Tower of Babel
FIRMS PLANNING TO implement customer contact and retention systems for the first time should take heed: The deck is stacked. Just under one-third of these systems are successfully launched, on time, within budget, and with the features and functions originally specified. Another third are late, over budget or don’t deliver what was anticipated. The remainder simply fail or are abandoned. “The big thing the winners have in common is that they are on their second or third systems,” says Vernon Tirey, president of Boston consulting firm DiaLogos Inc.
Tirey cites three main reasons why these programs don’t make it. The first debacle occurs when a system is foisted on marketing departments that don’t see its relevance to their goals. The second is the result of people in a company who don’t have experience in relationship marketing having to generate long lists of potential features. Often they have no idea of what is appropriate-or even possible. This is especiallyhe systems go beyond simple renewal marketing and encompass membership benefits, channel analysis, customer profiling and other non-direct revenue functions.
The third occurs when companies look for the perfect off-the-shelf product, slam it into place, and leave each department to work in accordance with the dictates of the software.
Customer contact systems are priced from a few hundred dollars for an off-the-shelf system to several million for a consulting firm to evaluate needs, make recommendations, coordinate whatever new equipment needs to be purchased, and provide or oversee necessary training. But the cost of failure is even greater, ranging from lost time to customer attrition.
The success stories that follow have one element in common: The implementers realized communication was not something limited to customers, but that had to be done between a company’s departments as well.
Financial Information Services, a New York-based marketing intelligence firm, had the benefit of learning from a rigid legacy system it had been saddled with. The company was recently spun off from New York-based Moody’s Investor Services, and its customer service marketing program had been run off a customized system on Moody’s mainframe. But the system was not Y2K compliant, and required an upgrade. Once the decision to upgrade was made, other shortcomings became apparent: There was no way to capture notes, or run detailed marketing or customer service reports.
The decision to change came from the chief information officer, who was charged with researching and choosing an appropriate system. (CIOs are responsible for managing a company’s communication channels, both internally and externally, and for choosing the hardware, software and IT personnel that will enable a company to do so.) But maintenance, once the system goes live on June 1, will be coordinated by assistant vice president, director of sales operations Debbie Fogel. Additionally, because the new company does not have a large internal information technology department, she will be responsible for its oversight.
Fogel stresses capability to modify the system as a primary benefit of the upgrade. The company has consultants customizing the software to reflect sales territory management needs, such as renewal effort dating and modification of pricing structures. Not having to do wholesale programming code changes every year, she says, will be one of the biggest advantages to the new system.
The role Financial Information Services’ CIO played in choosing the system is increasingly becoming the norm, says Tirey. “CIO’s jobs are changing,” he says. “They used to have to know everything about technology. It is a terrible job. The turnover rate is terrible. Nobody wants to get behind. [In the past] they took huge budgets and didn’t deliver.” Today, says Tirey, a CIO’s responsibility is to let the firm know what the possibilities are.
Having a top-level person like the Financial Information CIO involved was a stroke of good fortune, says David Schneider, executive vice president of consulting and sales at Waukesha, WI-based Retail Target Marketing Systems, Inc. “We preach having top management on board who realize the value of customer information. You will move at a much slower pace if there is no emphasis on the top.”
This seems to hold true for companies contacted, despite Tirey’s contention that implementation should take no more than six to 12 weeks if a company wants to avoid loss of interest or momentum.
The impetus for a new system is changing as well. Three or four years ago, says Schneider, 90% of such systems were suggested by marketing, with credit departments and IT making up the rest. These days marketing instigates the search 50%-60% of the time, IT 30% and an enterprise-wide executive in most other cases. And IT is usually involved, he says, because of an edict from the company’s president.
At Washington, DC-based AARP (American Association of Retired Persons), the rationale to change was a marketing decision, with input from data processing. “It was a collaboration between the two units, [with each saying] this is what we think we need to make marketing decisions. Let’s figure out the best way to reach an endpoint,” says membership development program manager Brenda Heggs.
That she didn’t immediately say an enterprise-wide officer spearheaded the effort is telling: The reengineering effort has been in the works for four and a half years, and counting. Heggs feels a sense of urgency has been lacking.
AARP recently split customer retention from the marketing section. In the process, it has recently gone online with a new generation of its membership system. Heggs sees flexibility as the new system’s principle benefit.
“The programming [of the old system] was hard-coded, making it difficult to implement new processes,” she says. The new system allows the organization to easily change the formatting of renewal timing. Currently, renewal segmentation is based on whether or not a member uses the services offered. For example, members who take advantage of the AARP’s insurance offerings may get an extra effort reminding them their insurance is tied to their membership. The new system allows end users to more easily change the spacing of renewal efforts, set up test and control groups for different renewal series, change pricing structures or make any other modifications desired.
At the American Heart Association, Dallas, the customer communication system is being changed from a donor management operation to one that will better allow the company to build relationships with all of its “customers,” including donors, information requestors, and volunteers. The new system, according to director of customer relationships Steve Strucely, will allow the organization, both at its headquarters and in its field offices, to go beyond simply tracking a donor history.
“Now it is broadened. It’s not just donations, but cultivation and correspondence and other activities,” he says. “[This information] may have been tracked in other cases, but in some it just wasn’t being stored. It was our goal to do a better job of getting it all in one place. We needed to become more effective at seeing the customer as the same person no matter where [within the organization] we are contacting him.”
But there was a schism at the Heart Association. The marketing people wanted simplicity of use, and were concerned with how easily they could search for donors based on specific criteria, and how easily they could generate the reports and correspondence they wanted. The IT folks were focused on their involvement in installing the system and helping to run reports.
“One of the goals was to make it more of a system where the end-user could select and run reports rather than requesting them from IT,” says Strucely. “There was discussion over ultimate responsibility. [IT] did not necessarily feel they wanted to be involved. They wanted to be involved in its selection,but they felt that the business folks should drive it. IT’s role would be fitting it into the system.”
Ultimately, IT was given a voice, although not veto power. “We went through a structured process to evaluate our alternatives and assign weights to those criteria. IT had a voice in the weighting of those criteria.”
For many companies, a new customer contact management system is not replacing something already in place: It is a whole new endeavor. “It’s not like I am trading in my ’96 car for a ’99 car,” Schneider says. “It’s more like moving from a horse and buggy to a motorized vehicle.” When he meets with companies, he tries to include all facets of the company-marketing, IT, credit, catalog distribution and merchandising, if applicable. In many cases, companies are in the early stages and may not have an appointed customer relationship person. “We run into that quite often,” he says.
No matter what, says Schneider, it does need to be a joint effort. Implementing any sort of database marketing or customer relationship program is going to involve the IT department along the way. “If there is a wall between the two it’s going to be a very unsuccessful project. If there is a separation we will put them in contact with one of our existing clients.”
David Frankland, CEO of Lexana, KS-based Digital Archeology, is sympathetic to the needs of IT. “The rapidly changing needs of marketing departments and the technological tools that IT is forced to use set them up to fail. The tools themselves can’t keep up with the speed of business.”
Marketing departments, he says, are inherently adaptive and opportunistic, and they want results immediately, while IT people tend to be structure-oriented and methodical. “If a marketer has a campaign that they want to explore and the IT resources aren’t geared to supporting those inquiries and testing, you have a political firestorm.”
But his sympathies don’t interfere with how he approaches companies. Frankland will talk with marketing executives or CEOs before he contacts IT officials.
“They are the ones that have the pent-up business need. They have been watching and waiting while the rest of the world gets automated. IT should be one of the support functions: If marketing is still viewed as warfare, IT should not be fighting the battle, but should know how the weapons work.”
One example of a successful collaboration between marketing and IT departments is AAA Chicago Motor Club. AAA members [don’t call them “customers,” says vice president, marketing and travel services Jim Thompson] receive telemarketing calls for renewals, tiered efforts based on their level of membership, and solicitations throughout the year based on their use of travel services, insurance or emergency road services.
All this implies a sophisticated database operation, and that in turn implies a close working relationship with IT. AAA Chicago’s marketing department has allowed its IT department to have a fair amount of input into creating and running marketing analysis, and has been rewarded for it: A shift in analytic procedures resulted in a change in the mailing levels to certain cells of the database.
“There is a dotted line [in the company organization chart] that the two departments need to reach across to each other and speak each other’s language,” says Thompson. “IT needs to understand what marketing needs and marketing needs to understand what to give IT.” One member of the IT department is “really well immersed” in marketing, Thompson continues, and has worked with him on AAA Chicago’s direct marketing projects.
But getting to this point has not always been easy. Marketing once came to IT with a series of reports they needed run, and were told flat-out by IT their system was unable to provide them. Instead, IT offered to work backward from the end result marketing wanted and retrofitted the analysis to fit the solution.
As a result, IT is considered a valued participant in choosing new member communication and retention systems. To a certain extent, IT has veto power over new systems-and has exercised it.
“We haven’t seen anything that has gotten past an analysis by marketing and IT,” says Thompson. “A lot of systems are not affinity-organization based, which is what we are, and [vendor salespeople] try to sell us off-the-shelf products that don’t fit affinity-based organizations. We improve our systems from within.”
