Marketers Face Substantial Obstacles

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Marketing
Marketing

At a time when companies are looking for any insight that will help drive revenue, a new research study from the CMO Council says the best place to start is from existing customer data.

According to "Business Gain From How You Retain," conducted by the CMO Council and funded by Computer Sciences Corporation, IBM Software, and Dun & Bradstreet, only 50 percent of global marketers report having a strategy for further penetrating or monetizing key account relationships. In addition, 15 percent rated themselves "extremely good" or "effective" at integrating disparate customer data sources and repositories; 55 percent note that there is room for improvement or a deficiency in this area

Conducted in late 2007 and early 2008, the study undertook a wide-ranging evaluation of where and how marketers are "operationalizing" customer intelligence and insight to reduce customer churn, increase lifetime value, improve the customer experience, and increase the effectiveness and targeting of marketing spend.

The audit of more than 450 marketers worldwide (72 percent in North America, 14 percent in Europe, and 8 percent in Asia-Pacific) found a significant lack of customer knowledge as well as substantial obstacles and roadblocks to integrating disparate customer data repositories across the enterprise. Just 6 percent of marketers say they have excellent knowledge of the customer when it comes to demographic, behavioral, psychographic, and transactional data, while more than 50 percent report they have fair, little, or no knowledge of the customer.

"We found very little in the report that was surprising," says Jay Glick, director, D&B strategic alliances. "A lot of what we found validated what D&B has been saying to the market for the past couple of years: There's lots of customer information out there but no way to bring it together to leverage it."

Other key findings from the report include:

* Forty-five percent of respondents rate the effectiveness of their CRM systems as deficient or needing more work.

* More than 31 percent of companies surveyed had customer churn rates of more than 10 percent, and 32 percent reported turnover of 5 to 10 percent. In comparison, more than 62 percent said they desired or expected a churn level of less than 5 percent.

* Respondents believe customer churn significantly impacts business performance through revenue loss (59.9 percent), reduced profitability (39.6 percent), and greater marketing and reacquisition costs (36.3 percent).

* Nearly 67 percent said they have no system for reactivating dormant or lost customers.

* While 38.9 percent said that their CMO or marketing department has primary responsibility for the customer analytics function, more than 31 percent said they do no data mining at all and 63 percent are only doing moderate levels of data mining for intelligence and insight.

Key initiatives to increase customer retention include improving customer communications (65.2 percent); addressing complaints, problems, and pain points (51.8 percent); and enhancing the customer experience (54.8 percent). However, achieving those goals remains difficult, according to Glick.

"Look at financial services," he says. "Thanks to the growth by acquisition in the late 1990s, they have over 25 different platforms with customer information, each owned by a different business unit. It's disparate, there's no overarching owner of customer at the C-level. Even if the VP of marketing or the CMO wants to get this data, he has to go to each separate business unit and ask for it, and then he has 25 different systems with absolutely no accurate way of aggregating the data. The behavioral information can not be linked with historical information.

"This is a challenge that's not recognized at the corporate level," he continues, "but it's a critical point. Knowing who the customer is and how he behaves, understanding them at each touchpoint is crucial."

Catherine Pedersen, product marketing manager at Purisma, the customer data integration company that D&B acquired last year, says there's a desire for change but not a strong belief in what will happen if that change occurs. "There's still a 'show me' aspect to it," she says. "Unless you can predict and achieve quick wins, show how funding will bring in value, you can't get [upper management's] attention."

Even having gotten their attention won't solve everything. "Comcast has a portfolio of 200 individual companies providing cable, Internet, and phone," Pedersen says. "It's not that they don't know who their customer is; they have the knowledge, but it's very fragmented."

Solutions must be implemented incrementally; the days of completely stopping the engine to overhaul the entire system are over, according to Pat McParland, product and marketing leader for D&B. "Some of our customers have found the most successful approach is to go department by department and show successes along the way," which, in turn, encourages more progress. Fixing the call center, then sales and marketing, then finance has been a proven strategy, she says.

"You need a top-down approach, where a senior level executive puts a stake in the ground and makes customer information a priority-but that won't solve the problem by itself," Glick says. "You also need to work from the bottom up: letting those with projects that are dependent on customer data do what they need to do. Consolidate and cleanse systems and data to realize a discreet business benefit.

"These companies are going to have to prove they can act nimbly, and take the initiative to make that change," he continues. "Silos are so used to owning the data individually, and sales managers are the worst at looking at it as 'my data, my customers.' But we all need to realize that what we did in the past is not going to get us to where we need to be tomorrow. We can't grow by just doing more of what we did before."

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