The Precision Marketing Benchmark Report 2006

The Precision Marketing Benchmark Report How Top Performers Turbo-Charge Their Investments September 2006 The Precision Marketing Benchmark Report Executive Summary The Precision Marketing Imperative Across all industries and company size, growing revenues is a top priority for organiza- tions. This holds true for all business models: business to business (B2B), business to consumer (B2C), not-for-profit, and for those that perform the “marketing two-step” (B2B2C). Moreover, top-line growth is not the only pressure faced. Marketers also seek to do more with less. They are pressured to identify and invest in their most valuable or profitable customers while optimizing both budgets and resources applied. (Figure 2) “Our objective was to select and embed In short, marketers must find ways to an analytical tool that can be deployed communicate, interact and provide ser- in a number of ways…the goal was to vice to customers based on value metrics. build more robust segmentation models Ideally, highly profitable customers would receive more attention, service that would provide continuous and resources than less profitable ones. updates…and treat customers Customer retention and acquisition rates differently based on customer value. among preferred segments or profiles would increase, as well as market share --Scott Burk, Senior Statistician & among most valuable customers. Marketing Analytics, Overstock.com Key Business Value Findings AberdeenGroup surveyed and inter- viewed 200 companies to gain an understanding of how Best in Class organizations se- lect, deploy and measure precision marketing techniques. Our research demonstrates that effective precision marketing techniques leads to improved customer retention rates, higher revenues from up-sell / cross-sell campaigns, and enhanced levels of customer satisfaction. Enterprises that deploy precision marketing enjoy a greater share of each customer’s wallet. More than fifty percent of top performers have customers who pur- chase multiple products or services from them annually—twice the rate of other bench- marked groups. Overall, top performers that hold higher competencies in advanced precision marketing capabilities also enjoy a higher return on investment in key performance metrics. Case in point, 51% of these top performers, (in contrast to only 10% of other benchmarked groups), attained customer satisfaction levels in excess of 70%. Implications & Analysis While enabling technologies and service providers facilitate the planning and execution of both inbound and outbound marketing campaigns, enterprises are more challenged by lack of internal expertise in precision marketing techniques. The majority of survey re- spondents revealed they lack the ability to establish and measure meaningful perform- ance metrics. Reminiscent of the proverbial “chicken and egg” scenario, organizations All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • i The Precision Marketing Benchmark Report struggle to secure the budget and resources necessary to improve precision marketing techniques, but lack the ability to build a business case and gain buy-in through the estab- lishment of measurement of key performance indicators (KPI’s), metrics or goals. All respondents confirmed they are addressing challenges from a technology, process, performance and organizational perspective. They realize that no one “silver bullet” ex- ists, but that a more holistic, process-driven approach to customer interactions, comprised of “closed-loop marketing techniques” is necessary to drive continuous performance im- provements in precision marketing. Selection Criteria Vendors and service providers who are able offer solutions that are financially attractive as well as easy to use for line of business (LOB) employees in marketing, sales/business development or call center will be in high demand. Overwhelmingly, survey respondents cited cost and ease of use as top priority criteria for selection of precision marketing tools and services. Figure 1: Selection Criteria for Precision Marketing Investments 70% 60% 50% 40% 30% 20% 10% 0% Total Cost of Ease of use in Ease in Cost of initial System can be Ownership (TCO) building/executing configuring deployment managed by line predictive business of business user models/scores processes (LOB) Top Performers All Others Source: Aberdeen Group, September 2006 Recommendations for Action In addition to the Best in Class actions, companies should also evaluate their processes, internal capabilities, and solution providers to ensure they effectively accomplish the fol- lowing: All print and electronic rights are the property of Aberdeen Group © 2006. ii • Aberdeen Group The Precision Marketing Benchmark Report • Secure organizational buy-in through executive-level sponsor- “You have to have top-down spon- ship of precision marketing by sorship and change the game, be- building the business case with cause a fool with a tool is still a demonstrable return on investment fool“ (ROI) • Leverage consultancies and/or –Steve Rooks, Vice President, marketing service providers to Simplification and Expertise bring “best practice” expertise in Center, Bell Canada business process workflow, per- formance metrics, and predictive modeling or scoring in-house through “train the trainer” programs. Alternatively, organizations may evaluate the benefits of persistent outsourcing and focus on internal core competencies • Evaluate technology providers against demonstrated return on investment and se- lect those that can be managed by a LOB user or business analyst rather than re- lying on IT resources • Consider hiring marketers, business analysts and statisticians with extensive pre- cision marketing expertise and create an in-house center of customer excellence • Align performance metrics established with specific corporate goals. Growing share of market requires a very different approach than focus on growing share of customer or improving customer profitability rates. Evaluate corporate priori- ties and create meaningful metrics and processes to achieve set goals All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • iii The Precision Marketing Benchmark Report Table of Contents Executive Summary .............................................................................................. i The Precision Marketing Imperative ............................................................... i Key Business Value Findings.......................................................................... i Implications & Analysis ................................................................................... i Selection Criteria ............................................................................................ii Recommendations for Action..........................................................................ii Chapter One: Issue at Hand.................................................................................1 Precision Marketing: Balance of Art and Science .......................................... 1 Priorities......................................................................................................... 1 Challenges..................................................................................................... 3 Key Enablers ................................................................................................. 4 Chapter Two: Key Business Value Findings .........................................................5 Precision Requires Expertise......................................................................... 6 Best in Class Define Top Performance .......................................................... 7 Leaders Centralize & Automate Deployment ................................................. 7 Conclusion..................................................................................................... 8 Chapter Three: Implications & Analysis...............................................................9 Capabilities and Process ...............................................................................