Insights and observations for improving marketing.
Issue 09

 

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A little shameless commentary

Welcome to the party

DCIís recent CRM conference in New York had a number of popular breakout sessions, but none was more popular than ďOverview CRM Masterplan Ė Step 1: People, Process and Technology; Why the Right Mix is critical.Ē In fact, this very topic has become white-hot as organizations struggle to gain value from their CRM technology investments.

Of course, most of you know weíve been preaching that technology is simply an enabler of CRM since we launched our business. Moreover, our business model is built around having a team experienced in overcoming people, process, data and technology challenges.

Perhaps the most telling of our long-held belief in human behavior and organizational process as key drivers for CRM success is Dave Harkinsí original article on the topic for Direct Magazine in March 2000 (click here to read), and revised for Insights to Action Issue 4 in October 2001 (click here to read).

It seems we were once a little ahead of the curve in our thinking. Weíre glad to see that the rest of the world is catching up.

 

IN THIS ISSUE:

Keeping your job.  [ Read ]
Dave Harkins gives a few tips to help marketers drive sales, and just maybe keep their jobs.

Got CRM?  [ Read ]
Randy Taylor explores what to do after you've installed that piece of software.

Wherever they go, there you are.  [ Read ]
Mike Ellsworth examines Short Message Service (SMS) and it's impact on marketing.

 

Keeping your job.

-- Dave Harkins, Co-CEO/Managing Partner

The notion that Marketing isnít Sales is an old, but somewhat untrue statement. We marketers have learned the hard way that marketingís number one priority is to drive revenue for the organization. I think we now realize that long-gone are the days when marketing produced pretty pictures, glossy brochures, gimmicky promotions and brand advertising that donít drive short-term sales. Those days are but a memory for marketers--up in smoke like many of the firms that promoted such frivolity and spending with reckless abandon.

Todayís environment requires marketing thatís effective. And to be effective, marketing must improve the top-line with new sales, and the bottom-line by improving efficiencies in marketing operation. If marketing canít do both--deliver a large number of qualified customers, in a cost effective manner--then doesnít deliver tangible value to the organization.

In most organizations these days--regardless of if youíre selling to consumers or businesses--marketingís primary job is to support new sales in an anxious push for increased revenue. Certainly, driving new sales can generate new revenue. However, blindly focusing on acquisition can wreak havoc on an unprepared organization in terms of insufficient capacity to handle front-line sales or merchandising, sales fulfillment, customer service or technical support. Worst of all, with the organization concentrating on bringing in new customers in the front door, no one is watching the back door as existing customers stroll out. We would all agree, I think, that watching the back door is perhaps more important for long-term business success.

Balancing the organizationís desire for new customers with its desire for new revenue can be tricky. Somewhere, somehow, someone got the idea that new customers are better for producing revenue. While it may be true with some commodities, itís largely an untrue generalization. The best source for new revenue is the existing customer...not the new ones. The challenge is that building business from existing customer is a relationship sell--something thatís longer term for the organization--and not something than usually can be leveraged to create an immediate impact on business revenue.

Relationship selling is what marketing is about, so changing a marketerís mindset to focus on more immediate needs of sales can be a difficult thing to do--all marketers reading this raise your hand if youíve ever said, "Thatís a sales problem, not a marketing problem". Iíll bet at least 75% of us raised our hand and of that number another 50% has at some point lost his or her job because our boss thought we werenít demonstrating a tangible contribution to the sales efforts.

Marketers are generally good at relationship building efforts, but letís examine a few other ways to improve marketing effectiveness (nee drive sales) in the near term:

  1. Do what works not what is pretty: It doesnít have to cost a lot, nor does it have to be pretty to generate sales. Creative-types always strive for a pretty ad or marketing collateral, but the most important thing to get across is benefits of the product or services that youíre selling. Some of the most effective marketing campaigns were four-page direct mail pieces filled with nothing but text. If it works, and doesnít degrade the overall image of the company, who cares what it looks like. In direct response, itís about the offer, the audience, and then creative. Thatís not a bad approach to take for all marketing efforts.

  2. Analyze and measure activities: Track the effectiveness of your marketing efforts. Are your programs driving people to your stores? Whatís the increase in average daily sales volume during the promotion? Alternatively, are you successful in generating leads for the sales force? Whatís the quality of those leads? How many of those leads have turned into sales? What was the duration of those leads in the sales pipeline?

    With the exception of those in database or direct marketing, most marketers donít track the effectiveness of their marketing efforts. Doing so is critical to gaining ongoing corporate support for marketing. Figure out how you can track and measure every thing you do with your marketing dollars.

  3. Create a dialog with sales, merchandising, and other departments: Communicate with sales, customer service, tech support and all other customer-facing departments. The people on the front lines deal with prospects and customers on a daily basis and can tell you more about a customer and market needs than any market research study or survey. Gain input from individuals in these areas to develop such things as message strategies, collateral pieces, promotional ideas, and mailing lists to ensure that your marketing efforts are truly in line with prospect and customer needs, values and expectations.

  4. Listen to customers: Once in a while, pick up the phone and call a few customers. See what they like and what they donít like about your advertising, marketing, services, sales and products. Do it randomly and periodically and you gain tremendous insights into the effectiveness of your marketing efforts.

  5. Create opportunities to generate sales: Figure out how to help the sales and merchandising teams gain immediate sales. Working with them, you may find a simple, easy-to-do promotion will fill an urgent need that will drive short-term sales. This will ensure additional cooperation from the front-line, and gain recognition with you management for driving revenue.

There are many other ways to improve marketing effectiveness, and while the points listed here may seem most obvious now, we often forget about these when going about our daily work. But above all, if you can remember that marketing is truly about sales--moving merchandise and making the cash register ring--you will be a more effective marketing and may never need to worry about job security.

Dave Harkins can be reached by email at: mailto:%20dharkins@taylorharkins.com

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Got CRM?

-- Randy Taylor, Co-CEO/Managing Partner

Got CRM? Maybe you just installed your new CRM software; but, does that actually mean you have achieved CRM? So whatís next? What should you be doing to ensure results are gained from that nice piece of software and that CRM is actually realized within your company?

Letís stop for a moment to think about what went into the process for determining your company needed this new system, or needed a CRM initiative. What were the challenges, issues, goals, and objectives that went into that decision process? Whatever your goals are, higher retention, better customer satisfaction, improved process management, one needs to understand the effect of this initiative on everyone effected--customers, prospects and employees.

Did I say employees? With any CRM initiative people, specifically those people on the front lines, are the cornerstone to the initiativeís success.

That said, what are the next steps in ensuring that the initiative is a success and your company gains a return on that technology investment?

  1. Organizational Evaluation: Will more than one department (sales, marketing, distribution, accounts receivable, customer service) use the new technology? If so, the employees in these areas need to be evaluated for their ability to make understand the CRM concept and make change. Based on the evaluation, group individuals by their abilities and tailor improvement plans based on their needs. Most importantly, make sure they are providing input into this process to avoid implying previous poor work ethics and reducing resistance to change.

    If the system is designed for one department, try to understand how it can aid in CRM efforts in other, customer-facing departments. CRM strategies typically require inter-department exchange with common customer management goals to make for success.

  2. Training: Assuming this initiative was based on technology, one would want to start with the people on the frontlines, talking with them, understanding how they interact and then training them on how to use the system to improve their effectiveness. Training certainly should start with the basics of the service shift, then move toward understanding how making changes can improve not only how they work, but the net effect on the customers and prospects and, longer term relationships with those constituiencies.

  3. Analysis: Analysis is a key step in any CRM or knowledge based initiative. Once the CRM technology is up, and hopefully it includes information from sources beyond marketing, the information should be analyzed to understand knowledge expansion on customers and prospects. It is knowledge expansion, because new findings should be gleaned from the integrated data; behavior, beyond response to campaigns and purchase history. Examples may include returns, payment, customer service interaction--all information that can lead to characteristics of each customer that is used for better preparing a company to interact with each customer or prospect.

  4. Segmentation: Once the initial analysis has been completed, the formulation of segments can be made. In CRM, segmentation tends to take on a micro form. With the wealth of new information gained through integration on non-standard sources of information, companies can start to make better assumptions on behavior and customer loyalty to their companies, and in return develop micro strategies for handling these micro segments.
  5. Program Development: Now that customers and prospects can be better identified, it is time to develop programs that effectively administer business operations to them. Programs developed under this plan include not only marketing, but also service, contact and communication from every customer-facing department using a consistent message and process. By doing so, responsiveness, loyalty and ultimately return will be realized.
  6. Measurements: As part of program development, metrics to measure change or success will have been established. As the programs are executed and running, periodic checks on these metrics need to be prepared. The understanding of the results is used for determining what successes or failures occurred, and learn where to make adjustments.
  7. Planning/re-planning: The knowledge gained from the first six steps can now be used to planning, or in reality, re-planning. At this point, a company will want to take the opportunity to determine what efforts are moving the company closer to their objectives for the CRM initiative, and learn what else needs to take place to enable further gains. This re-planning will look at all of the contributors; people, process and technology, and determine where opportunities can be taken advantage of and expand the overall effort.
  8. Start again from the top!! Finally, the process starts all over. CRM is not a one-time process, but and ever-evolving process that needs continually improvement or adjustment. By starting all over, improvements can be made along the way to adjust to personnel, business environment, customer or prospect movement or product shifts.
As on can see, the cycle of next steps are very similar to the old direct or database marketing process, only expanded to be an enterprise initiative. In reality, "Got CRM" is not an end to a means, but a means to improve the ever-changing way companies organize their business to service customers. If companies are not improving their operations through effectively improving the mix of people, process and technology, then CRM is not attainable.

Randy Taylor can be reached by email at: rtaylor@taylorharkins.com

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Wherever they go, there you are.

-- Mike Ellsworth, Executive Consultant

A rather important event for cell phone users happened recently, and almost nobody noticed. For the first time, U.S. users of a wireless service known as Short Messaging System (SMS) can send messages to people who subscribe to a different carrier. So now, for example, a Sprint user can message a Verizon user. This puts U.S. users on the same footing as European users have been for years, and it opens up an exciting new channel for U.S. marketers.

The SMS service allows cell phone users to tap out short (160 character) messages on their cell phones and send them to another user by using that userís cell phone number as the address. Depending on the model of cell phone, the recipient can reply to the message in real time. In Europe, where SMS is very well developed, users send as many as a billion messages a day and average 16 billion per month (up from a worldwide monthly total of 7 billion a year ago). In contrast, U.S. cell phone users sent a paltry 400 million messages in December 2001. The advent of carrier interoperability promises to energize U.S. SMS usage, especially among younger consumers.

Should a marketer be concerned with the SMS phenomenon? Well, just look at the stats:

  • Wireless is the fastest growing communications channel in the U.S. with more than 136 million subscribers and a projected 230 million by the end of 2006.

  • In Europe, mobile marketing has achieved response rates as high as 20 percent with ad recall rates up to 65 percent.

  • Industry analysts predict that mobile marketing will become a $5 billion industry by 2004. Gartner Dataquest says worldwide revenues from all forms of mobile messaging will almost double to $22.3 billion by 2006 from $13.4 billion last year.

  • Nearly a third of U.S. wireless subscribers plan to upgrade their handsets within a year and 67 percent of them want short text messaging on their new phone according to a study by Telephia and Harris Interactive. Usersí actual behavior is even more interesting: Replacement sales will account for more than 70 percent of new handset sales in 2002 according to Strategy Analytics.

If thatís not enough to convince you thereís a new marketing medium brewing, take a look at how important SMS is likely to be for U.S. wireless carriers: In Europe, short message service makes up 15 percent of all cellular revenue and, more significantly, 40 percent of the overall industry profit margins, according to Colin Matthews, President and CEO of InphoMatch. Consulting firm BWCS predicts that a third of wireless carrier revenue will come from advertising fees and commissions in 2005. With wireless adoption approaching saturation and slowing from its frenzied growth of the last few years, wireless operators will increasingly stress SMS services as a way to wring more money out of existing customers.

Using a New Medium

Already, forward-thinking marketers on both sides of the Atlantic have rushed to exploit SMS. Some innovative European services include:

  • Cellus is planning to launch a mobile phone service in Norway to help drivers dodge police speed cameras.

  • The Eirpharm SMS reminder service reminds patients to take their prescription pills and the company has developed a pollen-alert service with UK mobile-phone operator Vodafone.

  • Ekaterina Sitnikova, a Brussels-based music promoter for Mal & Co., uses SMS to make sure people don't miss the launch party when one of the artists she represents unveils a new song.

  • The VirusAlert.nl Web site sends computer virus warnings to subscribers' mobile phones in the Netherlands, Belgium, and Luxembourg.

  • In Zurich, city officials use SMS to remind people when recycling-pickup dates are coming.

  • SMS is used to reduce waiting times for three of the top rides at the Alton Towers theme park in the UK.

  • The Riminibeach.it site in Rimini, Italy provides a "wind alert" service. Whenever wind speeds climb above 12 knots, a computer sends SMS messages to sailors and windsurfers.

  • Sky Digital customers in the UK can send text messages from their digital set top boxes to cell users, and now a new service enables mobile users to reply to the messages.

U.S. marketers are getting into the act as well:

  • M-Qube is introducing a platform for advertisers to launch marketing campaigns via SMS, with a focus on North American customers.

  • People2People Group has a service that sends personal ad matches through SMS.

  • Yahoo! sends bulk SMS messages to AT&T subscribers to drive traffic to its wireless Internet sites.

  • The CambridgeSide Galleria mall in Boston enables shoppers to use their cell phones to get instant coupons for Galleria stores.

  • SMS@ctive Technologies launched its Term Messaging Service that allows subscribers to receive pre-programmed messages and additional content such as stock alerts and meeting reminders 24 hours a day.

  • eBay and InPhonic will launch an SMS-based bidding system called Wireless Rebidding for $2.99 a month. eBay currently offers SMS message alerts about auctions as part of its eBay Anywhere campaign.

Finally, cell phone users themselves are coming up with some innovative uses of the service:

  • In Switzerland, bird-watchers can update each other on sightings by punching in the species and location using an SMS system that also displays a list of the "best beaks" sighted on a Yahoo Web site.

  • A Dubai court has legally endorsed a divorce notice issued by a Dubai man to his wife via SMS. The husband sent a message to his wife saying, "Why are you late? You are divorced." (According to Islamic law, a man can divorce his wife merely by saying, "I divorce you" three times.) Luckily, the man later changed his mind.

New Features Make Mobile Marketing Even More Attractive

With all this marketing activity occurring on a medium that limits messages to 160 characters of text, think of the opportunity that will be available once Multimedia Messaging Service (MMS) begins to take hold. MMS features long messages as well as the ability to attach sound and pictures to messages. The service is already available on some cell phones--like those featured in the AT&T Wireless and Sprint ads you have probably seen on TV and in newspapers.

"Expectations are now that MMS will be larger than SMS--at least in the number of messages sent--in 2005," said Per Lindblad, head of Ericsson's MMS unit. However, the key to this growth is not likely to come entirely from marketing messages. "I think it's going to be a lot more successful than WAP [Wireless Application Protocol, a cumbersome way to create wireless applications], because MMS is about person-to-person communication," he said. "This is the key element, because push-based services are unlikely to achieve such a success."

Nonetheless, the ability to send pictures and longer, rich text messages really opens up a wealth of possibilities for marketers, and several companies are already offering or readying MMS services:

  • RealNetworks has partnered with Major League Baseball Advanced Media to provide live audio streaming feeds of professional baseball games to cell phones. For $19.95 per month, fans can get the local audio feed of games and receive updates on other games via SMS.

  • PocketThis lets users send information from the Web to a wireless phone with a series of one-touch options built in to the application, such as send to a friend, call to buy tickets, get insurance quote or check flight status.

  • Sony Ericsson announced a deal with Hallmark and THQ Wireless to develop MMS games and card greetings.

  • Microsoft will roll out its popular MSN Hotmail service for mobile phone users in Singapore, Hong Kong, and Taiwan.

  • The music performing rights organization BMI signed a licensing agreement with Cellus USA covering the public performance rights on behalf of approximately 300,000 songwriters, composers, and music publishers for 4.5 million musical works. But you have to ask yourself, will cell phone music services really compete with radio?

"As a channel, mobile marketing's time has come," said venture capitalist Joel Cutler, whose firm General Catalyst Partners recently backed m-Qube, a Boston startup whose software helps companies do mobile marketing. Indeed, according to Jupiter Research, European advertisers will spend $53 million for mobile campaigns in 2002 and, although North American numbers are still negligible, the firm projects the market will catch up by 2006 on the strength of use by fast food and consumer product companies.

Marketers will be using the mobile channel for alerts, couponing, games, promotions, and sweepstakes. And because of the interactivity of SMS, market researchers will be interested in polling and consumer preference studies.

The key to the success of all this activity, however, is permission and the development of a relationship with the cell phone user. If marketers abuse the channel to broadcast spam, as has happened with email, users will be turned off.

"Users will not be receptive to being solicited for products and services on their wireless devices if they have not explicitly requested it," warns ad firm Carat Interactive. Equally important is responsible privacy policies. Marketers need to build trust to be effective in mobile marketing.

There is nothing quite as personal as a phone, living as it does in pocket or purse. Abusing the privilege of reaching these consumers will backfire, in part because of the intimacy of the device, but also because of its immediacy. Spam email can be ignored, deleted easily, or routed to special folders. Telemarketing, while much more intrusive, can be ignored through use of Caller ID. Nevertheless, spam SMS messages could carry the interruption potential of telephone marketing to an extremely irritating degree. Indeed, expect laws to be enacted in this area. (One bill, HR 113, was introduced in January 2001 but was referred to subcommittee.)

What Should You Do?

If you have a product or service that could benefit from being able to touch customers in real time wherever they are, you should be looking into SMS messaging. However, it will pay to be very careful in this uncharted marketing territory as the rules are by no means clear yet. You should start with high-value, permission-based messages to users who have very clearly consented to being contacted in this manner. Irresponsible use of this new channel could quickly ruin this exciting communications capability.

You should also keep in mind the limitations of the medium. For example, if you want a response from your targets, it may make more sense to ask them to call a toll-free number than to peck out a return message using the phone's limited keypad. If your users are already MMS-capable, be aware that the data speeds on current wireless networks average less than the speed of current dialup Web users. Donít send huge, and perhaps costly to download, graphics or video files.

As with any permission-based campaign, the best thing you can do is offer something of value--a discount, a coupon, or free goods or services. Doing so will help overcome any resistance your customers have to being contacted in such an intimate way.

Mike Ellsworth can be reached by e-mail at: mellsworth@taylorharkins.com

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Insights to Actionô is a periodic publication of Taylor Harkins Group.
Copyright © 2002, Taylor-Harkins Group. All Rights Reserved.

About Taylor-Harkins Group
Taylor-Harkins Group is a professional services firm specializing in optimizing marketing operations. We help organizations find ways to drive revenue and reduce costs associated with marketing and sales. Using structured, time-tested proprietary frameworks and best practices, we produce high-impact results by leveraging the optimum mix of people, process, and technology in refocusing marketing toward activities that generate results.

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10.10.02
Online learning programs launched


In keeping with our focuss on helping organizations with people, process and technology challenges, we're pleased to announce that we have launched our first e-learning course, Introduction to CRM.

This course is one of many that are in development and is available to the public at VCampus Corporation ( http://www.vcampus.com/) and will soon join other courses on our own, private campus.

The courses offered online both supplement and compliment our training workshops, and provide a cost-effective alternative for continuing education in marketing.

To learn more about our courses and how they can be customized for your organization, contact us at info@taylorharkins.com or call Dave Harkins at 630.820.2087

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Dave Harkins and Randy Taylor are speaking at the NCDM Winter Conference December 9-11 in Orlando, FL.

More details to come!

 

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