It’s Not Too Late to Catch Up

Tell me if this doesn’t sound like a description of your company. You market a variety of products and services to a large customer database using all potential distribution and communications channels: retail outlets, direct mail, print, outbound and inbound telemarketing, even radio – and of course you sell over the Web.

Customer activity is faithfully recorded in your data warehouse, which is updated in real time. Data is distributed such that all employees who deal with customers have access to the latest information pertaining to them.

Proactive customer marketing is handled by an integrated campaign management and data mining system that matches products and services with customers and their preferred avenue of distribution in such a way that not only ensures the customer receives the right product with the right offer, through the right channel at the right time, but also optimizes the return on discretionary marketing dollars.

Your Web site uses the most sophisticated customer relationship management technology, including not only collaborative filtering but also real-time push/pull Web pages, interactive customer service, and just in case that isn’t enough – “call me” buttons.

OK, so maybe your company isn’t completely there yet, but are you hopelessly alone or just back with the rest of pack?

Who knows? Well, the DMA does…more or less. I’ve just finished reading the recent study it commissioned, “Customer Relationship Management Technology Enabled Marketing.” The study, prepared by PricewaterhouseCoopers, included data from 159 participating companies.

Before telling you about some of the report’s more interesting findings it must be noted that the participating companies ranged in size from those with less than $10 million in sales to those with more than $2 billion in sales. The version I read did not include cross references, so the averages reported are undoubtedly skewed. Even so, I found the following information worth mentioning.

– Eighty-seven percent of the firms managed their databases in house. I would’ve guessed that this number would be lower, since a lot of companies use service bureaus.

However, as customer relationship management becomes more of a core competency, internal IT groups are becoming more interested in controlling this function. Ten years ago, when database marketing was just a below-the-line item for non-traditional direct marketing companies, this percentage would have been far lower – I think.

– Only 34% of respondents said they used data mining techniques. More specifically, only 24% used cluster analysis; 23% regression; 9% decision trees; 6% neural nets; and 4% genetic algorithms. I thought the numbers might be much higher, but the averages undoubtedly are influenced down since 23% of reporting companies had sales less than $20 million and 5% didn’t know!

I suppose if you don’t know your sales you’re not too likely to use advanced modeling techniques – at least I hope not.

Campaign Management

– Even given the relatively low penetration of data mining techniques, I was still a little surprised to discover that only 5% of the firms employed “full-service campaign management software.” And 54% admitted that they had either no formal system or no electronic system for managing campaigns. I wonder what they do.

– While DMers may be slow in adopting data mining and campaign management techniques, they certainly haven’t been hesitant to move onto the Web: 80% have corporate Web sites, 52% advertise online and 48% conduct business transactions on their sites.

And I’ll bet these numbers are even higher today.

On the other hand, DM firms’ adoption of the most advanced technologies is still in its infancy, based on these statistics:

– 7% conduct interactive dialogues on their Web sites.

– 3% feature real-time push/pull Web pages.

– 3% employ “call me” buttons.

– 7% use collaborative filtering.

In looking at all these numbers it almost seems there’s a negative correlation between the amount of hype surrounding a particular technology and the adoption of the technology. But that’s being too cynical. The fact is, it does take time for new technologies to take hold, and that’s probably what’s going on here.

Relying on work done by the Gartner Group rather than on specific questions asked in the survey, the study notes that 75% of today’s call centers will migrate to customer interaction centers by 2003 – the implication being that these centers will have to adopt the most advanced technologies to remain competitive.

Trends Examined

The report concludes with some interesting trend analyses: Fully 66% of respondents believe the lines between marketing and sales and service are blurring, and 79% agree that companies are struggling to acquire and retain customers. Moreover, 76% acknowledge that customers are demanding uniform treatment at all points of contact.

What all of this implies is that the world is changing rapidly and customer expectations will force companies to adopt technologies and methods that will enable them to compete effectively.

So if your company is still back with the rest of the pack, there’s still time to change. But it’s not clear how long this window of opportunity will be open.