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The Effect of Corporate Misalignment on ROI
If an organization's IT and business units have misaligned CRM goals, it will not get an accurate picture of ROI.
Posted Nov 15, 2004
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One roadblock to accountable marketing is the inability to forge a link to financial measures of importance to C-level executives. This weakness is a symptom of a much broader disease that involves marketing, CRM/technology, and the financial suite. Many from the CIO side of the table still perceive the ability to run SQL calls or the introduction of an OLAP as the solution to the measurement need. Supporting and offering these tools fits very well into the technology system, but that offers little of value to the organization's marketing front lines. It offers even less in assessing and testing whether campaigns have worked, whether marketing actions resulted in a customer change in attitude or behavior, or whether the value/payoff of marketing efforts has been achieved. These are all key areas of ROI generation. The CIO is not totally at fault here. The CMO (or vice president of marketing or advertising) generally has not been very good at introducing effective ways to clearly present business-user requirements to the IT side. And most have been unable to figure out how to embed, infuse, or align key customer measures like customer satisfaction, customer loyalty, or brand equity, to take full advantage of technology systems (data integration, access, and delivery). In most organizations a wide gap still persists. To complete the picture we see the CFO today gradually being pulled into discussions about new (accounting) valuation techniques, ROI (including investments in technology, return-on-marketing, and determining optimal marketing allocations), and how to comply with new legislation, particularly the Sarbanes-Oxley Act. Many financial processes by their nature fit well in the tool-and-technology framework. However, CFOs are increasingly being asked to link, integrate, or encompass a wider array of measures, in effect, to develop new perspectives, techniques, and approaches. Six Sigma and Balanced Scorecard are two initiatives making resurgences as cure-alls, but they are often introduced by the financial side, and have serious weaknesses. They are internally focused, do not account for the ROI of marketing--which is customer-focused--and the very people who could extract and create the proper value of such efforts are missing from the table. Yet frameworks, such as linkage/causal modeling (from econometrics) and attitude/preference evaluation (from psychometrics), are available to address holistic measurement needs.
IT, marketing, and measurement misalignment saps vital potential that companies desperately need to make use of to be successful. Technology creates an advantage in its ability to bring together disparate sources of data for sophisticated analysis and results delivery, but we see few companies widely embedding or exploiting a powerful, integrated measurement approach. This is a reality that grows from a fundamental difference in perspective brought about by the inertia of traditional roles and responsibilities. The enabling effects of technology have changed the rules--if we understand this, we can begin to break down the walls and move toward a more integrative solution. The danger remains, however, that many decision-makers will continue to fall for the promise that technology (in particular, CRM analytic or BI software) alone will be the answer. About the Author Dr. Raymond Pettit is president of ERP Associates. Ray writes extensively about the critical need for alignment between technology, marketing, and finance to drive improved ROI and corporate financial performance. His new book, entitled Rethinking Advertising Effectiveness: Measuring and Managing New Media and New Technologies, will be published in fall 2005. Ray published an executive report, "Analytic Marketing Integration: The Seven Frames of Marketing Intelligence," in May 2003, and he is also the coauthor of Market Research in the Internet Age (John Wiley & Sons, 2002). Ray received a Ph.D. from the University of Illinois at Urbana-Champaign, and has been a quantitative and market research consultant and executive for a number of domestic and European firms. He has been an education and training consultant for SPSS since 1998.
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