tools
from companies
such as Loyalty
Builders, Loyalty
Labs or Alterian
are designed to
help marketers
predict customer
behavior in order
to head off potential
problems in advance. "I can tell you with 85 percent to 93 percent accuracy which customers are not
going to renew
their agreements,
and I can also
tell you which
ones you should
go after," claims Mark Klein, CEO of Loyalty Builders.
The
quest for analytics
is spreading into
customer service,
too. Susan Feldman,
an IDC analyst,
says vendors such
as Factiva and
Biz360 are helping
marketers parse
through customer
feedback forms
and other unstructured
content to analyze
its emotional meaning.
These companies
use a variety of
techniques, from
basic keyword analysis
to more sophisticated
natural language
processing, pattern
matching and machine
learning, to weigh
the general tenor
or comments for
potential trouble
spots. An angry
comment from a
large customer
on a Web form,
for example, might
trigger a priority
response from a
customer service
representative
— a far more proactive
action than waiting
for results from
a customer survey.
"Things
like text-mining,
search and categorization
provide a new aspect
of computing that's
been ignored before
since it's so complex," says Feldman. As the technology becomes more user-friendly, marketers are warming
up to its potential
in the battle to
retain customers. "They see the promise of using these technologies to have a more personal relationship
with customers," says Feldman.
Social Networking
Online
social networking
sites are
great
for making
friends and finding
dates
(so we're told).
But can a lonely
CMO use them
to
get closer
to her customers?
Those
answers are
still
forming, but
the prospects
are appealing.
One
reason for the
buzz is the basic
premise of social
networks: "the ability to get your audience into dialogue, to engage them in conversation," says Stephan Spencer, president of NetConcepts, an online marketing consultancy.
Spencer, who posits
that online social
networking tools
have the potential
to help marketers
better target current
or potential customers,
is watching the
emergence of tools
such as Ning, a
social networking
platform introduced
in 2005 by Marc
Andreessen, the
Internet pioneer
who co-founded
Netscape in the
1990s. Ning enables
companies to embed
social networks
in existing websites.
This type of platform,
used in conjunction
with blogs or wikis,
will help companies
foster better dialogue
with the customers
they want to reach,
Spencer predicts.
While
Spencer predicts
that Ning is too
new to make much
of a splash this
year, other collaborative
tools are starting
to gain traction
as customer relationship
builders. Duckworth,
the law firm CMO,
is piloting "relationship capital management" technology from Visible Path to see if it can improve the firm's CRM system.
The Visible Path
platform parses
customer contact
lists, e-mail programs
and other corporate
data to rate the
breadth and strength
of customer relationships.
While the firm's
InterAction CRM
system (from LexisNexis
Interface Software)
does a fine job
at revealing how
many of the firm's
lawyers have contacts
at a potential
client, it can't
judge the quality
of those relationships
— critical information
for Duckworth's
client acquisition
and retention efforts.
The
challenge for Duckworth
is quantifying
any signs from
Visible Path that
warn of a weak
relationship with
a client. "Some of the partners here may challenge the rigor and efficacy of the algorithms," Duckworth says. Nevertheless, she thinks social networking could become a valuable
part of her CRM
efforts.
Social
networks may also
play a role in
lead generation.
Eloqua, the campaign
management and
analytics software
developer, has
built hooks in
its Web analytics
software to Spoke
and LinkedIn, two
social networks.
Mark Organ, the
company's CEO,
believes B2B marketers
can tap into these
networks to get
more information
on who is visiting
their websites. "There's plenty of data on the Web on senior level people, but there are whole
levels of people
who make buying
decisions that
are effectively
invisible," he says. "We can find them through LinkedIn or Spoke."
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