Consumers Will Reshape the Future of CRM Marketing

Transcription

1 Strategic Planning, C. Marcus, W. Janowski, A. Sarner, K. Collins, G. Herschel, J. Radcliffe Research Note 4 December 2003 Consumers Will Reshape the Future of CRM Marketing In 2004, marketers will need to align customer relationship management programs, budgets and planning with new boundaries set by governments, vertical markets and, above all, newly empowered consumers. Core Topic Customer Relationship Management: Business Strategies, Technologies and Applications for Marketing Key Issue How will marketers fill the gap between data and insights that are acted upon? Strategic Planning Assumptions By 2006, enterprises will see a tenfold increase in spending to secure the technology, expertise and training required to respond to customer preference and privacy demands (0.7 probability). Through 2007, 80 percent of Global 1000 enterprises will be unable to measure their marketing effectiveness (0.9 probability). By 2005, all major enterprise application vendors will offer an integrated enterprise marketing management application suite (0.8 probability). By 2007, vertical markets, including telecommunications and high technology, will join automotive, financial services and consumer goods companies at the leading edge of super-verticalization. Enterprises will need to drill into existing customer data and embrace analytics not only to remain competitive, but also to remain viable (0.7 probability). In 2004, businesses will respond to consumer demand with a 40 percent reduction in pop-up delivery and a 60 percent loss in marketing delivery (0.8 probability). In 2004, marketing organizations will hear the rallying cry of consumers empowered by privacy legislation and the popularity of marketing restrictions. The U.S. "Do Not Call" registry (which tracks phone numbers of customers opting out of telephone solicitations) now totals nearly 50 million telephone numbers. In Europe, a new Electronic Commerce Directive (2002/58) requires enterprises to gain explicit permission (opt-in) from individuals before sending them marketing s, Short Message Service messages or faxes. Responding to consumer demand presents a series of complex challenges businesses must "buck the trend" of planning around products and services, and truly put the customer at the center of their business planning. You will need to drill into customer data and embrace analytics not only to remain competitive, but also to remain viable. In 2004 and beyond, "customer-centric" must be eradicated as a buzzword, and regarded as a business principle. Prediction Customers post "keep out" signs Customer privacy concerns will require improvements in marketing capabilities, driving enterprises to increase spending on managing customer privacy issues, including opt-in and donot-call requirements, customer contact preferences and number of potential customer contacts. Targeting capabilities must be enhanced to incorporate these restrictions and find relevant offers. Further, as the channel mix continues to grow, enterprises will become more accountable for the ways in which they reach out to customers. Tracking and honoring customer privacy preferences will become as prevalent as traditional segmentation methods such as purchasing traditional customer value and Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 demographic data as well as emerging trends toward life stage, life style and psychographic data. Strategic Planning Assumption: By 2006, enterprises will see a tenfold increase in spending to secure the technology, expertise and training required to respond to customer preference and privacy demands (0.7 probability). Audit established customer data to determine whether customers have expressed a preference in the way their personal data is handled, and work toward associating those preferences with the customer data wherever it is accessed in the enterprise. Evaluate marketing plans in the context of customer permissions and potential or perceived risk to consumer privacy. Extend privacy policy considerations to consistently encompass all customer touchpoints, not just the Web and e- mail. Move away from the practice of using purchased lists and unsolicited as acquisition tools, focusing instead on using for customer retention and development. Minimize exposure to lawsuits by implementing global practices, such as providing customer data use accountability, enhancing role-based data access with rulebased access capability, and delivering employee training on collecting, storing and effectively sharing customer choice criteria internally. Centralize campaign management and marketing processes to ensure consistency in treatments across the enterprise to minimize risk. Prediction ROI becomes increasingly important, but projects aren't structured to measure it Enterprises are gaining visibility and accountability in marketing programs, but broad-based marketing effectiveness and optimization are major challenges for marketers. As traditional marketing communications suffer from increased scrutiny about program effectiveness and return on investment (ROI), marketing expenditures will continue shifting toward more targeted and measurable communication and interaction channels. Although these efforts enhance the ability to understand, adapt and dynamically respond to changing customer demands, many large enterprises still depend on "broad reach" media to build and sustain awareness or broadcast information about new products 4 December

3 or services. In 2004, mass-market channels will begin to support greater precision and measurability, but the persistence of business and marketing function "silos," along with a lack of vision, leadership and effective change management, will continue to thwart the promise of greater marketing effectiveness for most enterprises. Despite these challenges, managers can improve visibility for marketing operations, improve overall effectiveness of marketing programs, improve operational efficiency and reduce related costs by standardizing planning, budgeting, reviews and approvals as well as by centralizing marketing asset management (see "Introducing Gartner's CRM Value Development Frameworks"). Strategic Planning Assumption: Through 2007, 80 percent of Global 1000 enterprises will be unable to measure their marketing effectiveness (0.9 probability). Abandon planning and budgeting exercises that are mostly based on historic and competitive programs and expenditure levels. Reassess marketing spending to ensure that marketing programs can be directly linked to specific business objectives and bottom-line results wherever possible. Ensure that the measurability and accountability of traditional marketing efforts continue to improve. Continue to explore and expand the use of e-marketing as an integral component of marketing practice. Prediction Enterprise vendors launch marketing applications with gaps Enterprise suite vendors will launch marketing application suites, but they will not successfully address the functionality required by more-demanding business-to-consumer (B2C) requirements, nor will they support indirect relationship model business-tobusiness-to-consumer (B2B2C) requirements. Through 2007, investments in marketing applications are expected to grow at a rate more than 10 times that of overall customer relationship management (CRM) applications. As the marketing automation market expands, vendors such as SAP, Siebel Systems, Oracle and PeopleSoft will attempt to cross-sell marketing applications into their large, established client bases. Vendors that have traditionally focused on marketing automation, such as Aprimo, E.piphany and Unica, expect that their more-dedicated focus on marketing and established relationships with marketing organizations will help them attract new customers. Best-ofbreed marketing application vendors will continue to compete on 4 December

4 tactical deals focused around a narrower set of requirements. For customers, a broader array of choices and trade-offs will be available. Business-to-business (B2B) enterprises committed to a CRM strategy based on their enterprise resource planning (ERP) vendor's CRM offering will see a credible marketing suite taking shape. Strategic Planning Assumption: By 2005, all major enterprise application vendors will offer an integrated enterprise marketing management application suite (0.8 probability). B2C enterprises with challenging requirements or enterprises operating in an indirect B2B2C relationship model should continue to use best-of-breed marketing vendors or improving CRM suite vendors, or delay automation until ERP vendors improve these capabilities. Assess the trade-off between pre-built integration among marketing applications (and beyond to CRM and ERP applications) and deeper, best-of-breed capabilities from point solution vendors. Prediction Vertical marketing solutions will be poised for a"bigbang" In 2004, enterprises will continue demanding vertical-specific marketing applications. This will present vendors with a new challenge. To effectively influence sophisticated customers, marketers will require analytic applications capable not only of managing customer information at the industry level, but also at more-granular customer data levels, with data models in each vertical area. Vendors that have already begun drilling down into vertical product lines (such as Teradata and SAS Institute) will need to simultaneously deepen and expand offerings to encompass analytic components, enabling marketers to create and effectively deliver distinct value propositions for strong B2B and B2C consumers that are increasingly verticalized. (For example, vendors offering financial services-specific products will expand offerings that enable cross- and up-selling based on credit scoring and investment tracking, leveraging industryspecific customer data.) Strategic Planning Assumption: By 2007, vertical markets, including telecommunications and high technology, will join automotive, financial services and consumer goods companies at the leading edge of "super-verticalization." Enterprises will need to drill into existing customer data and embrace analytics not only to remain competitive, but also to remain viable (0.7 probability). 4 December

5 Audit information systems and examine customer data for "missing links" (the types of information that will be required to reach customers becoming increasingly accustomed to personalized marketing pitches). Evaluate marketing plans in the context of data models that are required to refine customer information, retain relationships and expand market reach. Vendors not currently embracing verticalization should begin exploring new territory. (Vertical markets such as financial services, automotive and consumer goods are on the leading edge of super-verticalization with increasing subsets of functionality more-specifically grouped to meet industry needs, but this could be attributed to the larger portion of overall marketing spend devoted by necessity to the vertical nature of their product lines.) Vendors with vertical product lines should consider deconstructing bundled product lines and converging functionality to better fit smaller, more-defined market segments or "microverticals." Vendors will need to support microverticals, but will also need to support things such as industry convergence across sectors and microverticals. Prediction Community shifts e-marketing from push to pull The concept of push e-marketing has been around for years. For example, an early push scheme by PointCast was an early version of "pushing" content to a user desktop while in screensaver mode. Unfortunately, push e-marketing is now manifested through major annoyances such as pop-up ads, spyware and lots of . For instance, 45 billion s will be sent each day in 2004, 60 percent of which will be "spam." Users are becoming frustrated, and they will fight back. The community will respond by ignoring and deleting push-marketing messages, and they will have help. Software vendors are quickly building ammunition to combat push marketing as a result of the increasing community backlash. Microsoft Outlook 2003 allows for draconian "whitelisting" that is, it provides a system that lets consumers receive only from selected individuals, while blocking out the rest of the world. Browsers such as Modzilla and Internet Explorer have built-in pop-up stoppers to combat intrusive techniques that force Internet users to look at advertising. Strategic Planning Assumption: In 2004, businesses will respond to consumer demand with a 40 percent reduction in pop-up 4 December

6 delivery and a 60 percent loss in marketing delivery (probability 0.8). Strengthen the value of marketing messages to customers and reduce the amount of push marketing. Without strong and relevant value propositions, marketers could end up on consumer "blacklists," with ads obliterated by pop-up stoppers. Use to further develop an already established relationship based on information that is relevant to and requested by the customer. Move marketing messages from "mass blasts" to explicit personalization. Give customers an opportunity to ask for and then modify the types of content that are important to them, and regulate how often they will receive messages. Bring back traditional marketing methods use traditional advertising methods such as magazines/catalogs, television and physical store locations to drive customers to a Web site. Avoid using "push marketing" for prospecting and new customer acquisition. Acronym Key B2B business-to-business B2B2C B2C CRM ERP ROI business-to-business-toconsumer business-to-consumer customer relationship management enterprise resource planning return on investment Bottom Line: Growing consumer concerns and privacy restrictions will cause enterprises to rethink their marketing processes in 2004, moving from product-focused plans to true customer orientation. Many will begin to recognize the importance and value of the marketing function beyond branding, advertising and prospecting. Dramatic shifts and marketing improvements in domains such as campaign management tied to event-triggering and inbound scoring will occur, as well as improvements in marketing resource management tied to budgeting and planning within particular lines of business. However, the alignment of marketing and channel resources with the best marketing opportunities will remain elusive for many enterprises during the next few years. 4 December