In 2002 the clamor for greater accountability in financial and corporate management resulted in passage of the Sarbanes-Oxley Act. This was a direct result of the reporting debacles associated with several major corporations, underscored by the well-documented collapse of Enron. In 2005 a similar clamor for sales and marketing accountability may be taking root. The past six months have witnessed several high-profile scandals tied to misuse of customer information, all involving inappropriate disclosures, poor safeguards, or sales to unauthorized parties. This comes on the heels of the explicit or tacit involvement of sales and marketing executives in some of the worst scandals that led to the creation of Sarbanes-Oxley.
We already see companies taking a hard look at their key sales and marketing processes. Their goal is to get clarity around items such as promotional spending and discounts, sales commissions, classification of selling expenses and contra-revenue items, and net pricing. We believe that this scrutiny will increase, as public concerns around the accuracy and reliability of revenue reporting increase.
Other accountability issues that sales and marketing executives should contend with over the next several months include: Linking sales and marketing expenditures and results Protecting customer data Avoiding excessive marketing intrusiveness Minimizing self-service demons Preventing the abuse of proximity technology Reducing investments in big bang sales and marketing technology efforts
Following is a six-point agenda for sales and marketing executives to hold themselves accountable before someone else does:
1. Tie sales and marketing spending more clearly to results.
Traditionally, sales and marketing spending has not been completely visible, much less the outcomes associated with this spending. Developing clear metrics around how much it costs to acquire and retain customers, and how much these customers contribute to the bottom line, are key first steps. This will require discipline in understanding true customer revenues, acquisition costs, costs to serve, and loyalty.
New technologies that enable analysis of prices actually received from customers (and lost revenues), as well as marketing resource management software, should help.
2. Secure customer data.
Deloitte Consulting LLP has been predicting a high-profile scandal tied to the misuse of customer information for the past 18 months. The multiple scandals that have hit the press over the past six months reflect and confirm the need for: Clear policies for controlling customer information integrity and access Strong internal controls that support those policies (much like the internal controls for financial information mandated by Section 404 of the Sarbanes-Oxley Act)
3. Get customers' permission before communicating.
Seth Godin articulated the concept of "permission marketing" in his work, Permission Marketing: Turning Strangers into Friends and Friends into Customers (1999). You don't build loyalty through manipulation and interruption. Ask first.
4. If you want customers to do your work, pay them.
Self-service, when properly engineered, can be a godsend for both suppliers and customers, providing low-cost, highly responsive and highly available servicing capabilities. On the other hand, how many of us truly value the experience of interacting with a voice recognition system that forces us to speak at a pace and in simple sentences normally reserved for young children?
If you want to make customers complicit in the procurement and delivery of your services, make sure that this complicity provides benefits to them, as well you. Then hold yourself accountable for delivering these benefits.
5. Apply proximity technology responsibly.
Two of our favorite technology applications involve the use of radio frequency identification (RFID) to enable rapid passage through toll booths and provide chip times for road races. This same technology also allows tracking of your movements in any environment equipped with sensing equipment.
If you plan to use proximity technology like RFID make sure that your customers understand how you will and will not use the information that this technology allows you to accumulate.
6. Buy your CRM technology infrastructure in bite-size pieces.
The era of the big bang CRM technology play is waning. Focus on specific technology-enabled solutions that address a particular business issue and demonstrate a clear return on investment.
Building a platform of accountability should be a critical priority for every sales and marketing executive in 2005. Over the longer term this will become more and more essential to doing business in a society that has been conditioned by Sarbanes-Oxley.
Jonathan Copulsky is a Chicago-based principal at Deloitte Consulting LLP and serves as the global leader for the firm's Customer and Channel Strategy (CCS) practice. He can be reached at firstname.lastname@example.org. Richard Lee is a partner with Deloitte & Touche LLP. Richard is based in Toronto and co-leads the Canadian CCS practice. He can be reached at email@example.com