Improving CRM Investments

WHITE PAPER | ENGAGEMENT SYSTEMS

improving crm investmentsopTiMiziNG ThE cuSToMEr lifE cYclE wiTh

iNTElliGENT MArkETiNG AuToMATioN

WHITE PAPER | 1

InTEllIgEnT MARkETIng AuToMATIon EMPoWERs CoMMunICATIon THRougH TECHnology

The technology evolution is replacing live human interaction. GpS systems give better directions

than a passenger with a map. Elementary schools have changed their curriculum to better prepare

students for the day computers become smarter than human beings. Many people spend more time

with their cell phones, ipods® and Blackberries® than with other people. And yet most people feel

more connected to their friends and families today, than they did before the advent of mainstream

technology.1

This is also true in today’s business environment, where the basic premise of relationship building

through good communication is growing more dependent on technology. however, people still buy

from people, not from computers. crM systems promise results through improved communication

with prospects and customers, yet most companies are still struggling to figure out how to make that

happen and to realize a return on the investments made in these systems.

read on to discover why crM systems have failed to effectively build customer relationships, and to

learn how to reverse that trend by better utilizing these systems in combination with the customer

life cycle to increase sales and reduce costs.

PART onE: AssEssIng THE CuRREnT sITuATIon

the truth About Lead generation And Follow Up

whether the marketing staff size is one or many and consists of internal employees, agencies or

consultants, their primary responsibility is to be the creator and keeper of the brand. Through the

creation of advertising and marketing materials, marketing staffs focus on consistently getting the

word out about the company, resulting in brand awareness, but not necessarily more revenue.

Typically marketing departments are responsible for lead generation and are routinely measured on

the quantity of leads delivered to sales, with little attention to the quality of those leads. Trade shows

are a perfect example. Small fortunes are spent on booth displays, marketing materials and travel

expenses. The result: a considerable number of “leads” in the form of business cards collected at

the event. however 80% of these leads never receive any follow up.2 The internet has also changed

lead generation by making it easy to collect large amounts of prospect data. using information and

entertainment as bait to capture contact data, masses of leads are dumped into crM systems. The

reality is that the majority of leads today do not go through a formal qualification process and, if not

1 pew internet and American life project, 20082 center for Exhibition industry research (cEir)

WHITE PAPER | 2

immediately ready to purchase, are deemed unqualified prospects by sales. Buried in all those leads

are qualified prospects who will buy at some point in the future, but they go unnoticed.

As marketing automation platforms become the latest panacea to fix crM systems, marketing

departments have taken advantage of the opportunity to communicate with prospects and customers

using automated methods. for most this means a dependence on email only; sending auto-response

“thank you” emails, or generic email messages that are personalized and “dripped” to the customer

or prospect over a period of time. however, even the best communication makes no impact if it is not

received. Email appears to be delivering the message, but unfortunately email can be a hit or miss

medium. That great prospect that is truly interested, or customer who is ready to buy more, is not

always getting the message.

closed sales, not Leads, pay the Bills

for most companies, the sales process does not change after a crM system is implemented, other

than lead and customer information is now being stored in this central repository. Most salespeople

feel that adding and updating prospect and customer information is just another administrative task

they don’t have time for, and they perceive crM as one more way for management to keep tabs on

their activities. They don’t recognize any tangible benefit in being able to perform their role more

effectively.3 As a result, many companies become frustrated over the lack of adoption by their sales

staff, and struggle to find a way to persuade them to utilize the crM system. however the underlying

reason for poor crM adoption by sales people is often overlooked: closed sales, not leads, pay their

bills, feed their children, and pay for their new house.

Because of the monthly or quarterly sales cycle, salespeople still cherry pick the leads that will close

in time to hit the next commission check. prospects that are not buying in the immediate future

fizzle away in the abyss of the crM system, untouched by sales and receiving occasional, if any,

communications from marketing.

the Battle Between sales And marketing

optimizing any crM system requires aligning sales and marketing to function as a team. however,

lack of agreement on metrics, what makes a lead qualified, the amount and types of marketing

material needed, and who is responsible for executing marketing communications tends to drive

them in different directions, instead of bringing the two departments together. This becomes even

3 “The challenge in crM is really specific to the sales and marketing applications. Much of the (crM) software on the market today helps automate process, but doesn’t necessarily provide incremental value back to the user. Salespeople often complain that crM or SfA is just an administrative burden, and does little more than prove to their boss that they are doing their job. So adoption wanes, and users go back to using familiar tools like spreadsheets, databases or even just rolodexes.” -robert Bois, research director for AMr research

Today, 80% of all sales are

made on the 5th-12th contact.

15 years ago it took only an

average of 2-4 contacts before

concluding a sale.

The National Association of Sales Executives

70% of consumers

interviewed said they were

“more likely to respond to

or remember something if

it is communicated by

mail and email.”

Quadrangle

WHITE PAPER | 3

more complicated when consultants, agencies and contract employees provide all or a portion of the

company’s marketing.

finger-pointing between sales and marketing begins with the lack of agreement on shared metrics. in

times of significant growth, both sides claim victory, and in challenging times, it’s easy to assign blame

to the opposite party because there’s no clear end result that measures mutual success.

As often occurs, marketing successfully generates a large quantity of leads, but sales stops following up

on the leads when the majority are not ready to buy in the near term. without agreement on specific

qualification criteria, both teams become disenchanted.

The battle rages on as sales and marketing can’t agree on what marketing methods and materials

are needed. Traditionally, some companies get bogged down creating the materials to be used in

conjunction with a crM system. white papers, emails, descriptions of products and services, case

studies, websites, blogs… the list goes on and on as sales demands more from marketing, while

marketing can’t possibly provide materials for every unique situation.

one of the core principals of customer relationship Management is maintaining consistent

communications with prospects and customers. Yet neither team can afford to spend valuable time

to deliver personalized, non-automated marketing communications. As a result, marketing creates

generic materials to promote the company and generate more prospects, often with little thought

about nurturing those prospects and retaining current customers. The battle between sales and

marketing escalates over who should be responsible for lead nurturing and customer retention.

Healthy investment, Unhealthy results

The investment in crM and marketing automation systems is both strategic and financial. Strategically,

it signifies a commitment to fostering prospect and customer relationships, and creates a central data

repository for data-driven decisions. financially, the purchase decision is tied to an roi figure that must

be met.

There are reasons why 50% of business and iT executives are not satisfied with their crM applications.

it didn’t meet initial expectations and didn’t quickly return the value they had planned for.4 upon

introduction of a crM system, the focus often becomes getting marketing to generate leads to put in

the system, and finding a way to make sales actually use the system. The outcome quickly reflects the

lack of focus on the end game: an effective lead process that generates more sales. The result: sales

don’t go up, costs increase, and finger-pointing between the two departments becomes prevalent.

4 forrester research Best practices: Getting the Most from your crM Deployment - July 2007

WHITE PAPER | 4WHITE PAPER | 4

companies become focused on making the crM system work for them, forgetting that the real value

of the system is making it work for potential buyers and current customers.

PART TWo: HoW To gET MoRE FRoM youR CRM sysTEM

Define And Understand the customer Life cycle

Just as businesses go through a life cycle, prospects and customers also follow a life cycle in their

interaction with a company. Not all customer life cycle stages are the same. Depending on the

product or service being sold, the stages and length of time in each stage can vary. Generally there

are five stages to a customer life cycle:

Figure 1.1

CoMMon CusToMER lIFE CyClE sTAgEs

sUspect An unqualifi ed lead who is an information gatherer. This prospect has unknown potential.

QUALiFieD is qualifi ed to become a customer and needs information throughout prospect the buying process to guide a purchase decision.

neW has made an initial purchase and needs to be assimilated into a partnership cUstomer to avoid returning to the previous vendor or suffering from buyer’s remorse

that could impact long-term sustainability. This adjustment period builds the foundation for rapid growth and repeat business.

estABLisHeD has made repeat purchases over time and is in the growth and maturity cUstomer stage of the relationship. has a need for education on new products and

services, and may have unmet needs; potential for up-selling and cross-selling. May be a key target for competitors.

DecLining purchases are in decline or time between purchases lengthens. holds potential cUstomer for defecting to a competitor or going out of business.

The real value of a crM system

is making it work for customers

and potential customers.

WHITE PAPER | 5

figure 1.2 displays what a common customer life cycle looks like for a company with multiple repeat

purchases throughout the life of the customer.

Figure 1.2

realign sales And marketing efforts to enhance custom growth

Breaking down the stages of the customer life cycle and then identifying where sales and marketing

efforts are being applied, highlights where efforts are misaligned and can lead to a revised strategy

regarding resource allocation. Not all companies apply resources in the same manner, but for

most companies figure 1.3 demonstrates where sales and marketing efforts are being focused in

comparison to the customer life cycle.

lead generationsuspects

lead nurturingqualifi ed prospects

Assimilationnew customers

growth/Maturityestablished customers

Recessionlost/declining customers

THE CusToMER lIFE CyClE

revenue

WHITE PAPER | 6

Figure 1.3

To make any crM system a revenue-generating machine, communication must match the needs

of prospects and customers. figure 1.3 highlights that marketing efforts and budgets are typically

focused on the front end of the cycle – generating leads – often leaving only a small investment

remaining for building trust and an ongoing relationship through the critical life cycle Stages of lead

nurturing, establishing new customer relationships, and fostering customer retention. loading up the

front end of the cycle, only to lose revenue at the back end, sets up a stagnant cycle that results in flat

sales and disappointing growth.

Figure 1.4






THE CusToMER lIFE CyClEComparing Revenue to Sales and Marketing Effort

marketing effort

sales effort

revenue






Majority of Marketing Resources

Lack of Marketing Resources

THE CusToMER lIFE CyClEComparing Revenue to Marketing Effort

marketing effort

revenue

Lack of Marketing Resources

WHITE PAPER | 7

reallocating marketing resources to give better, more focused attention to prospects and customers

throughout the customer life cycle results in a shorter amount of time to turn a qualified lead into a

new customer, faster assimilation of new customers, and a much longer growth and maturity phase.

(figure1.5)

Figure 1.5

Although not all prospects and customers behave in the same way – nor do all customer life cycles

look the same – the knowledge and application of identifying and mapping the stages, and then

applying resources to best develop customers, is a worthwhile effort. By identifying the critical

communication points for each stage of the life cycle, and then allocating resources to focus on those

critical points, the crM system can become a viable tool to achieve increased revenue.






THE CusToMER lIFE CyClEReallocated Marketing Resources

improvedmarketing

effort

improved sales effort

improved revenue

Marketing EffortMoved To

Entire CustomerLife Cycle

More Time inGrowth &Maturity

Shorter Lead Nurturing &

Assimilation for New Customers

WHITE PAPER | 8

The final step in aligning sales and marketing efforts with the customer life cycle is to determine

the objective, strategy, tactic, timing, message and offer for the communications to be applied at the

various stages of the cycle. Developing a solid communication plan begins with common principles:

• WHo wants or needs to hear from us?

• WHAt do they need to see or hear to make a decision?

o WHAt are they trying to decide? it is not necessarily just a purchasing decision.

other information may be needed to take the next step in the buying process.

• WHen do they need to see or hear the information?

• WHere would they like to receive the information: in the mail, via personal visit,

telephone, email or internet?

• UnderstandWHy they want or need the information to make sure the communication is

relevant and speaks to their situation.

• HoW should the information be conveyed: conversation, chart, graph, research paper,

product brochure, demonstration, etc.?

using the data within the crM system, companies can refocus their marketing communications

strategies on the buying process of prospects and the entire customer life cycle. Marketing activity

should support long term sales growth by nurturing relationships among qualified prospects and with

current customers. This allows sales to focus more effort on prospects that are immediately ready to

buy to successfully create new business revenue and protects the organization’s investment in the

current customer base.

marketing And sales: partners in revenue growth

Getting sales and marketing to work together seems like an obvious solution. however, historically

their differing incentives, goals and metrics have often created an adversarial relationship resulting

in inadequate utilization of the crM system. To align these two teams, create shared goals, and break

down the preconceived ideas about their roles in supporting one another.

Traditionally, marketing is measured on the quantity of leads generated as reflected by the

misleading metric of “cost per lead generated.” Salespeople often ignore or inaccurately

disqualify leads, resulting in two thirds of disqualified leads making a purchase from someone

else.5 Determining what makes a prospect qualified must become standardized, so all subjectivity

is eliminated. with the appropriate add-on technology, prospect behaviors can be analyzed and

matched to different stages of the buying process to help determine how close the lead is to making

5 70 percent of all incorrectly disqualified leads purchased the product or service from another vendor. - wendover corporation

What sales and marketing

staff want from

a CRM system:

•Alertswhensomeone

needs to be contacted so

guesswork is eliminated

•Eliminationofexcess

administrative work

•Awaytoautomatically

deliver our relevant,

personalized

communications

•Metricsandreporting

that supports a

unified goal

What today’s

buyer is saying:

•EducatemewhenI’m

ready to learn, not when

you want to teach me.

•Don’thoundmeifI’m

not ready to buy, but

keep in touch.

•BethereformewhenI’m

ready to buy, not when

you want to make a sale.

•Don’tforgetthatIhave

needs after i’ve become

an established customer.

•IwanttofeellikeI’m

important to you.

WHITE PAPER | 9

a purchasing decision. however, it is critical that these criteria be agreed upon by both sales and

marketing in order to gain buy-in from both parties.

Buying processes are longer today, and for complex products and services it can take months to

more than a year to close a sale. however, 90% of companies that implemented a structured sales

process in their crM system didn’t match the steps to their customers’ buying process.6 poorly timed

sales processes that force a prospect into a premature purchasing decision will cause the prospect to

become annoyed with the communication. They will assume future communications are irrelevant

and will eventually “tune out” all attempts at engagement. Aligning both sales and marketing efforts

to the customer buying process is critical for success.

An attentive, correctly-timed approach to nurturing prospects until they are ready to purchase is a

change for both sales and marketing. This requires the reallocation of the marketing budget to focus

on creating and delivering communications to qualified prospects. Nurtured through automated

marketing touches, prospects “raise their hand” by demonstrating behaviors that indicate they

are ready for a live discussion with a salesperson. This makes the salesperson more efficient and

better converts marketing dollars into sales dollars, thereby improving roMi (return on

Marketing investment).

Both sales and marketing should agree upon what marketing support is needed to achieve their

shared goals. it is important not to alienate the marketing team by suddenly demanding multitudes

of new programs and support materials that they are not adequately prepared to create. lack of

expertise or general lack of resources should be taken into consideration and a plan developed to

provide training or additional resources to develop the required materials.

Developing trust and rapport between sales and marketing begins by holding both accountable for

a common desired result: continual sales growth. in essence, sales and marketing must share the

common goal of increasing revenue and become one voice to the prospect or customer. The crM

system becomes the data collection and analysis point to determine what the prospect or customer

needs to see or hear next, and when that communication should take place.

implement intelligent marketing Automation to Deliver personal touches

A crM system becomes a very expensive and resource intensive data collection device if the data

is not used to impact a company’s growth and profitability. To put crM into action, a marketing

automation solution must be integrated for every stage of the customer life cycle. leads are

nurtured through the buying process with relevant, timely information that naturally moves them

toward a purchasing decision. customers are informed and given the attention they need to increase

6 robert J Schmonsees - “Escaping the Black hole,” Thomson, 2005

WHITE PAPER | 10

the amount of time they spend in the Growth and Maturity stage. And finally, lapsed customers are

quickly identified for immediate win-back initiatives.

Marketing automation comes with a variety of bells and whistles, but certain functionality must be

present to improve sales efficiency, increase effectiveness of marketing campaigns, and earn the trust

of both sales and marketing.

Triggers are the rocket science behind marketing automation. identifying prospect and customer

activities and behaviors that indicate the need for more or less contact. Triggers are the intelligence

that make everything else happen. They detect when a prospect has moved further into the buying

process and when a current customer’s purchasing pattern has changed. These triggers can be simple

or complex depending on your business, industry and capabilities. Some common triggers include:

• aprospectchangingtoacustomer

• acustomerrequestinganewproductdemonstration

• aprospect’sstatuschangingfrom“cold”to“warm”asidentifiedthroughpredeterminedbehaviors

• acustomermissingaregularlyplacedseasonalorder

• aprospectvisitingyourwebsitemultipletimeswithinthesameweek

• onlineshoppingcartabandonment

• algorithmsandpredictivemodelsthatindicateprobabilityofpurchase

with programmed business rules, triggers can then automatically initiate the appropriate

actions, including tasks for personal attention from sales, and automatic electronic and printed

communications from marketing.

intelligent marketing automation eliminates clerical activities for both sales and marketing. No licking

stamps, stuffing envelopes, or sending emails the old fashioned way. The latest technology does all of

that and more, by creating personalized web pages, surveys, dynamic content and imagery specific to

the needs of each individual prospect or customer. intelligent marketing automation then delivers the

information via the medium that is most effective for a particular phase of the life cycle or based on the

recipients preferences: mail, email or online content.

The best marketing automation solutions take efficiency one step further by creating affordable,

personalized communications, delivered to one person at a time. literally sending one mail piece, one

email, or creating one web page, allows relevant content to be delivered at precisely the correct time

for each individual. These targeted and personalized communications connect with each prospect or

customer by only conveying what they want to see or hear at that moment, and eliminate the expense of

emails, mailings and phone calls that go to untargeted individuals.

71% of sales and marketing

executives have no process

for identifying lost or inactive

customers and 68% have

no process to predict how

customers behave before

switching to a competitor.

customer Sat 2007 Survey

WHITE PAPER | 11

finally, intelligent marketing automation builds trust through information. All prospect and customer

behaviors, marketing touches and sales activities are automatically written back to the contact record in

the crM system. This provides a 360 degree view of each contact across the organization, along with a

history of exactly what has occurred over time. This allows simple analysis by users, more complex analysis

for data mining, and data modeling to optimize ongoing efforts. Sales is able to review the marketing

touches that have been delivered to individual prospects and clients, while marketing can use the results

of the campaigns to determine changes to the messages, offers, timing and medium. And management

finally has a tool to measure the impact of the crM system.

suMMARy: sIx kEys To EMPoWERIng CRM

using technology to build customer relationships requires six key elements to be in place and working

together to maximize the investment. Because these strategies are synergistic, one missing piece

impacts the effectiveness of the other parts. The six critical components to lead an organization to a

profitable crM solution are:

Build a solid communications plan and budget allocation based upon the entire customer life 1.

cycle and prospects’ buying process, not the organization’s selling process.

foster a single unified sales and marketing team charged with mutual short- and long-term 2.

goals and metrics to support achieving those objectives.

implement a truly automated marketing solution based on programmed triggers to initiate 3.

and manage communications.

Match communications to the needs of the customer or prospect for their stage in the 4.

customer life cycle by using personalized multi-channel communications to deliver marketing

messages via direct mail, email and website landing pages.

Adopt a system that makes it possible to automatically deploy 1:1 communications, one person 5.

at a time, with individualized content for maximum relevancy without adding administrative

work for sales and marketing.

find an affordable add-on solution that allows you to be confident the additional investment 6.

will create a positive roi.

people buy from people, not from computers. At the heart of any business transaction are real,

live people. intelligent marketing automation utilizes technology to communicate personally with

Questions to Ask When

Determining Triggers For

your CRM system:

•Whatmakesaleadreadyfor

immediate attention?

•Whatinformationdoour

prospects need to see or

hear to make an informed

buying decision?

•Whendotheyneedto

hear it?

•Whatmediumsare

most effective for direct

communication?

•PhoneCalls

•Email

•Mail

•OnlineInteraction

•PersonalVisits

•Whatbehaviorsindicate

a current customer is

unhappy?

•Whendoesup-selling

make sense?

•Whatcanbedoneto

turn current customers

into advocates?

WHITE PAPER | 12

WHITE PAPER • DECEMBER 2008 © Engagement Systems, All rights reserved

prospects and customers to put them back where they belong: at the heart of business. crM systems

on their own are just fancy data collection devices. But enhanced with the right marketing automation

solution, crM platforms can foster the connections required to earn the business of prospects and

customers, while making sales and marketing more efficient.

CAPTuRE. nuRTuRE. RETAIn. REPEAT.

Four simple Words. one Advanced Application.

Engagement Systems is the only web-enabled marketing automation solution where the execution of

multi-channel communications including direct mail, email and personalized urls is native within the

application itself. Through the use of programmed event and behavior triggers, Engagement Systems

helps organizations address the entire customer life cycle, dramatically increasing lead generation

results, prospect conversion rates, customer retention and overall lifetime value. Specializing in

1:1 marketing to one person at a time, the technology backbone has been used by nearly

11,000 customers and executed more than 14.5 million unique communications.

To make your crM data actionable, call Engagement Systems at 866.938.3658 or learn more

at www.engagementsystems.com

Documents

Improving CRM Investments