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ForrTel:Relationship Marketing Trends And TechnologiesElana Anderson Eric Schmitt
Senior Analyst Senior Analyst
Forrester Research Forrester Research
June 28, 2004. Call in at 10:55 am Eastern Time
Agenda
• New market dynamics demand change
• The shift to Left Brain Marketing
• The evolution of the marketing technology backbone
• Recommendations
The big picture
Two technology trends are reshaping marketing
• Media fragmentation
• Addressability
Trend 1: Media fragmentation
• More media channels and content streams now compete for consumer attention
Media fragmentation: What it means
• Consumer choice grows
• Audiences fragment
• Competition for audience attention increases
• Per-contact costs rise
• Efficiency of advertising decreases
• Clutter results
• Attention spans shorten
Erosion of attention impacts advertising
Direct marketing response rates are in decline
Catalog
Telemarketing
Responserate
Cost/contact
1.61%
1.46%
0.99%
2.32%
5.73%
$0.55
$0.18
$0.09
$0.63
$1.45
$3.95
$1.31
$1.28
$2.88
$6.17
7.2
7.3
14.2
4.6
4.2
Direct mail
Inserts
Revenue/contact
Revenue/cost
Source: Direct Marketing Association
The painful effects of clutter
January 2004
Trend 2: Predominance of addressable media
» Sometimes addressable
– Web
– Retail POS
– TV
» Not addressable
– Radio
– Newspapers
– Billboards
» Addressable
– Direct mail
– Telephone
Media addressability: What it means
• Targeting prevails
• Measurability increases
• Consumer privacy concerns grow
• Regulatory environment changes
• Data management gets tougher
• Consumer control grows
Addressability’s byproduct
Base: 470 responses recruited from PlanetFeedback.com membersSource: Intelliseek and Forrester Research,
Inc.
Personalvideo
recorder
Pop-upblocker
software
Spamblocker
software
Do notcall list
82%
56% 52%
14%
“Do you use, or have you signed up for any of the following services or technologies?”
Putting it all together
• Media fragment
» Marketers’ need to target grows
• Addressable media eclipse mass media
» Marketers’ ability to target increases
• Marketing becomes more measurable
» Analytical marketing techniques predominate
Welcome to the era of Left Brain Marketing
As the marketing environment changes . . .
• Traditional contact strategies are losing effectiveness
» Increasingly difficult to gain access to the audience
» Marketers exclusively focusing on “push marketing” are missing opportunities
• Focus on retention is more critical than ever
» High penetration in some consumer verticals
» Deeper penetration of the customer drives retention, value, and loyalty
• Visibility and accountability are a mandate
» Privacy legislation drives need for governance
To address these challenges, firms must . . .
• Centralize governance of customer communications
» Ensure compliance with consumer privacy legislation
» Migrate from product- to customer-centric marketing
• Integrate contact strategies across channels and lines of business
• Optimize the value of customer interactions
» Give marketing a voice in every interaction
» Transition from “push” to “pull” marketing
• Build a consolidated enterprise marketing technology infrastructure
To address these challenges, firms must . . .
• Centralize governance of customer communications
• Integrate contact strategies across channels and lines of business
• Give marketing a voice in every interaction
Marketing technology backbone
The marketing technology backbone
► Technology that supports and integrates marketing strategy, development, delivery, and measurement
Marketing automation platform
Marketing technology is evolving
MarketingCampaign
management
Customer
Sales
Service
Planning
Optimization
Sales
Service
Decisioningengine
Requirements of the enterprise infrastructure
Corporate governanceLine of businessOrganization
Traditional Emerging
Distributed modelSmall group of power
usersUsers
Higher volume and velocity, new types
Fixed schedule, few segments, batch-n-blastPrograms
External data, more timely access
Customer data warehouseData
Inline integrationAnalytics Separate environments
Direct mail, telemarketing
Inbound, transactional, etc.Channels
Recommendations
• Organizational and process change is a precursor to the success of the marketing technology backbone
• Get the right team in place
» Find a business sponsor with vision, power, and budget
» Understand the required skills
» Build a bridge with IT
• Prepare for organizational and process change
» Customer-centric
» Governance and accountability
• Start with the low-hanging fruit
» Work toward a long-term vision but deliver incrementally
» Crawl before you run
Elana Anderson
www.forrester.com
Thank you
Entire contents © 2004 Forrester Research, Inc. All rights reserved.
Eric Schmitt
www.forrester.com
