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From Crayons to Calculators
The transition marketers have had to make--from creative souls to metrics mavens--has occurred quickly over a relatively short period of time. Here, a brief on recent developments and some tips for remaining competitive.
For the rest of the January 2007 issue of CRM magazine please click here
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More of an art, less of a science has been a popular way to describe the marketing world's behaviors. That world is undergoing a sea change now, and marketers have had to put down their crayons and pick up calculators. The reasons? Finance departments breathe down their necks; accountability restrictions bind them to measurement software; demand for real numbers piles on from all sides. With industry sands shifting under their feet, how are marketers staying competitive? The advent of high-speed Internet has probably been the greatest impetus for the changes marketers have experienced. Broadband penetration in U.S. households was at 5.5 percent in 2000, but this percentage has surged to almost 50 percent. The increase in broadband adoption has led to exponential growth in online consumer value: More people are making more buying decisions and purchases online, leaving marketers scrambling for new, innovative ways to catch customers' eyes and measure campaign success. The Web has contributed heavily to the demand for hard numbers as customer behavior is much more easy to quantify online than offline. Items like blogs, wikis, search engine optimization, social networking sites, and pay per click advertising did not exist 10 years ago, but now must become integrated into a marketer's lexicon and awareness. Liz Roche, managing partner at Customers Incorporated, says the most important thing for today's marketer to understand is that "the 'Web experiment' has succeeded and the Internet as a commercial tool is here to stay." Suaad Sait, CEO of ReachForce, a provider of on-demand marketing automation products, began his career in marketing. "I used to be frustrated early on," he says. "I'd talk about wanting to quantify marketing spend and people looked at me like I had two heads." Just a few years later Sait moved to a different company and considerations had already begun to shift toward the ROI bent he had long been looking for. "The first day of the quarter the vice president of sales sat right next to me, and the last day of the quarter the CFO sat next to me."
Sait's experience is indicative of many marketers' journey in the past decade. It is understandable that marketers are still enduring growing pains associated with the changes in relationships between marketing and other departments. New technologies have allowed some departments to work more closely together, while restrictions have caused others to start exchanging dirty looks at the water cooler. With analytics stressed and technology growing, it is, understandably, IT, sales, and finance that have been doing the most severe relationship reevaluation. The explosion of online opportunities and new compliance responsibilities like Sarbanes-Oxley--the poster child for accountability pressures--are also factors that have helped to kick up some serious dirt on marketing's turf. Another wrinkle for marketers these days is the plethora of recently coined terms that they must not only recognize, but also understand on a deep level to properly leverage. Sait says that language in marketing has changed so much that 10 years ago, "it would be the equivalent of me speaking Mandarin Chinese in Maintown, U.S.A." Today, marketers must get their heads around new terms, such as predictive analytics, search engine optimization, and social computing, in order to stay fluent (see the sidebar, "The Top 6 Terms for Marketers to Know Now"). Get It? New pressures and advanced technologies have led to many shake-ups. A Forrester study released in October 2006 found that three of four firms have reorganized their marketing departments in the past two years. Creative marketing through broadcast TV, billboards, newspapers, and direct mail isn't on its deathbed, but with the explosion of Web technology and analytical tools, a marketer now needs a different bag of tricks than she did five years ago. To cope with the advent of new, mandatory skills, some companies have created separate e-marketing departments; most analysts agree, however, that this move is counterproductive. "Organizations must begin to regard the Web as just another channel in the channel mix, as opposed to treating it as a separate business unit, operating company, or division," Roche says. A separate department is not only costly, but can lead to a breakdown in brand identification and message cohesiveness. Sait argues that a company that treats e-marketing as a separate function within the organization would be "a good indication of someone who doesn't get it." I.T.enuous According to Peter Kim, a senior analyst at Forrester Research, in recent years it is marketing's relationship with IT that has become the most tenuous. Kim's recent "Reinventing the Marketing Organization" study found that only a little more than 60 percent of marketing executives felt that their relationship with IT was either somewhat or highly productive--a number far lower than that of any other department. Kim explains that for IT, "technology has moved too fast away from the traditional world of ERP and enterprise software," and says that as IT tries to support internal technologies, marketers are left without support for the new online consumer connections. Kim believes that marketing and IT must try to build a trusting relationship so that marketing can focus on marketing instead of scrambling to support its new technology, but on the flip side emerging technologies are making it easier for marketers to bypass the IT department almost completely. SaaS has enabled companies to implement systems quickly and easily, cutting out the middleman. Pam O'Neal, director of marketing communications at NetQuos, says that her company uses exclusively hosted solutions so that its marketing department may "make Web changes in an instant." She is able to maintain a strictly metrics-based focus without relying on a separate department to help her get the technology to deliver these numbers. Kim does not believe this to be the best approach for enterprise companies, but he recognizes that it has become easier for marketers to skip over IT, noting that many look to expense applications so that they won't have to deal with the other department. Sales Buddies Not even a decade ago, sales and marketing were miles apart. Sait remembers when his marketing department would go to an event to find prospects: "We'd come back and celebrate with champagne, because we had a thousand leads and then we'd just throw them over the wall to sales." Today, Sait reports, this model is dead. Because the true return from marketing investments can only be seen through total purchase, sales and marketing need to work together for marketing to appropriately assess its campaigns. Many midsize companies have a chief sales and marketing officer to better facilitate this integration. For larger enterprises where this level of responsibility is impossible or impractical, communication between the CSO and the CMO must be constant, facilitated by collaborative technologies. Although marketing automation technologies in the past made it easier for sales and marketing to function separately, the new wave of advanced analytics apps, such as those from SAS, is aligning the two departments. "I'm seeing a lot more tools cropping up around analytics and less around automating processes," says Rob Bois, a research director at AMR. According to Bois, processes have become as automated as possible, but now are becoming more intelligent. Tools allow marketers not only to find the best way to create a general demand for a product, but also to go farther in shaping a demand for a specific product. Because sales sells to the demand that marketing promotes, the two must, then, use the same data, the same tools, and work on the same page. Bois says that because marketing is able to deliver better data to sales, sales "is recognizing a new value out of the marketing department that it didn't have before." Finance Frienemies NetQuos's O'Neal remembers a time when she, as the head of her marketing department, could have told her CFO: "I need $50,000 to do this." Now, she says, "He would just look at you and laugh." Increased accountability has forced marketing executives to come up with a clear picture of what was once a black hole of corporate investment. Solid investment must be based on solid data. Although this can create tension between marketers looking to create innovative but expensive campaigns, O'Neal contends that the new constraints have made the relationship less fraught. As long as a marketer can prove the need for the investment, "it's easier to spend money," she says. The relationships between marketers and their other-department colleagues are changing, but the trend is toward cohesiveness, not separation. As marketing becomes more numbers-based and tech-driven, the line between where marketers' responsibilities stop and financial engineers, sales reps, or IT directors' kick in becomes more blurred. Any kind of promotion or activity that goes through marketing must touch every group involved. The same is true for the most important relationship marketers have--the one with the customer. Customer Consciousness With the advent of wikis, blogs, and online search, the customer has a tighter grip on a product's reins than ever. Never before has it been so easy for customers to change the public perception of a company. (Think of the now infamous posting of a live conversation between customer Vincent Ferrari and an AOL CSR in June 2006.) Marketers must be highly aware of this customer power, and must take care to solidify and maintain excellent customer relationships. An example of what not to do: When a customer calls with a service request it is not a good time to use direct marketing. Ferrari did not wish to receive a sales pitch on AOL while he was trying to cancel his subscription. According to Forrester's Kim, marketing's ultimate job and a marketer's primary role is handling the company-customer relationship. "When you think about what marketing is responsible for, it's the customer. There's nothing more important to a company. A company can't be customer-centric until it has a CMO at the executive level." It is at the customer level where all relationships in a company converge and where the metrics marketers now rely on must be put to best use. O'Neal knows from her own experience that the relationship between customers and marketing today does not hinge on the attraction of flashy ads and sleek designs, but on trust, knowledge, and communication. Her bottom line? "It's no longer Malibu Barbie. It's no longer, 'I hate math.' We've got to be far more process-driven. We've got to be customer focused." Contact Editorial Assistant Jessica Sebor at jsebor@destinationcrm.com. The Top 6 Terms for Marketers to Know Now
  • Affiliate marketing A method of promoting Web business in which a merchant rewards one or more affiliates with a commission for increasing clicks, subscribers, leads, or sales.
  • Consumer value The expected or perceived value of a customer, minus the perceived value of investment. Value does not necessarily equate to how much the customer purchases, but can mean how much a customer gives back in other ways, such as blogging or through loyalty.
  • Predictive analytics The forecasting of a future likelihood of an event or trend. In predictive modeling data is leveraged to create a statistical model that can predict customer behavior or profit, for example. SPSS, Fair Isaac, and SAS are three vendors that have developed predictive modeling tools.
  • Search engine optimization Finessing a Web site through choosing appropriate key words and altering pages and links to improve visibility and rank through organic (nonpaid) search.
  • Social computing The use of social software that supports social networking and communication. This term covers email, instant messaging, blogging, and social networking (MySpace and Facebook, for example). Social computing can act as an environment for a company to forge customer relationships or for customers to have a forum to discuss a company's products and services.
  • Return on investment Profits created that surpass the initial investment, calculated to present net value, shown (most often) as a percentage of the initial investment. (Many analysts believe that it is misused in marketing.) --J.S.
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