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"SAP CRM provides a central marketing platform that enables organizations to analyze, plan, develop, and
execute all
marketing activities through all customer interaction points. This integrated application
empowers marketers with complete business insights – enabling you to make intelligent business
decisions and to drive end-to-end marketing processes."
Source : SAP
Six Success Factors for Building a Best-run Marketing Organization
Best-run Marketing is also known as :
Best-run Marketing,
Integrated Marketing,
Leading Integrated Marketing,
Support Marketing,
Best-run Marketing Organization,
Best-run Sales,
Factors of a Best-run Marketing,
Sales & Marketing Trade,
Best Practices of Best-run,
Internet Marketing,
Top 10 Marketing Automation,
Compare Top 10 MKTG Apps,
Best Run Affiliate,
Marketing Best Client,
Best Run Companies,
Marketing Network,
Best Run Time,
Building Best-run,
Long Run Marketing,
Best Internet Marketing Strategies,
Direct Marketing,
Secrets of the Marketing,
Marketing Thinking,
Diffusion Marketing,
Manufacturing Internet Marketing,
Best-run Businesses,
Distributor Marketing Programs,
Building Best-run Finance,
Best-run Finance Methods,
Best-run Supply,
Best-run Practices,
Best Run Server,
Best Run Whitepapers,
Search Marketing,
Becoming Best-run,
Competitive Marketing Strategies.
EXECUTIVE SUMMARY
Today, companies judge the success of their marketing
organization on its ability to drive customer demands, and
marketers are being held accountable for their contributions to
profitable growth. Growth and profitability objectives are
becoming particularly challenging amid customer demands for
lower prices and customized products, more personalized interactions
across an increasing number of touch points, a need by
companies for more detailed information about customers, and
increasing global competition in almost every industry.
Several key success factors employed by the best-run marketing
organizations, as well as software systems that support marketing
processes, are essential contributors to favorable business outcomes.
Focusing on organizational alignment, well-considered
measurements, and sound IT-enabled processes can empower
your marketing organization to better do the following activities:
- Support growth - by enabling a consistent customer experience
across all channels, reinforcing brands, promoting initiatives
that matter in your company's industry, and executing
programs efficiently
- Demonstrate value - by enhancing the internal credibility of
the marketing organization, increasing accountability for
marketing spending, fostering insights to enable your company
to become more customer focused, and increasing agility to
achieve success within changing and increasingly competitive
business environments
Marketing has been traditionally seen more as an "art" relative to
a company's other business activities such as accounting or
manufacturing - and has typically lacked the process rigor of
operations. Nonetheless, achieving favorable outcomes still
depends on efficient deployment of resources, use of measurements
that ensure alignment with business strategy, and value
creation for customers and shareholders.
MARKETING TRANSFORMATION
The field of marketing is undergoing a substantial transformation,
driven by global competition, advances in and adoption of
technology that's affecting consumers' consumption of media
types, increased consumer control, and a proliferation of
products and services.
In the past, marketing groups often focused on isolated planning
and limited analysis, reacting to demands of executives and the
sales force, without being well connected to customers. While
marketing frequently delivered services or creative insights that
arguably supported top-line growth, program execution was
often not coordinated with other company activities, and the
value that marketing delivered was rarely measurable.
This model can no longer stand. There are new trends shaping
the business approach to every market, such as the shift to
greater funding of channel marketing programs by brand owners
in the high-technology industries; the increasing importance of
better managing trade promotion funds in consumer goods
businesses; the need to reduce customer acquisition costs in
financial firms; and the growth of pay-for-performance advertising
among small and midsize companies.
These transformations are necessitating massive changes in
companies and thus in their marketing organizations, including
a shift from a product to a customer focus; a greater emphasis on
accelerating, measuring, and optimizing campaign execution;
and investments in software solutions to more effectively provide
tailored information for consumers. While preserving the art
that is intrinsic to the function, marketing is incorporating more
rigorous, scientific approaches to planning and analysis in order
to better address the proliferation of consumer needs and
growing competition. And the go-to-market processes within
companies have evolved beyond isolated groups - such as sales -
to encompass channels and other organizations both inside and
outside the company.
Eliminating Silos and Demonstrating Value
To be effective in this network, marketers must go far beyond
independent planning roles. It must increasingly integrate with
all company functions and become intimately involved in go-tomarket
execution, including aligning awareness and demand
generation activities with sales resource deployment, distribution,
brand promotion, pricing, finance and controlling, and, more
often than not, partner networks.
The transformation of marketing is similar to the transformation
that other company functions - such as logistics, finance, and
manufacturing - underwent years ago. The common trend in
marketing and other functions is toward eliminating silos and
achieving greater internal alignment and customer focus. The
marketing organization must move well away from being an
isolated cost center and prove that it contributes to the longterm
profitable growth that is a central objective of major
business enterprises. In fact, the average tenure of a chief
marketing officer (CMO) has been below two years in recent
times. To increase their credibility and, ultimately, staying power
with their CEO and boards of directors, CMOs need to demonstrate
solid contributions to deliver on the company's strategic
and tactical goals.
Energizing Growth amid Constant Change
To address evolving demands of the market and increased
globalization, companies must establish specific programs across
their range of operations. To this end, companies are increasingly
looking to the marketing organization to attain sustainable,
profitable growth through initiatives that shape market
perceptions and foster organizations that focus on serving
customers' evolving needs. Through new, integrated marketing
programs, companies are looking to gain the following benefits:
- Enhance product differentiation
- Address shifts in the locus of value creation (for example, from
manufacturers to channels and from producers to customers)
- Market to a target of one, generating opportunities derived
from the fragmentation of customer segments and a
proliferation of brands
- Better manage brand portfolios
- Enable organic growth
THE MARKETING FRAMEWORK
Successful marketing programs are derived from insights into essential
elements of marketing: customers, channels, brands, and
processes (see Figure 1). These elements constitute a marketing
framework, defining the core policies and providing the foundation
for successful marketing execution.
Figure 1: The Marketing Framework
Senior leadership of an organization is responsible for establishing
business strategy and defining core policies covering customers,
brands, and distribution channels. For example, the executives
of an automaker division may decide to focus on high-end
sports cars, concentrating on wealthier customer segments and
limiting brands and distribution channels to foster an aura of
exclusivity.
Marketing execution defines the logical flow of activities executed
by a marketing department, which supports the core policies.
The CMO leads the organization to develop optimal market
analysis, marketing planning, marketing operations, and so forth,
based on the policies covering brands, customers, and channels.
For example, in the case of the automaker, the marketing group
might establish a campaign that limits contacts to prospects in
specific demographic groups that are likely to be interested in
purchasing high-end sports cars.
MARKETING SUCCESS FACTORS AND THE ROLE OF ENABLING SOFTWARE
Six specific actions can enable your company to build a best-run
marketing organization (see Figure 2).
To establish a marketing framework based on core policies, your
company should take the following actions:
- Implement a customer value-based strategy
- Manage brands effectively
- Optimize the channel mix
To execute the marketing process efficiently and effectively, you
should do the following:
4.Leverage customer insights across the organization
5.Improve process and resource efficiency
6.Increase marketing accountability
Figure 2: Marketing Success Factors Within the Marketing Framework
Implement a Customer Value-Based Strategy
Once the policy framework is established by senior management,
among the tasks of the marketing organization is to focus on the
target customers and understand the value they generate for the
business. Not all customers add value to your organization. Some
customers are very profitable and are critical to retain, and others
may generate low profits or actually be unprofitable to serve
(see Figure 3).
Figure 3: Variations in Customer Profitability
To implement a customer value-based strategy, take the following
actions:
Segment the customer base
Develop a value-based strategy and a range of service levels on
the basis of a deep understanding of customer values and the
ability to segment the customer base by value ranges.
See Figure 4 for an example for a retail business, which shows
how you can provide customers - segmented based on value -
with appropriate offers, served through the most effective
channels, and grant them optimal service levels. In this example,
the retail business might provide automatic discounts and
premier service levels to high-value customers, who may be
shown to be highly profitable because of large order sizes and
extensive repeat purchases. On the other hand, customers who
generate lower profit levels because of small purchases, elevated
return levels, and perhaps high complaint levels may be serviced
through electronic channels and be encouraged to engage
in more self-service in order to contain costs.
|
CUSTOMER VALUE?BASED STRATEGY |
|
Offer |
Channels |
Service |
| High-value
customers |
Automatic
discounts |
Dedicated
sales agent
follow-up |
Premier
service level |
| Midvalue
customers |
Free
shipping |
Multichannel
interactions |
Routing to
offshore
service team |
| Low-value
customers |
Newsletter
sign-up |
E-marketing |
Self-service |
Figure 4: Customer Value-Based Strategy for a Retailer
Moreover, take the example of a large oil and gas company
whose lubricants business was earning the lowest margin of all
the company's business groups. Using advanced analytics, the
company clustered customers into six groups and determined
that 90% of the revenue came from 12% of the customers. With
this understanding, the company was able to realign sales and
marketing to focus on the most profitable customers. Through
this action - and despite substantial increases in crude oil
prices - the lubricants business moved from last to first place
in terms of overall contribution-margin percentage.
Consider lifetime customer value
You should base customer value formulation not just on historical
profitability but also on future possibilities; some customers
may provide low-margin contributions today but lead
to significant profitability in the future. A young worker, for
example, may provide low levels of profit for an investment
firm, but the firm would be wise to consider the lifetime value
of the worker, incorporating the likelihood that that worker's
investments will grow and that he or she may recommend that
others use the firm.
Apply advanced analytics
Information technology plays a vital role today in supporting
customer value management strategies, particularly through
deployment of large-scale data warehouses and use of
advanced analytic techniques.
Look beyond basic profitability data to truly understand
customer behavior and thereby facilitate development of
strategic programs. Gather data from an array of sources, and
mine it effectively to understand changes in customers' buying
patterns, the expectations about the future direct contribution
of customers, and the value of strategic customers who may
have broad spheres of influence.
For example, in some industries, basic customer satisfaction
measures might help determine customer loyalty. Bank
customers and cell phone users may be influenced to remain
with their current provider if service levels are good. On the
other hand, simple customer satisfaction measures may fail to
indicate probability of defection or changes in spending
patterns in some businesses, such as consumer goods and
automobiles, where lifestyle changes and health and safety
concerns can play a significant role in determining consumer
behavior and loyalty.
Robust analytic functionalities can provide more accurate
insights into customer behavior and consequent long-term
customer profitability. This is particularly true if you employ
demographic measures, loyalty profiles (including categorizations
based on decision-making style, such as emotive or
deliberative), multivariate statistical analyses, and other
quantitative methods.
In short, developing a data-based understanding of customers
can help you develop strategies to promote loyalty, nurture
lifetime customer value, and enhance profitability in the long
run.
Manage Brands Effectively
Brand management is focused on increasing profits by enhancing
the perceived value to the customer of a product or your
company's services. Decisions about your company's brands,
brand positioning, and the implied promise associated with a
brand rest with brand managers. Marketing's role is to develop
programs that support these decisions and advise executives
regarding branding issues and opportunities.
Brands are proliferating rapidly, and brand management has
become increasingly challenging because of the burgeoning of
products and consumer choice that is a result of organizations'
trying to meet the growing demand by customers to have
solutions specifically tailored to their needs. In supermarkets, the
number of unique products has nearly tripled compared to 25
years ago. Large consumer companies typically manage more
than 100 brands, and in recent years, the number of brands in
pharmaceutical firms, automotive companies, white goods
companies, and others has increased consistently.
This proliferation - accompanied by an increased number of
messages to consumers from television, the Internet, magazines,
and other media channels - makes it difficult to communicate
effectively with consumers. In fact, the key purpose of brand
management - enhancing perceived value - is made much more
difficult because of the number of competing messages that
consumers receive. To make matters worse, lack of a strategic
approach to brand management can lead to redundant investments,
cannibalization, and confusion in the market.
So what approach can a marketer take to manage brands
effectively and communicate to potential customers? How does
a firm differentiate its products from generic versions or commodities?
How does a marketer leverage customer insights to
drive innovation and build brand equity? Of course, the answers
depend on the nature of the business, but there are some
approaches that have proved effective, as follows:
Take a portfolio approach
Brands do not exist in isolation. Both new and old brands
can succeed, and both can fail. You need to take a proactive,
portfolio-based approach to your brands, incorporating continual
changes in portfolio structure into everyday business
considerations.
Start by defining your complete set of brands on the basis of
consumer needs. A solid profiling of the different customer
segments - identifying their needs, buying habits, and expected
value - provides the basis for an effective brand strategy. It's
essential to then determine how to best structure brand
positioning, taking into account what best resonates with the
targeted customer segments and how to differentiate brands
from those offered by the competition.
Finally, consider each brand's contribution to profitability
within the overall portfolio of company offerings, and make
the tough choices about when to launch new products and
which brands to kill. Conduct disciplined analysis and
modeling that cover profitability (for example, are adjacent
brands taking share from competitors or from each other?),
as well as consumer and competitive responses to portfolio
restructuring.
Develop integrated campaigns
Marketing campaigns are no longer limited to outbound direct
marketing, distribution of discount coupons, or a costly Super
Bowl TV ad. State-of-the-art campaign management communicates
consistently across many channels and integrates direct
and indirect marketing tactics. It embraces interactive inbound
channels such as Web self-services channels and other newmedia
channels to facilitate bidirectional information flow,
creating multiwave campaigns that can be adapted on the fly
during execution, based on immediate feedback loops.
Moreover, integration of partners - including not only use of
creative agencies and suppliers, but also, increasingly, comarketing
initiatives through distribution partners - substantially
broadens the audience, enables building on insights from collaborating
stakeholders, and provides opportunities for a much
more rapid response to opportunities. For example, semiconductor
manufacturers often increase their brand value, add
market value to end-user products such as PCs, and enable collaboration
with original equipment manufacturers by incorporating
their brand messages into marketing of end-user
products. One well-known example is "Intel Inside."
Drive product innovation
In order to continually increase brand value, carefully evaluate
new product features and ideas, communicate these ideas
through the product development cycle, and collaborate
among internal organizations to synthesize product
innovations
Getting closer to customers through robust customer relationship
management (CRM) processes is an important way in
which your company can gain insights to drive new product
developments. For example, a company that manufactures and
sells office equipment (including printers and fax machines)
improved its customers' experiences by enhancing its service,
complaint management, call center, and campaign management
processes. In addition to improving service quality, increasing
accessory sales, and enhancing revenue growth, the
company can now gain better information about customer
requirements. It provides this stream of information about
customer needs to its R & D group, fueling subsequent rounds
of product innovation and business growth.
Proactively manage brand assets
Message consistency is key to effective brand management.
Clear, positive, and immediate identification of a brand helps
drive recognition of the implied brand promise, customer
purchase decisions, and long-term loyalty.
Marketers need to have a strong handle on their brand assets,
ensuring that all collateral, advertisements, logos, and other
product representations meet the standards established for
their brand. Moreover, brand reach is increasingly global, so
you need to account for and manage localization and cultural
differences when you are rolling out brand assets in world
markets.
Enable collaboration with partners
There are benefits to tying partners and suppliers into your
enterprise software systems and data, which can facilitate
collaboration, efficiency, and synthesis of new ideas. You can
best accomplish this collaboration by considering the abilities
of technology solutions to integrate processes and data within
an organization and across enterprise boundaries. In fact,
sometimes what is regarded as the "best of breed" solution for
marketing and other CRM applications doesn't yield optimal
benefits because of an inability of that solution to fully interconnect
with existing software systems.
Analyze and adapt
Analysis of vast amounts of data is becoming critical to understanding
and managing the proliferation of products and
brands, and to determining where to invest. Analytics leveraged
to gain insights into customers - and their response to
marketing campaigns - is likewise highly valuable.
As with all good processes, planning, measurement, and
adaptation are vital to successful marketing processes. Brand
managers are most effective when they can make informed
decisions, adjusting their approach on the basis of up-to-date
information. Of course, it's best when that information is
relevant for strategic decision making and tightly aligned with
key business objectives. For example, knowing the clickthrough
rate on an Internet banking advertisement may have
some value. But only by bringing this information together
with the demographics of these prospects - and determining
whether the attributes indicate that they will likely be future
account holders - can the bank get a full picture to support
investment decisions.
Optimize the Channel Mix
It is the responsibility of marketing management to determine
the company's high-level approach covering market channels.
Marketing managers should consider the following actions when
determining the channel strategy:
Align channels with customers' preferred interaction
channels and brand strategies
It's crucial that the marketing channel mix is consistent with
the channels the customers choose to interact with the organization
and with the brand messages that your company wishes
to communicate.
For example, wealthy banking clients may wish to use the Web
for many banking transactions, but they are likely to want to
visit their relationship manager face-to-face for private discussions
in a traditional office location. A low-cost Internet bank,
on the other hand, may opt to have no brick-and-mortar
branches. This is probably acceptable to customers - and even
reinforces the message that the low-cost bank can provide better
loan and deposit interest rates because expenses are minimized.
In fact, the foundation of the Internet bank is based on
a new channel strategy concentrating on online banking services,
in a way parallel to that of Amazon.com, which pioneered
Internet-based ordering and delivery of physical
products.
Develop a multichannel strategy
In most cases, you should not limit yourself to one delivery
channel. But adding channels does cost money. So again, the
policies covering customers and brands can provide some
guidance to help optimize the mix for long-term profitable
growth.
In the example above covering banking services for wealthy
clients, the bank would likely decide that it needs to invest in
both Internet and retail branches (probably in high-rent office
districts) to most effectively serve its targeted clients.
Today, it's very common for customers to employ different
channels on the basis of the purchasing life cycle. An example
of this comes from the auto industry. Customers are likely to
research brands, options, and pricing on the Internet but
choose to visit a physical dealership to take a test drive and to
make the actual purchase. In this case, the investment in the
complementary Internet-based channel is warranted - and
even mandatory for most automobile markets.
Adapt in real time to sustain customer focus
Channels provide a rich source of information to enable rapid
adaptation to changing market conditions. Information
systems can facilitate refinement of marketing programs by
collecting and delivering data from the sales and distribution
channels, enabling simulations and what-if analyses, and
monitoring some metrics - such as campaign response rates
and sales - in real time. In fact, instantaneous information
is particularly beneficial in industries such as retail, financial
services, and telecommunications, where immediately
available data can drive adaptive responses.
Leverage the partner network
It's not economical for many companies to handle all of their
sales and distribution activities themselves. Partners can be a
valuable resource to scale the business, and policies covering
target customers and development of brand equity should
help determine an appropriate partner strategy.
For example, a semiconductor manufacturer may have penetrated
accounts around the globe, and demand is still growing.
How can the company effectively serve its customer base and
pursue new opportunities?
By segmenting its opportunity base and deploying an appropriate
partner strategy, the company can determine which
customers it wants to serve itself - preserving its brand
promise for service to specific accounts - and which it wishes
to offer as opportunities for partners. The semiconductor
producer can provide partner incentives, and even devote a
portion of its marketing budget for partners, to support development
of its partner network and increase its global sales and
service coverage.
Enhance the inbound channel
When a customer contacts your company - even if it's because
of a complaint - you are presented with a unique opportunity
to reinforce your brand message and, in many cases, even
generate additional revenue. Marketing is in a position to
influence policies and processes that advance the inboundchannel
procedures, improve the company image, provide
extraordinary service, and capitalize on up-sell and cross-sell
opportunities. This is particularly important because it's been
found that conversion rates for contacts made through
inbound channels are much higher than those for outbound
channels.
Moreover, you can often transform service activities from a
cost center to a profit center, by using analytics to understand
which customers are likely to respond to cross-sell and up-sell
offers (particularly in consumer-oriented industries) and by
using scoring mechanisms to enable continual improvement
of the offers. You can also further the profitability objective by
using improved service experiences to ensure higher customer
referral and retention rates (thus minimizing costs of newcustomer
acquisition) and by leveraging service-call discussions
as a low-cost means of securing information about customer
needs.
Use the right software solutions
There are numerous opportunities to deploy enterprise
software solutions to enhance effectiveness of the selected
channels. For example, intelligent, rule-based routing of
qualified leads to the partner network can keep the pipeline
full, driving incremental sales and enabling the partners to
more effectively spend their marketing dollars. You can also
use software systems to track your partner marketing budgets
and ensure they're spent effectively, even though the spending
is occurring outside of your company's four walls. Finally,
investments in call center software can support the inbound
channel through processes that enable immediate identification
of customer attributes, ensuring that appropriate service is
provided and that new sales opportunities are pursued.
While your organization may consider investing in best-ofbreed
point solutions to enhance channel management, you
should also factor in the importance of integration of the
selected solution to enable streamlined workflow, accurate
financial processing, and efficient collection of data for analysis
and decision making. These are the types of benefits facilitated
by solutions that can be robustly interconnected.
Leverage Customer Insights Across the Organization
To enable marketers to drive the value-based customer, brand,
and channel strategies as outlined above, complete insights into
customer needs, buying habits, profitability, and trends are necessary.
To attain a 360-degree view of the customer, customer
data collected only by the marketing department is often not
sufficient. You need a more holistic approach, bringing together
data and insights from all parts of the company that interact
with customers.
Marketing is often in the best position to distill insights about
customers and educate and influence the enterprise at large,
with the goal of fostering a customer-focused organization. Key
actions that marketing can take include the following:
Pursue a holistic approach to data collection
While the marketing group can directly collect some data from
customers (such as through buying customer data from external
providers or conducting surveys in the customer base),
others in the organization are on the front lines with customers
and prospects and often have access to a much richer array of
information, as in the following examples:
- The sales organization and distribution partners have a
strong sense of what customers need and how well the
brand and pricing strategies are functioning.
- The service and support organization (including in call
centers) collects a wealth of firsthand information on which
cross-sell approaches work, what customers like, and what
customers complain about on a daily basis (which is also a
great source of information for shaping new-product development
and branding strategies).
- Back-office groups have good visibility into a customer's
financial situation, including the current balance, the total
amount of business conducted, the number of purchased
items returned, and so on.
Marketing can integrate these various views. As a complement
to new data collection initiatives to gain customer and prospect
information, marketing can look to partners and those within
the organization to gather data and synthesize new insights.
By pursuing a holistic approach, marketing will acquire better
information, more accurately target customers, and optimize
the use of company resources.
Consolidate data for analysis
Many organizations have multiple customer databases, which
hinders effective analysis and decision making. Marketing can
champion the consolidation of customer data to attain a
holistic "one version of the truth" about customers, serving as
the owner and high-level architect, articulating the benefits,
and helping to promote the necessary technology programs.
One premium auto company had 10 different customer databases
across its organization; by consolidating these into a
single database, the company realized substantial gains in terms
of its accuracy of customer information. This contributed to
better-targeted customer communications and helped to
secure internal alignment around programs that would truly
benefit customers.
Disseminate the right information to the right people
Once you have collected and analyzed the information, your
marketing organization needs to disseminate the relevant
customer information to other departments that can help
drive decision making and program execution. The sales force
and partners benefit from lead information to help target
prospects and counter competition, the call center can use the
insights to refine complaint handling and sales processes, and
product development can create new plans derived from the
holistic data about customers.
In short, you can benefit significantly from breaking down the
silos. Marketing can ensure timely distribution of customer
insights, which will contribute to the success of the marketing
organization and, ultimately, the whole enterprise.
Improve Process and Resource Efficiency
As with any company organization in today's cost-conscious
environments, marketing must continually improve productivity.
Establishing and monitoring metrics are important steps toward
achieving this goal. You can establish and monitor metrics
associated with productivity of resources, including headcount
and marketing spend, and you can make continual refinements
so that productivity improves over time.
But there are many opportunities that go beyond the basic
approach of measuring, monitoring, and improving key metrics.
These include the following activities:
Leverage advances in data analysis
There have been many advances to marketing-data analysis in
recent years. Direct marketing has become a science in which
marketers - using predictive propensity models - can deliver
finely tuned campaigns that speak with a relatively high degree
of accuracy to customer needs. There are various multivariate
statistical techniques that help explain variability in observations
and enable market researchers to accurately model purchase
decision drivers. By adopting such techniques, marketers can
adjust investments and reach customers more effectively.
Deploy IT-enabled marketing processes
Marketing can play a role in advancing processes that are
enabled by contemporary enterprise software solutions. Lead
automation software, for example, helps make certain that
marketing is providing highly qualified leads to the right sales
agents with relevant information in a timely manner. Another
example is marketing resource management software, which
helps marketers to optimally manage the marketing resources
and to align all marketing activities to higher business goals
and objectives. The software provides visibility into activities,
helps minimize duplication of effort, and ensures that you are
tracking actual spending against budgets. By implementing
these types of software systems - especially solutions that can
integrate well with your existing technology platforms - you
can ensure that productivity is continually improving and that
resources are deployed for their most productive uses.
Capture best practices and preserve knowledge
Knowledge management software can help consolidate and
preserve intellectual capital that may be spread throughout
the enterprise, ensuring that even in relatively high-turnover
organizations, the marketing best practices developed over
time are safeguarded. By using tools and templates derived
from the experience of others, new staffers can become
productive more quickly.
In some cases, documenting marketing processes and
executing them in a transparent manner is becoming essential
for reasons other than basic knowledge management; it's
becoming important for Sarbanes-Oxley compliance, especially
for accurate accounting of costs and expenses. This is particularly
true in the more regulated industries, including utilities,
banking, and life sciences.
Optimize end-to-end processes
The opportunity for improvements is much larger than those
defined by the four walls of the marketing organization.
Marketing is in a strong position to play a role in optimizing
processes and resource use throughout and outside of the
organization.
Creative redesign of an organization's processes in which
marketing is involved - including product development,
supply chain management, finance, and those processes that
work with external partners and suppliers - can unleash
substantial improvements in productivity as well as enormous
gains in customer service. For example, redesign of a trade
promotion management (TPM) process established by the
marketing organization in a consumer goods company -
with attention paid to the fact that TPM at its core integrates
sales, marketing, and other processes - might incorporate
technology supporting the following areas:
- The logistics and purchasing organizations (to guarantee
product availability for a demand surge)
- Distributors and retailers (to minimize stock-outs)
- R & D (so that feedback from the market is quickly built into
new product plans)
- Investor relations (to ensure that anticipated growth is appropriately
communicated to Wall Street)
Increase Marketing Accountability
As noted above, marketing is more and more often being held
accountable for contributing to the profitable growth of the
enterprise, particularly since marketing budgets have traditionally
consumed a large share of a company's discretionary spending.
In fact, two of the most critical challenges for CMOs are how to
optimize the allocation of marketing spend for maximum
business impact and how to prove contribution to business
success to the rest of the organization. For CMOs, accountability,
not creativity, needs to become the topmost focus. While the
marketing organization must not lose the passion surrounding
development of its brands and advertising campaigns, it must
steer its efforts on the basis of facts and data, as well as be able to
explain its investments and activities in ways that the CFO can
understand, as follows:
Establish sound measurements
While measuring return on marketing spend has become
crucial, it is often a difficult task. It's not easy to identify the
right actions and metrics that matter to determine the ROI of
marketing spending.
A study by the value engineering organization at SAP, for
example, found in consumer products companies that 86% of
trade spending (for example, spending on in-store promotions)
was not profitable. However, the companies didn't have a deep,
quantitative understanding of their trade-spending inputs and
outcomes, and they thus struggled with determining where to
divest and where to increase trade spending. A study by the
Marketing Leadership Council found that marketing groups
were able to calculate an ROI for only 28% of their marketing
budget, on average (see Figure 5).
Figure 5: Challenges Determining Return on Marketing Investment
Source: Marketing Leadership Council
Ensure organizational alignment
In complex organizations operating in changing business
environments, organizational alignment is crucial for
addressing the accountability challenge. It's essential to focus
on the planning process, set up metrics that support corporate
goals, align business plans with related organizations, and
measure results on an ongoing basis in order to continuously
improve marketing impact. While many marketing organizations
have made progress in top-down planning - that is,
cascading marketing objectives from corporate business goals -
they still struggle in aligning this with bottom-up planning by
the sales force and the regional field-marketing organizations.
An aligned plan helps define the right key performance
indicators to measure marketing results.
Align metrics across the enterprise, focusing on fact-based
measures that relate to profitability and growth. For example,
you might choose the rate of revenues growth as a metric to
monitor the success of a marketing initiative. When you conduct
a marketing campaign for a product, you may conclude
that a boost in revenue resulted from a successful campaign.
While there are many factors influencing these metrics (some
controllable and some not), it may still be reasonable to hold
marketing accountable for outcomes achieved in this measure.
Also, focusing on activities where cause and effect are more
clearly identifiable is quite valuable. For example, measuring
outcomes of online marketing activities (such as e-mails and
online ad campaigns) provides much greater insights relative
to measuring the success of more traditional advertising. This
is one of the reasons that, in many marketing departments that
focus on accountability, online marketing is on the rise.
Support strategic goals and drive desired behaviors
There are many other possible metrics that are highly relevant
for understanding the impact of marketing, including advertising
spending and return on marketing investments, and other
indirect measurements, such as lead-to-sales cycle times, brand
recognition rates, and customer satisfaction. It is the task of
marketing and a company's leadership to select the measures
that support strategic goals and are likely to drive the desired
behaviors.
In short, it's important to approach metrics selection holistically,
to ensure alignment across the organization for the
selected set of metrics, to be mindful of the role that the
measures play in contributing to your organization's profitable
growth, and ultimately to stay focused on the customer. By
proceeding in this way, marketing and management can
sharpen the organization's ability to execute programs that
truly support profitable growth. Marketing can increasingly
gain the organization's trust and can earn the ability to invest
in new programs.
THE SAP APPROACH TO MARKETING
The SAP® Customer Relationship Management (SAP CRM)
application provides a central marketing platform that allows
organizations to analyze, plan, develop, and execute marketing
activities through all customer interaction points. This integrated
solution is fully aligned with the six success factors presented in
this paper, empowering marketers with the business insights
essential for making intelligent decisions and driving the effectiveness
of end-to-end marketing processes.
SAP CRM supports critical marketing processes, including the
following:
Marketing resource management, to manage the efficient
use of marketing resources, control and manage budgets, and
facilitate collaboration
Segmentation and list management, to manage enterprise
customer and prospect data, as well as external lists, and enable
smart segmentation of customers and prospects for effective
targeting
Campaign management, to facilitate execution of marketing
through all inbound and outbound interaction channels,
including direct mail, e-mail, the Web, and external agencies,
as well as the preintegrated interaction channels of SAP CRM
for campaign execution, such as telemarketing through the
interaction center of SAP CRM
Lead management, to generate and qualify leads and seamlessly
facilitate coordination between the marketing and sales
organizations
Marketing analytics, to enable the conversion of reports and
data into actionable insights on marketing performance, predict
customer behaviors, and facilitate understanding of the
reasons that marketing activities did or did not work
In addition, SAP CRM provides support for high-impact
industry-specific marketing processes, such as the following:
Trade promotion management
Although consumer companies engage in all the traditional
marketing tactics listed above, the number-one factor for their
business success is how well they manage trade-marketing
activities with the retailers. The SAP Trade Promotion Management
application, which is part of SAP CRM, manages this
process from end to end, from planning and funding through
execution, allowing increased return on trade funds and
promotions, as well as significantly increased efficiency.
Market development funds
For companies in industries such as high tech, it is key to the
business to efficiently and effectively manage market development
funds for comarketing initiatives with partners.
Loyalty management
For industries where products and services are fast becoming
commodities - such as airlines, retailers, and so on - managing
customer loyalty programs integrated into an overall customer
strategy is critical to the business.
Real-time offer management
For businesses dealing with large volumes of end consumers
and large volumes of consumer interactions, such as finance
and telecommunications, you can generate huge value to the
overall business, as well as generate customer satisfaction, by
having an intelligent system that recommends the next best
actions and offers.
The marketing functionality in SAP CRM is designed to leverage
other functionalities of SAP CRM and is further integrated with
a broad array of SAP solutions covering enterprise resource
planning, product life-cycle management, supply chain management,
and supplier relationship management. The complete
solutions from SAP provide a sound foundation for this
continual innovation in the enablement of end-to-end enterprise
processes.
CONCLUSION
The role of marketing in companies will continue to grow.
Increases in the demand for personalized products, Webenablement
of business processes, and global competition will
catalyze the need for differentiation, clear articulation of brand
messages, and efficient management of advertising dollars and
other marketing resources.
The responsibility of senior management amid the continual
change will require clearly defining overarching strategy
encompassing customers, brands, and distribution channels.
Marketing's role will be to interpret this strategy in order to
shape programs and cross-organizational processes that add
value for customers and ensure efficient resource utilization.
Enabling software will certainly play a larger role in the future,
providing the foundation for analysis of massive amounts of data,
preservation of intellectual capital through knowledge management,
and streamlining of intra- and interorganizational
processes.
Marketing and management will continue to face growing
complexity as customers change their buying patterns, the
opportunities for collaboration proliferate, and new entrants
induce the need for revamped communication about products
and brands. Marketing will need to advance both the art and the
science of its approach. The guiding light for companies and
their marketing organizations will continue to be to ensure that
customers are extraordinarily satisfied and, consequently, that
superior value is created for shareholders.
To learn more about how SAP CRM can help your marketing
organization, call your SAP representative today or visit us on the
Web atwww.sap.com/crm
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CONTENTS
- Executive Summary
- Marketing Transformation
- Eliminating Silos and Demonstrating Value
- Energizing Growth amid Constant Change
- The Marketing Framework
- Marketing Success Factors and the Role of Enabling Software
- Implement a Customer Value-Based Strategy
- Manage Brands Effectively
- Optimize the Channel Mix
- Leverage Customer Insights Across the Organization
- Improve Process and Resource Efficiency
- Increase Marketing Accountability
- The SAP Approach to Marketing
- Conclusion