Exceptional results.
It’s Not Too Late To Catch Up
By: David Shepard
This article first appeared in Direct Magazine
Tell me if this doesn’t sound just like of a description of your company. You market of a variety of products and services to a customer database of significant size using all potential channels of distribution and communication: retail outlets, direct mail, print, outbound and in-bound telemarketing, even radio and of course you sell directly over the Web.
Not only are you taking advantage of all distribution channels, all customer activity is faithfully recorded in your data warehouse which is, needless to say, updated in real time, and data is distributed such that all employees that deal with customers have access to the latest customer data.
Pro-active customer marketing is managed though an integrated campaign management and data mining system that matches products and services with customers and their preferred channels of distribution in such a way that not only insures that the right 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 CRM 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 their 1999 study entitled Customer Relationship Management Technology Enabled Marketing – the study which included 159 participating companies was done by PriceWaterhouseCoopers—and the results are very interesting.
Before telling you about some of the more interesting findings it must be noted that the 159 companies ranged in size from firms with less that $10 million in sales to firms with more than 2 $billion in sales. And, the report I read did not include cross tabs so the averages reported are undoubtedly skewed. Nevertheless, I found the following worth noting and commenting on.
- 87% of the firms managed their databases in house. I would have guessed that this number would be lower, but that may be just because we work with a lot of companies that use services bureaus. On the other hand, as customer management becomes more of a core competency, internal IT groups are becoming more and more interested in controlling this function. Ten years ago, when database marketing, for non-traditional direct marketing companies, was just a below the line item, this percentage would have been significantly lower—I think.
- Only 34% of the respondents said that they used “data mining” techniques. More specifically, only 24% used cluster analysis; 23% regression: 9% decision Trees (CHAID?); 6% Neural Nets and 4% Genetic algorithms. I would have guessed the number to be significantly higher, but the averages are undoubtedly influenced down by the fact that 23% of the respondents had sales of less than $20 million and 5% didn’t know! I suppose that if you don’t know your sales you’re not too likely to use advanced modeling techniques – I least I hope not.
- 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.
On the other hand while direct marketers may be slow in adopting data mining and campaign management techniques, they certain have not been slow in moving on to the Web.
- 80% have corporate web-sites;
- 52% advertise on the web; and
- 48% conduct business transactions on their sites.
And, I’ll bet that these numbers are even higher today.
On the other other hand, adoption of the most advanced technologies is still in its infancy as evidenced by these statistics:
- 7% conduct interactive dialogues via their web-sites
- 3% employ Real Time Push/Pull Web pages
- 3% employ Call Me buttons
- 7% use Collaborative filtering
In looking at all of these numbers it almost seems as if there’s a direct 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 of the matter is that it does take time for new technologies to take hold, and that’s probably what’s going on here. The report concludes, leaning on work done by the Gartner Group, as opposed to specific questions asked in the survey, that 75% of today’s call centers will migrate to customer interaction centers by the year 2003 –the implication being that these centers will have to adopt the most advanced technologies in order to remain competitive.
Finally, the report concludes with some interesting trend analyses: Fully 66% of the respondents believe that the lines between marketing and sales and service are blurring and 79% agree that companies are struggling to acquire and retain customers. What’s more, 76% agree that customers are demanding uniform treatment at all points of contact.
What all of the above implies is that the world is changing rapidly and that customer expectations will force companies to adopt technologies and methodologies 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.