Making the Most of Customer Data

In particular, marketing-automation systems provide the tools that help organizations segment their customer bases, identify specific customer needs, and build promotions and personalized campaigns designed to cater to those needs while generating additional revenue.

Marketing-automation technology specializes in analyzing large volumes of data, identifying patterns or trends that would not otherwise be apparent. Armed with this information, organizations can build custom campaigns and track their effectiveness. They can also leverage these systems to drive other processes, such as real-time customer-service interactions in which customer-service agents recommend products targeted to customer needs over the phone, or real-time offers and promotions personalized to customers navigating a Web site.

Before diving in, it's important to understand how the systems work and what you should look for in a marketing-automation solution. Doculabs advises its clients to start by taking a close look at their major motivators for marketing automation to determine whether they align with their customer relationship management (CRM) strategies.

Business Drivers For Marketing Automation
Organizations are always looking for a strong business justification to support their return-on-investment arguments. The measurable areas of business benefit that marketing-automation solutions can provide include:

• Accelerating customer acquisition: By helping organizations build highly focused campaigns that are personalized and tailored to specific customer segments, marketing automation can help improve the effectiveness and speed of customer-acquisition activities.
• Increasing customer retention and enhancing value for existing customers: By continually presenting personalized product and service marketing messages to highly profitable customers, marketing automation can enhance customer value and increase retention through effective cross-selling that leverages purchasing histories and increases repeat business.
• Refining marketing strategies in real-time: Marketing-automation technology examines customer response rates, conversion rates, Web-site metrics, abandon rates and general demographic data to continually fine-tune customer segments and profiles, refine marketing strategies and eliminate approaches that are ineffective or counterproductive,all in real-time.
• Reducing cost: Marketing automation can help organizations make the most productive use of their advertising budgets by evaluating the effectiveness of campaigns and identifying successful strategies, redirecting ineffective campaigns and managing the costs of all campaigns within the organization. Effectively implemented marketing-automation solutions can pay for themselves in 12 months or less by increasing marketing staff productivity and reducing the time required to analyze customer data as well as to design, implement and evaluate the success of individual campaigns.
• What To Look For
  Marketing-automation solutions comprise three major components: marketing operations, marketing analytics and campaign management. Marketing operations lets you manage and track the costs, resources and business goals of multiple marketing programs and campaigns across lines of business. Marketing-analytics technology is designed to capture customer data from multiple channels and data sources, and to analyze that data in different ways for customer segmentation, profiling and personalization purposes. Campaign management is utilized to design, schedule, execute and measure the effectiveness of multichannel marketing campaigns that leverage the work done in marketing analytics. These campaigns can be executed across channels, including direct mail, telemarketing, customer-service centers, events, the Web and e-mail.
• In general, marketing-automation solutions provide capture-and-synthesis of large amounts of customer data from multiple sources, including online registries or directories, customer databases, billing systems and outside customer lists. Marketing-automation systems let companies effectively mine and leverage a large amount of customer data to build individual profiles of customers with more effective segmentation. That data is then used to target a consistent message across multiple channels to specific customer sets.
• Some of the key capabilities of marketing-automation solutions include the ability to:
• Manage business and financial goals of marketing campaigns: Marketing- automation solutions allow you to incorporate the strategic goals of your business that marketing campaigns support, while providing a method of tracking all costs and resources associated with these campaigns to facilitate marketing budgeting and cost control. This functionality should allow multilevel marketing organizations to roll up reporting on business goals and financial measurements to management to allow for complete visibility into the marketing process.
• Capture and analyze data to define profitable customers: Marketing-automation solutions should capture customer demographic and transaction data from multiple channels and applications, including internal and external data sources (such as back-office systems and third-party marketing lists) and applications used by sales representatives and customer service agents. Such data collection forms a data model that represents key customer attributes used for marketing analytic functions, such as predicting customer behavior and forecasting buying patterns.
• Plan, design and execute effective marketing campaigns: Leveraging customer analysis in campaign design means using customer segments and profiles to drive campaigns across multiple channels to deliver targeted offers. For effective campaign execution, a marketing-automation solution should schedule multichannel, multiwave campaigns that include real-time management, evaluation and midstream modification of campaigns based on response rates. To achieve a true ROI on the campaigns, financial metrics, including the costs associated with the campaigns, must be a key input.
• Close the loop between campaign management and marketing analytics: The customer data and segmentation generated by the marketing-analytics component can not only be effectively leveraged in the campaign-management applications, but can also be updated with new data gained from the marketing campaigns themselves, providing a truly effective closed-loop marketing-automation process.
• What the Vendors Offer
  To pick the right marketing-automation solution, you must first identify your application priorities and match them to a specific solution or solutions that best fit your needs. Some marketing-automation solutions focus on analytics, some focus on campaign management and still others do both. The following overview discusses some of the leading marketing-automation solutions and their application focus:
• Aprimo
  Aprimo Marketing is designed for the multilevel marketing organization that requires comprehensive marketing operations' functionality, as well as leads management, content management and support for designing direct mail, e-mail, event and Web-form campaigns. Aprimo provides basic marketing analytics through OEM relationships with SPSS for modeling and Hyperion for analysis and reporting. There is also limited breadth-of-data capture from multiple sources and systems.
• Chordiant
  Chordiant 5 Marketing is geared toward users in enterprise businesses with data models and warehousing and mining environments already in place. Its campaign-design planning, collateral sharing and synchronization capabilities enable flexible campaign management. The solution supports phone, e-mail, wireless and customer-service center channels. Chordiant uses an Excel worksheet for data mapping that requires customization during the preinstall phase of the solution, with capability limited to relational databases. The product lacks support for a true real-time environment, apart from content-decisioning based on predefined business rules executed in real-time.
• E.piphany
  E.piphany's E.6 offers a comprehensive set of marketing-analysis capabilities that are focused on the marketer who rates ease of use and analytical results over the ability to create his own models and sophisticated analysis. For campaign management, E.6 excels in basic campaign design across multiple channels and its scalable e-mail server, and is positioned as one of the few marketing-automation vendors that provide real-time data capture, analysis and decisioning. E.piphany also has actual integration with leading content-management and e-commerce vendors such as ATG, BroadVision and Vignette.
• Kana
  Kana Marketing offers a complete marketing-automation solution that includes strong marketing analytics, campaign-management and leads-management functionality. The solution provides a consistent browser interface between analytics and campaign management and offers extensive campaign-management support for e-mail, Web and event channels. Its weaknesses include limited modeling capabilities and a marketing operations component that lacks financial planning functions.
• MarketFirst
  MarketFirst is geared toward marketing users in enterprise businesses with a data-warehousing, mining and analysis environment already in place. It provides prepackaged, vertical-specific customer- and business-centric data model templates. The product's campaign design, testing, execution and measurement capabilities provide robust interactive marketing campaign management that emphasize contact and lead management. The product, however, lacks support for a true real-time environment apart from content-decisioning based on predefined business rules that are executed in real-time.
• Protagona
  Protagona's Ensemble is well-suited to large enterprises with their own data models, and warehousing and mining environments that need comprehensive marketing-analysis tools and multichannel campaign-management capabilities. Ensemble's campaign-design component allows easy use of analysis to develop multichannel campaigns that synchronize offers and share collateral. A specialized e-mail campaign server and application is also provided, as well as a marketing-operations component that allows users to plan marketing projects and allocate resources.
• SAS
  SAS's Enterprise Marketing Automation (EMA) solution offers a robust set of marketing-analysis capabilities. The suite of components integrates data-warehousing, data quality, customer profiling, customer segmentation, analytics/predictive modeling, campaign management, outbound communication and response management into a single solution targeted at statisticians, modelers and marketers. SAS does not yet offer real-time analysis and decisioning, although it is planned. The campaign-management component makes it difficult to see segments and offers and doesn't provide direct access to all relevant data/components. SAS EMA is a good fit for enterprises that have large customer databases and are comfortable with the SAS environment.
• Teradata
  Teradata, a division of NCR, offers CRM Solution, which focuses on comprehensive marketing-analytics capabilities, including data-warehousing, mining, modeling and segmentation. It also provides a strong vertical-data model, including reports by industry. The campaign-management component offers an easy-to-use interface for designing multichannel campaigns and offers built-in optimization functionality. The solution does not provide a marketing operations component and is generally more suited for Teradata data-warehouse environments.
• Unica
  Unica's Affinium Suite is a good fit for enterprises looking to maximize customer relationships via a flexible and adaptable architecture that takes advantage of the skills of the marketer, statistician and modeler. It offers a rich and robust set of marketing-analysis capabilities that are equally focused on the needs of those three roles. Affinium's strengths include varied and sophisticated analytical tools for marketing analytics, as well as campaign management and design. Its ability to read from any available database enables it to adapt to the enterprise environment and it excels in multiple-channel data capture, analysis and decisioning. Unica recently added a marketing-operations component for marketing planning and resource management in large enterprises.
• Xchange
  Xchange 8 is a good fit for large enterprises that want a solution that delivers extensive marketing analytics and campaign-management functionality to multiple marketing channels, including the Web and contact centers. The product packages best-of-breed components that provide a comprehensive set of marketing-analytics functions, and its campaign-management capabilities extend out to contact center and Web channels.
• What's Next?
  As customer demand for end-to-end or closed-loop marketing grows, we expect to see more marketing-automation suites that offer marketing analytics and campaign management in a single product set. The importance of real-time analytics for capturing, analyzing and updating customer profiles for use in marketing campaigns both on the Web and within customer service centers will be a major driver in the CRM market.
• Increasingly, marketing-automation solutions are being adopted by large enterprises with multilevel, multiline-of-business marketing departments. Those organizations need to coordinate their marketing programs and campaigns and are creating increased demand for marketing-automation products that include marketing operations and management functionality. Vendors such as Aprimo excel in that area; other vendors including Unica have recently added that capability to their product suites and prospective customers should look for it to show up in other marketing-automation suites.
• Selecting a marketing-automation solution is a tall order for marketing and IT personnel, and the solution-evaluation process raises many concerns: Can the system you are evaluating run your own models and proprietary algorithms? Can it tie into other systems you might be using for data analytics, data-warehousing, content-management and personalization? Does the vendor have implementation experience in your customer's industry, and does it provide an industry-specific data model, or can it be adapted to match the profile of your customer? Can the product help you manage and coordinate multiple marketing campaigns across the enterprise?
• Finally, for marketing-automation solutions to be cost-justified and truly effective in retaining old customers and acquiring new ones, they must offer the ability to support new channels of data capture and customer communication, as well as the ability to integrate with the back-end data sources to drive effective campaigns.
• Bill Chambers is a principal analyst, Dennis Shin is an analyst, and Chris Klima and Bob Anders are editors with research and consulting firm Doculabs. Contact them at (312) 443-7793, www.doculabs.com, or at [email protected].