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The Art and Science Equilibrium
ROI increases as organizations' marketing initiatives fall in line with strategic corporate goals; four core marketing competencies help.
Posted Oct 12, 2005
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Compared with their standard and lagging counterparts, marketing-ready organizations are three times more likely to experience a return on marketing investment (ROMI) of 50 percent, according to the Aberdeen Group study, "The CMO's Strategic Agenda Benchmark Report: Building the Marketing-Ready Enterprise." The study, done in conjunction with the American Marketing Association (AMA) and SAS Institute, offers a definition of the marketing-ready enterprise as one armed with an array of business processes, role-based functions, and technology that enable it to profitably interact, build, and manage customer and stakeholder relationships. "As marketing processes, competencies, and enabling technologies become more sophisticated, CMOs are aligning the marketing function with strategic corporate goals--including customer intelligence, product innovation, brand, and reputation management," said Leslie Ament, director of Aberdeen's market analytics research, in a written statement. Additional findings reveal that best-in-class companies (BICCs) are more likely to see more than a 15 percent annual improvement in ROMI when measured up against what Aberdeen classifies as Industry Norms and Laggards. Forty-three percent of BICCs noted a ROMI of 15 percent or more, followed by 31 percent of Industry Norms and 24 percent of Laggards. A heftier percentage of BICCs also are increasing their gross revenues and customer retention rates. Sixty percent of BICCs reported better than 15 percent annual improvement in gross revenues, while 50 percent of Industry Norms and 38 percent of Laggards did. About two-thirds of BICCs noted more than 15 percent annual uptake in customer retention rates followed by 52 percent of Industry Norms and 30 percent of Laggards. Regarding the ability to track customer behavior, 60 percent of BICCs are able to, half of Industry Norms can, and 40 percent of Laggards are equipped to do so. When it comes to integrating customer touch points to purchase or sales channels, however, only 37 percent of BICCs do, followed by 25 percent of Industry Norms and 26 percent of Laggards. "Leveraging enabling tools and processes that have until recently been the domain of power users or IT departments will be a challenge for most marketers," the report states.
Aberdeen suggests four core competencies of marketing: Use customer profitability and lifetime value models to plan investments. Tap predictive analytics and modeling tools to turn customer and product data to improve revenue-generating opportunities. Build relevant, personalized relationships with most valuable customers via their channels of choice. Use marketing analytics to craft higher-value customer interactions through event-based, lifecycle stage or adaptive interaction marketing procedures to construct personalized relationships. "Companies serious about building a marketing-ready enterprise will need to rethink how they create processes around customer interactions and how they invest in technologies that support advanced, rules-based communications," the report states. "Best-in-Class companies enjoy a performance advantage over their peers in understanding not only who their customers are, but what type of relationship their customers want with them. Additionally, core competencies of leaders are enhanced by use of market analytics, customer interaction applications, business processes, and an infrastructure that is integrated across brands, product lines, media, purchasing, sales and distribution channels, which empowers them to better understand, target, and retain their most profitable customers." Related articles: Redefining Interactive Marketing What Can Direct Mail Do For Marketers? SMBs Shift Best Practice in Marketing Approaches
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