The Age-Old Battle: Best of Breed Versus Enterprise Solutions
Just about everyone in customer relationship management talks about "knowing your customer" -- it's the catchphrase that accompanies a thousand sales pitches for everything from data mining tools to campaign management software. Business headlines speak to the importance of "competing on analytics," which is about collecting, analyzing, and acting on data. In fact, as more and more products and services become commodities, more and more companies are turning to customer insights as their primary path to growing a durable and profitable customer franchise. So how does an organization go about developing deep and meaningful relationships with its customers? A key element is strategic investment in the right software applications.
According to some estimates, companies will invest more than $10.6 billion this year on CRM technologies designed to solve marketing challenges. But too often, these tools are not purchased strategically. Four areas that are key to CRM are data quality, data mining, marketing automation/campaign management and business intelligence. Many organizations will automatically purchase four separate "best-of-breed point-solution" packages from four different vendors because the deliberation process seems easier.
Why do some companies choose best-of-breed point-solutions? Often a need is identified within a department. For example, the Chief Marketing Officer may appropriately mandate that "we need to deepen our customer insight, we must better choreograph customer interactions, and we must continuously improve marketing performance." The company may then put out a request for information (RFI) to software vendors offering solutions that address these broadly defined business challenges.
Many vendors respond to the RFI with a proposal to solve part of the problem. They divide the broad business challenge into small parts and claim that their tool is best at solving one part. Overwhelmed by the number of possible solutions, and weary from reviewing multiple proposals, some companies will end up strapping together multiple "point solutions" from different software vendors.
So why not buy an integrated solution from one vendor? Perhaps it's why gourmet cooks are still hesitant to buy all their ingredients at a supermarket. Sure, there was a time when a supermarket couldn't supply high-quality items, and the cheese shop, wine store and butcher exploited that weakness. Point-solution vendors are sometimes as snobby as the local artisanal cheese shop that dismisses the big grocery store, but savvy organizations need to look beyond the marketing hype and seriously consider the advantages of an integrated solution. In fact, today many enterprise solutions have "best of breed" components. The result: "Best-of-Breed Enterprise Solutions".
Saying No to Point-Solutions
The point-solution approach is dying. It's already dead in the hardware space. Standard hardware platforms are the rule not the exception. So what's really important when making strategic investments in the right software applications? We believe that there are two primary considerations:
- Can the technology platform support all the elements of an enterprise customer intelligence strategy (enabling you to expand and extend capabilities over time)?; and
- Can you trust the technology partner to be with you for the long-run?
Customer Insight is about deepening your understanding of individual customers (and thinking about customers as individuals). It requires technologies to manage, integrate, and analyze data. More importantly, it requires the creation of new analytically derived insight such as customer profitability and potential scores, attrition and credit risks scores, and channel migration scores. The payoff -- deeper customer insight will enable you to make smarter decisions.Customer Interaction is about managing customer engagement. This is where early CRM technologies began with sales force automation and campaign management. Today, it includes marketing mix optimization, behavioral triggers, digital marketing, and real-time decision making (to name a few). The payoff -- choreographing customer interaction will improve your ability to manage the customers' experience.Marketing Performance Management is about measuring and reporting what matters. It's about aligning organizational activity around actions that create value with the customers that matter most. Importantly, it's about integrating the learning that occurs with every customer interaction. The technology set includes strategy maps and marketing scorecards for a top-down view of marketing performance, and OLAP reporting for bottom-up detailed analysis of marketing performance.. The payoff -- continuously improving marketing results.
After these two hurdles are cleared, we then encourage you to focus on the three interdependent parts of a good customer intelligence business strategy: customer insight; customer interaction; and marketing performance management.
Success Lies in the Integration of Technologies
The point is, that today there are multiple technologies that can empower marketers to more effectively reach their goal of growing a durable and profitable customer franchise. Therefore, as you make your technology decisions, remember success lies in the integration of these technologies.
There is no question that all customer intelligence software vendors create software that can be integrated with just about anything else on the market. And there is no question that some offer excellent individual solutions. Companies need to ask themselves whether cobbled-together individual solutions are the best use of company resources when comprehensive players can provider equal or better solutions at a lower overall cost.
Jeff Gilleland is the global strategies for customer intelligence at SAS. Jeff Levitan is the general manager of customer intelligence at SAS Institute.