accenture - insight driven marketing report

Insight Driven MarketingUsing Customer Insights to Build BrandLoyalty and Increase Marketing ROI

Research Report

© 2001 AccentureAll rights reserved.

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Introduction

‘It’s a difficult time to bea marketing professional.’

About Accenture

Accenture is the world's leadingmanagement and technologyconsulting organization. Through itsnetwork of businesses approach – inwhich the company enhances itsconsulting and outsourcing expertisethrough alliances, ventures and othercapabilities – Accenture deliversinnovations that help clients across allindustries quickly realize their visions.With more than 75,000 people in 46countries, the company generated netrevenues of $11.44 billion for the fiscalyear ended August 31, 2001. Its homepage is www.accenture.com

Acknowledgements

The authors wish to thank the manyexecutives who shared their valuableperspectives in order to make thisresearch possible. In addition, theauthors wish to acknowledge thefollowing individuals for their supportand contributions to the development of this research report: Karim K. Emara,Allen Valahu, Scott D. Egler, Heather G. Dyke.

EditorBernard A. Thiel – The Bloom Group LLC

To speak to one of our Insight DrivenMarketing experts please callAccenture at +1 312 737 7777.

Design and ProductionSilverskin Creative Consultants

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It’s a difficult time to be a marketingprofessional. The number of companiesnow vying for consumers’ dollars is at an all-time high, as is the mind-boggling array of these companies’products and services. The explosion in recent years in the amount ofadvertising and marketing ‘noise’,coupled with a drop in consumers’ freetime, have caused consumers’ patiencefor traditional marketing efforts towear thin. And customers’ increasingsophistication about where, how andwhat to buy has led to heighteneddemands for service, value, andpersonal attention from the companiesthey choose to patronize. All of thesefactors have made it increasinglydifficult for marketers to maintain a high degree of customer loyalty totheir companies and specific offerings.

Exacerbating the situation is the recentdownturn in the global economy. Insuch an environment, marketing takeson added importance, yet is subject to closer scrutiny. Companies realizethey need to redouble their efforts tostimulate demand for their productsand services in slow economic times,but also want to see a ‘bigger bang for their buck’ from their marketingactivities. The net effect is thatmarketers must be much more selectivein how they spend their money – andon whom they spend it.

Trying to meet these challenges,companies have looked to informationtechnology (IT) as an answer. And, infact, a number of IT solutions to datehave helped companies improve certainaspects of their Customer RelationshipManagement (CRM) activities –specifically in how they sell to andserve their customers. Yet, despite thebenefits these solutions have generatedfor the sales and customer servicefunctions, technology has not enabledcompanies to address the totality of

the problem – namely transformingthe entire customer experience to createlasting customer relationships andbuild superior brand value – becausemost CRM efforts to date have failedto successfully integrate marketingwith sales and customer service.

All of this, however, is about tochange. New CRM technologies and processes now make it possible for companies to build upon theirsuccesses in sales and service, and address their shortcomings inmarketing. Through our extensive work with hundreds of companies, as well as our comprehensive researchon marketing, sales and customerservice activities at organizationsaround the globe, Accenture hasidentified a number of leadingcompanies that are adopting a newapproach to marketing – we call itInsight Driven Marketing – thatprovides the missing link that thus far has kept CRM from living up to itspotential. Using this approach, thesecompanies are creating meaningfuldialogues with customers at allinteraction and transaction touchpoints and, in the process, they areestablishing lasting and profitablecustomer relationships.

The following report presents thefindings of a year-long research effort by Accenture to understand the challenges that marketingprofessionals in the US and the UKface, how they are addressing thesechallenges, and what characteristics are shared by those companies with the most successful marketingpractices. Also included arerecommendations from Accentureconsultants for how companies canimprove the operation of theirmarketing functions and significantlyincrease the return on their marketinginvestment.

Section 1:Transforming the MarketingOrganization 5

The Shifting Customer Landscape 7

The Impact on Marketing 11

A New Approach to Marketing 15

Analytical Marketing 17

Operational Marketing 27

Creative Marketing 33

The Future of CRM 35

Section 2:Research Findings 37

Demographics and Methodology 41

Challenges to Marketing Campaign Creation and Execution 43

Marketing Campaign Effectiveness 47

Measuring Campaign Performance 49

Time to Complete Campaigns 51

Ways to Improve Campaign Effectiveness 53

About the Authors 55

Bibliography 57

Contents

Section 1: Transforming the Marketing Organization

Anyone responsible for consumermarketing activities will acknowledgethat it’s become increasingly difficult toconnect with existing and prospectivecustomers. In fact, the environment inwhich companies operate today bearslittle resemblance to the market of 20or even ten years ago.

In the past decade or so, loyalty tobrands has been eroding steadily. Whilethe shopping habits of consumers in the 1970s and 1980s were highlyinfluenced by the brand of the productor the company that sold the item,consumers today are less likely topurchase a specific brand or patronizea particular company simply out ofbrand loyalty. As illustrated in Figure 1,the percentage of consumers whoclaim that they tend to stick with well-known brands when purchasingproducts and services has droppeddramatically for all age groupsbetween 1975 and 2000. Even thepercentage for individuals over 60years old – typically among the mostbrand-loyal consumers – dropped 20points in the past 25 years.1

Figure 1 Percentage of Consumers Who ‘Try toStick to Well-known Brand Names’

Age 1975 2000

20-29 66% 59%30-39 73% 59%40-49 77% 60%50-59 82% 59%60-69 86% 65%70-79 93% 73%

Source: DDB Life Style Study 2000

The ShiftingCustomer Landscape

Why is brand loyalty under attack? One reason is a simple explosion inchoice. The number of companiesselling to consumers has mushroomedin the past two decades. In the USretail sector, for instance, the numberof book retail outlets has more thantripled since 1975; the number ofdiscount stores has nearly doubledsince 1970; and the number of appareloutlets has increased by 50 percentsince 1970.2 Concurrently, the varietyof items available to consumers hasexpanded significantly. The typical USsupermarket now carries, on average,more than 30,000 products.3

Similar trends are occurring in otherconsumer-oriented businesses. The US telecommunications industryexperienced a 60 percent growth in the number of carriers offeringwireless, local and long-distanceservices between 1995 and 1999.4

In the financial services sector, anindividual investor now has to selectamong 8,200 mutual funds for his or her retirement plan.5 And hungryconsumers in the US have almost850,000 eatery outlets to choose from– nearly 220,000 of which are part of a regional or national chain.6

Transforming the Marketing Organization 8

Given all of these new options, itshouldn’t be surprising that people are spreading their purchases around –especially in areas like the US and UK,where an ever-expanding array ofchoice is presented to essentially staticpopulation bases.

Along with the increase in choice hascome a huge jump in the number ofmessages – marketing and advertising,emails, phone calls etc. – to whichconsumers are exposed. In 1985,consumers experienced an average of 650 such messages a day7; today,that figure is 3,000.8 Direct mail hascertainly played a role: the number of direct-mail pieces that consumersreceive each year has mushroomed inthe past two decades, from 35 millionin 1980 to 85.6 million in 1999.9

Telemarketing, as well, is on the rise, asthe average consumer receives between60 and 90 telemarketing phone callsevery month.10

And, the average Internet user isflooded with hundreds of emailmessages a week – many of themunsolicited ‘commercial’ pitches.

Finally, increasing customersophistication, as well as a gradualraising of the service and value bar,have also contributed to consumers’unwillingness to settle for the statusquo. Because of the Web and the boomin cable television, consumers nowhave access to more information thanever before and, thus, are much betterable to evaluate offers from competingcompanies. They can compare theprices of products and services in waysthey never dreamed of. They know thatthey don’t have to put up with shoddyservice, high prices or inferior products.And, because of their experiences withvalue and service leaders such asContinental Airlines, FedEx, Wal-Mart,and Fidelity Investments, consumershave been taught to expect more:what was once considered exceptional

performance that only very high-endcompanies provided is now viewed as ‘table stakes’ for any company thatwishes to enter the game.

This is the environment in whichbusinesses now operate. And it’s onethat’s proving to be vexing for mostcompanies as they struggle to servefickle, distracted and educatedconsumers who demand treatment on their terms.


‘The marketingenvironment today bearslittle resemblance to the market of ten yearsago. An ever-expandingarray of choices is being presented to an essentially staticpopulation base’

Marketing professionals are notunaware of the challenges. They knowthey need to rise above the marketnoise and clutter and get their messagesheard. They recognize that theircustomers and prospects are moredemanding and educated than everbefore. And they understand that thekey to their companies’ success iscreating profitable relationships withtheir customers that are sustainableover the long term. The trouble is,many marketing executives arestruggling to respond to the challenges:

• Companies aren’t getting through totheir audiences.

In a recent survey of companies in the US and the UK, Accenturefound that 70 percent of marketingexecutives have difficulty capturingthe attention of customers, given thenoise and clutter in the marketplace.11

As just one example, consider thefact that, 20 years ago, 80 percent of a target audience could bereached with one 30-second, off-peak television ad. Today, reachingthe same audience often requires200 to 300 prime-time spots.Another example is the performanceof credit-card companies, whichexperienced a drop in the rates ofresponse to direct-mail solicitationsfor credit cards from 2.8 percent in1992 to 0.6 percent in 2000.

• Companies are having troubleholding on to valued customers.

One highly visible manifestation of eroding customer loyalty is anincrease in customer churn. Estimatesshow that the average US companyloses 15 percent to 20 percent of itscustomer base each year,12 and half of its customers within five years ofattracting them.13 Some individualindustry sectors are doing even worse– particularly the automotive, airlineand telecommunications industries,which register upwards of 40 percentto 50 percent customer turnoverannually. Such churn is not just anannoyance; on the contrary, it’scosting companies big money. Arecent consumer survey shows thatthe inability of wireless telephoneservice providers to keep theircustomers is costing these companiesbetween $10 million and $55 milliona year,14 while another studyestimates that financial services

The Impact on Marketing

Figure 2 Length of Time to Create and ExecuteMarketing Campaigns

How long does it take yourcompany to create and implementa marketing campaign?

1 Month or Less 17.7%1 to 2 Months 31.4%2 to 4 Months 32.6%More than 4 Months 18.3%

Source: 2001 Accenture survey of 175 marketing

executives in the US and UK

companies are losing $700 millionannually in profit opportunities bynot building meaningful relationshipswith customers.15

• Return on marketing investments –when actually measured – is dropping.

The Global 1000 companies spendenormous sums on marketing. Totalspending is expected to grow from$825 billion in 1999 to $1 trillion in 2003, according to Accentureestimates. However, the return on these massive investments isdeclining. In the cellular telephoneindustry, for instance, the time ittakes to break even on a newcustomer will grow to 7.2 months by 2003 from 6.8 months in 1998.

In many cases, marketing ROI isn’teven measured. In the Accenturesurvey of marketing executives, 68 percent of participants said theyhave difficulty measuring the ROI of their marketing campaigns.

• Marketing campaigns take too longto create and implement.

The Accenture survey revealed thatthe average participating companytakes 2.5 months to develop andexecute a marketing campaign, with nearly 20 percent of companiestaking more than four months (Figure2). In a world now used to moving in Internet time, a company takingmore than a few weeks to launch a campaign runs the risk of themessage no longer reflecting thecurrent state of the market when itactually hits the streets. Furthermore,data is perishable and erodes overtime. Therefore, the longer it takes to create and implement a campaign,the less accurate the data is on which the campaign is based.

These troubles stem from the fact thatmany – if not most – companies haveserious shortcomings in their marketingprocesses, technology infrastructureand organization structure that limit

their ability to market effectively.Marketing processes tend to befragmented, spanning multipledepartments, divisions or agencies. In fact, the typical marketing functionhas control over the creative aspects ofmarketing (i.e. developing campaigns),but rarely over the analytical aspects(i.e. managing and analyzing customerdata, which is generally handled by IT)and almost never over the aspectsrelated to customer interaction (whichis directed by the sales and customerservice functions).


Reflecting this, 57 percent ofexecutives in the Accenture surveynoted that their campaigns are notintegrated or even coordinated withother areas of the company with whichcustomers also interact. This makes itdifficult for marketers to get acampaign off the ground in a shortperiod of time and results in aninconsistent message and experiencefor customers. It also hinderscompanies’ ability to continuouslymonitor the performance of activecampaigns and modify them asnecessary on the fly. And it prohibitsthem from automatically incorporatinglearnings from previous marketingprograms into future programs.Complicating matters is the fact thatno easy-to-use real-time tools exist tohelp marketers define the process, andintegrate the necessary tools and data,to create and execute a campaign.

Technologically, many companies have invested in a collection of point solutions designed for specificactivities. And while many haveintegrated the technical aspects ofthese solutions with each other or with corporate legacy systems thathold critical customer data, mostcompanies haven’t functionallyintegrated the solutions by changingbusiness processes and organizationalstructures to maximize the use of thesesolutions. For example, a number ofcompanies have spent huge sums onsophisticated data warehouses, only tofail to implement the workflow andreward/measurement systems necessaryto effectively mine and act on thatdata. As a result, marketers do nothave real-time access to key dataresiding in pockets around theorganization (as was the case with 58 percent of participants in theAccenture survey); they are not able to quickly transform customer datainto usable customer insights

(as reported by 53 percent); and they do not have an integrated view ofcustomers that could help them havemore informed conversations withcustomers or create more appropriatemarketing messages for individualsinteracting with the company (as notedby 65 percent).

Organizationally, most companies arearranged by business unit or product,rather than by customer, which makesit difficult for marketers to reachacross internal boundaries forcooperation. Indeed, 59 percent ofparticipants in the Accenture surveysaid that their marketing campaignswould be more effective if they hadtools that would foster collaborationamong various departments in thecompany. Additionally, in manycompanies, analytical resources tend to be located in a group separate fromthe marketing resources – which makesthe process of identifying andcommunicating with key customer

segments time-consuming andinefficient. Another problem is thatcompanies typically have institutedperformance metrics that encourageoptimization of one’s particularfunction or activity as opposed tocustomer value. But perhaps the mostsignificant problem is that, in mostcompanies, the marketing departmentitself is plagued by a ‘silo’ mentalityamong the three principal disciplinesthat comprise marketing: analytical,creative and operational. The walls andfriction among these three disciplinesis largely responsible for many of theproblems that companies have had todate in responding to the newcustomer environment.

The fact is that companies havedevoted significant attention andresources to bolstering their sales andcustomer service efforts in the earlydays of CRM. During these initial two‘waves’ of CRM, initiatives focused firston boosting the effectiveness of thecall center and sales force, and then on helping companies integrate theirvarious customer interaction channels(Figure 3). However, while these effortswere largely successful, they weren’tcomplete because they failed toadequately address the critical third leg of CRM – i.e. marketing. This mustchange if companies hope to improvethe profitability and lifespan of theircustomer relationships. As CRM entersits third wave (Figure 3.1), companiesmust create the ability to engage inintelligent conversations with customers– and that means creating a seamless,integrated customer experience acrossall interaction channels.


Figure 3Waves One and Two of CRM: The 1990s

CRM Wave 1: CRM Wave 2:Call Center/Sales Force Effectivness Multi-Channel Interaction

Early ’90s Late ’90s

CRM Goals Improving channel efficiency Improving customer interactionsIncreasing customer satisfaction Increasing customer retention

CRM Strategy Provide more efficient means Provide customers with multipleof customer interaction points of contact; gather insights

Resulting Customers enjoyed more Customers had more options toCustomer convenient transactions, but interact with the company, but

Experience channels were not integrated the experiences were fragmentedacross contact points

Marketing Customer acquisition Customer retentionFocus Product sales Cross-selling

Figure 3.1The Third Wave of CRM: Conversational Marketing

CRM Wave 3:Conversational Marketing

Today

Predicting customer behaviorBuilding brand and lifetimecustomer value

Integrate communications andbrand across channels

Customer is given a seamlesslyintegrated experience acrossall channels

Customer conversationBrand equity

To continue attracting and retainingthe most valuable customers, and to generate robust brand loyalty,companies must act aggressively toincrease the economic value of boththeir brand and customer relationships.In addition, in the face of skyrocketingmarketing costs and a weak economicenvironment, they must understandhow their efforts contribute to the overall company’s bottom-lineperformance. To realize these goals,companies must not only extend thescope of CRM to address their criticalmarketing needs, but must also achievea higher standard of excellence in, and integration among, the threemarketing disciplines:

• Analytical marketing, which involves collecting customerdata from a variety of sources todevelop a deeper understanding ofeach customer and to identify thecompany’s most profitable customers.

• Operational marketing, which uses the customer insightinformation derived from analyticalmarketing to make interactions more effective, differentiate sales and service across segments, drivecontinuous improvement acrosscustomer interaction processes and generate revenue lift.

• Creative marketing, which relies on the output ofanalytical and operationalmarketing to improve marketingprograms, optimize the overallmarketing investment and deliverthe brand promise.

A New Approach to Marketing

Once these disciplines are improved –and are linked with core CRMcapabilities – companies will be able to create seamless, consistent and real-time responses across marketing, salesand customer service (Figure 4). The result will be lasting customerrelationships and that elusiveconstruct: superior brand value.


Figure 4Transforming the Customer Experience

CRM Tomorrow

Bridging the Gap

CRM Today

Fragmented Customer Experience

Transformed Customer ExperienceSales

Serv

ice

Marketing

Sales

Serv

ice

Analytical marketing is the heart of the marketing engine. Done right, it enables companies to direct theiroverall marketing investment across the brand and customer. Done wrong, it results in misguided or misdirectedcampaigns, wasted marketing dollarsand an inability to measure the successor failure of specific marketing efforts.

Several companies – includingE*TRADE, DuPont, Borders Group andRoyal Bank of Canada – have taken the lead in building a more robustanalytical marketing capability. Thesecompanies can convert customerdata, gathered at various touchpoints, into relevant insights thatfeed into more effective campaigndesign and execution. Furthermore,by using descriptive and predictivemodeling, they have gained a morecomplete understanding of theircustomers and markets, and haveimproved their ability to makestrategic and operational decisionsabout customer treatment.

The reason that these companies havebeen so successful in transformingtheir analytical marketing capabilitiesis that they bring together customerdata from around the company into a coherent, consistent database; andthey use leading-edge analytical anddata mining tools to create logical

customer segments from which theycan create powerful new customer and brand strategies.

Integrate Disparate Customer Databases

Establishing a single view of thecustomer was the second-most severe challenge to creating effective marketing campaignsamong executives participating in theAccenture survey. While this challengehas existed for years – sales andmarketing people have historicallymarched to their own drummers inmany companies – it’s become evenmore difficult to address today, as the Web has emerged as yet anotherchannel in which customers caninteract with the company (not tomention another source of richcustomer data).

The root of the problem is the lack of integration of varied customer datawithin the company – a problem that

Analytical MarketingAnalytical • Operational • Creative

leading companies are solving throughthe use of a high-performance datawarehouse. Conceptually, a datawarehouse is simply a technical platformthat provides for the collection, storageand integration of various types of customer, transaction and otheroperational data. As depicted in Figure5, data from myriad sources – website,phone, stores, mail, purchased data,market research etc. – are pulled intothe data warehouse and consolidatedinto a consistent form and formatthat make sense. Once in the datawarehouse, the data can be tappedand analyzed to provide managerswith a more complete and consistentview of customers – a view that caninform and improve subsequentinteractions with said customers.

Data warehouses officially arrived onthe scene in the early-1990s and havebeen growing in popularity – and size– ever since. According to a recentsurvey by Winter Corporation, the

number of corporate databasescontaining more than one terabyte of data doubled between 1998 and2000.16 Furthermore, Gartner Groupestimates that the average enterprisewill have approximately 2.7 millionterabytes of available storedinformation in 2004, representing a compound annual growth rate of72 percent from 1999 to 2004.17

Wal-Mart, SBC Communications,United Parcel Service and Sears,Roebuck are among those companieswith large data warehouses. Wal-Mart’slegendary data warehouse, in fact, now tops 100 terabytes,18 while SBC’sapproaches 11 terabytes.19

However, a data warehouse doesn’thave to be big to be valuable. In fact,it’s often best to start small – say, byjust aggregating Web and call-centerdata – and gradually add otherinteraction channels as the warehousegenerates value. Even when startingsmall, however, it’s important to ensure

that the data warehouse’s architecturecan accommodate expansion as it grows.

Huntington National Bank inColumbus, Ohio, is one company thathas been at the forefront of bringingtogether disparate data to providegreater insights into their customers.By integrating the applicationsmanaging all 17 sources of customerinteraction – including ATMs, tellers,telephones and the Web – the bankcan paint a more accurate picture of each customer. All customertransactions are recorded in a person’sindividual profile – which is updatedvirtually in real time – givingemployees ‘one-stop shopping’ forcomplete customer information.20


Client Data Sources

• Profiles• Transactions• Interactions

External Data• Industry Trends• Competitive Research• Market Share• Brand Measures

Figure 5Creating An Integrated View of Customer

Integrated View of Customer

Faced with growing competition in the late-1990s, online brokerageE*TRADE began a transformation from a product-oriented company to one that is customer focused. Acornerstone of that effort was a six-terabyte data warehouse that includedthe ability to develop a customeranalytic record (CAR), which allowsE*TRADE employees to enter variablesand generate scores that help predictwhich customers have the propensityto buy certain products. Unlike typicalcustomer modeling, which can taketwo to three weeks, CAR providespropensity models in just two hours.

Michigan-based Borders Group – whichoperates Borders Books, Borders Musicand Waldenbooks retail stores, as wellas the Borders.com online store –recently built a one-terabyte- datawarehouse to help the company get abetter handle on the characteristics ofcustomers visiting its different outlets.The company wants to use the system,

which will bring together data fromnumerous customer databases acrossthe group, to ultimately understandsuch issues as the amount of overlap in customer bases among the physicaland online stores and how an individualcustomer’s shopping patterns vary by retail outlet.21

In addition to being used byestablished companies, data warehousescan also play a critical role in thecombination of two business entities,as chemicals giant DuPont discoveredwhen it merged its agricultural productsbusiness with Pioneer Hi-BredInternational, the top seed company in the US. Besides the usual dataconsolidation challenges associatedwith any acquisition, DuPont had to contend with a complexconglomeration of more than 20customer data feeds from its owninternal systems as well as fromPioneer and third-party sources. It also had to reckon with differing

definitions of what a customer is.Pioneer, America’s top seed company,generally dealt directly with growers,while DuPont – the leading producer of low-use-rate herbicides – typicallysold to distributors and dealers. Thecompany implemented a datawarehouse that consolidated andcleaned information from all ofDuPont’s 20-plus systems sources and Pioneer’s systems to providecomprehensive details on growers,dealers and distributors. The warehousewas also designed to capture new data from transactions and to permitupdates of its architecture andprocesses as necessary.

‘Analytical marketingdone wrong results inmisguided campaigns,wasted marketingdollars and an inabilityto measure the successor failure of specificmarketing efforts.’

As the experiences of Huntington Bank,Borders, E*TRADE and DuPont attest, a data warehouse is essential to creating the type of integrated view of customers that is critical tounderstanding patterns of behavior intoday’s mobile, finicky and demandingcustomers. For some companies, the data warehouse has become anindispensable part of their business. In just six years, Capital One FinancialCorporation in Richmond, Virgina, hasrisen to the top of the credit-cardindustry with an aggressive customeracquisition and retention effort builton the back of information technology.Much of the credit for Capital One’ssuccess is given to the company’s datawarehouse. “Our data warehousingtechnology is the central nervoussystem of everything we do,” notedDavid Buch, the company’s chiefinformation architect. “It’s past thepoint of ROI – it is an absolutelyintegral part of our business.”22

Segment Customers to Drive Customer Strategy

Of course, simply collecting criticalcustomer data is only part of thebattle. The bigger challenge forcompanies these days is what to do with the data once they’ve got it.

Unfortunately, what we’re seeing inmany companies evokes the proverbialstory of the dog catching the car.Companies for years have lamented: “If we only had that information, wecould do a better job.” Well, now manyof them do have that information, yetthey are still challenged to put it togood use. Grim statistics on the failurerates of large data warehouse projectsabound, with some industry observersnoting that more than 50 percent ofsuch efforts either fail outright or fall well short of expectations.

And the situation could get worse as data warehouses get bigger. Thechallenge of generating insights fromcorporate data becomes magnified the more data one collects – in partbecause accessing specific bits ofinformation in an extremely largedatabase can be a very difficult andtime-consuming process. A survey of605 company executives conducted by Seisint Inc. and ORC Internationalreveals respondents believe that, onaverage, only 66 percent of their data that would be useful to theircompanies’ decision-making process is accessible.23

The good news is that manycompanies have figured out how to probe their treasure-troves of data. These organizations are usingsophisticated data-mining tools andanalytical applications to help themcreate more powerful customerstrategies by segmenting theircustomers by various attributes.


The concept of customersegmentation is not new; for years,companies have organized customersby ZIP codes, titles and other suchhigh-level characteristics. What’sdifferent today is that technologyenables companies increasingly tonarrow their definitions of customersegments, making it possible to targetcustomers more accurately withmessages and offers that they have a high probability of accepting.

The fact is that marketers know that large amounts of data reside indatabases all around the company, andthey’ve been frustrated with not beingable to wring any value from itbecause, until recently, there haven’tbeen any tools that would let thempull insights from the data in a user-friendly way. In fact, to do so requireda strong background in statistics orprogramming – something that mostmarketers don’t have. As a result, if themarketing department wants to get anovel view of a customer or probe thedata in a different way, it has to handthe request to the IT department,which programs the specific query ofthe database and then runs the reports.This approach is neither very efficientnor user-friendly. Nor is it very quick.Such a process can take days or even weeks in a large company, thushampering marketing’s efforts tolaunch campaigns in a timely manner.

Today, however, using emerging data mining tools, marketers can siftthrough their massive databases andcreate customer segments based onvirtually any combination of attributesthey wish – and then craft a strategyfor reaching those segments.Significantly, they can do so quicklywithout the involvement of IT.

Royal Bank of Canada has longrecognized the value of customer data. In the late 1970s, the bank began collecting and consolidating itscustomers’ data for use at the branchlevel and, a decade later, embarked onsome limited segmentation of this data(mainly by profitability). Recently, the bank took its efforts a major leapforward by adopting a set of analyticaltools to work in concert with its datawarehouse so that bank managerscould see customers in an entirelydifferent light. “Nine million personalretail clients are now segmented intodiscrete components based onattitudinal and behavioral factors – as well as current and potentialprofitability, expected purchasingbehavior, vulnerabilities and channelpreferences,” said Cathy Burrows,senior manager in client relationshipsat the bank. “Strategies are thendeveloped not only for each segment,but also for hundreds of micro-segments within each segment.

The ultimate objective of this questbeing one-to-one marketing.”24

E*TRADE discovered how valuablecustomer data could be in fueling arebranding effort. By linking its datawarehouse to its website, campaignmanagement software and severalexisting CRM tools for reporting,querying and data mining, E*TRADEfound that it could develop a more in-depth understanding of thecompany’s customers to improve theways in which various customers aretreated. Using its analytical tools, thecompany was able to extract customerbehavioral data, which it then used todivide its customer base into six mainsegments with seven micro-segmentseach. The in-depth customerunderstanding generated by suchsegmentation formed the basis ofE*TRADE’s new public ‘face’ andbranding campaign, which it rolled out with great success in 2000.

Customer segmentation also played akey role for increasing profitability atthe fastest-growing mobile telecomoperator in France. With more than 6 million wireless customers, BouyguesTelecom had experienced dramaticgrowth in market share over the pastfive years. This growth, however, hadnot come cheaply. The costs to acquirenew mobile phone users in France areamong the highest in Europe, due tocarriers’ heavy subsidizing of handsetand retailer costs to make it easier fornew users to sign up for service. As aresult, carriers face a pressing need tomaximize their ARPU (Average ReturnPer User) by retaining their bestcustomers for as long as possible. Thischallenge is particularly acute in theface of slowing growth due to marketsaturation and the impendingexpiration of many original customers’service plans. Responding to thischallenge would require a significantchange in how Bouygues operated. For example, to more effectively match

‘Strategies are thendeveloped not only foreach segment, but alsofor hundreds of micro-segments within eachsegment. The ultimateobjective of this questbeing one-to-onemarketing.’Cathy Burrows, Royal Bank of Canada

service offerings to existing oremerging customer needs, the companyneeded to learn much more about eachcustomer. And, to increase the chanceof converting a marketing lead to asale, the company had to be moretargeted with its marketing messages.None of this was possible with themass-marketing, mass-acquisitionmodel Bouygues had adopted tocapitalize on a growing market.

Bouygues’ transition from a mass-marketing mindset to a ‘one-to-one’marketing model began by definingthe data it would need to effectivelyanalyze and predict its customers’behavior, identify consumer trends, and pinpoint patterns that wouldindicate needs for particular productsor services. Bouygues then more narrowly defined its customer base to make targeted marketing easier.Bouygues had already established three basic customer segments, but this segmentation was not granular

enough to provide in-depth insightsinto specific customer needs. So, tocomplement these three segments,several hundred ‘customer clusters’that comprised smaller groups ofcustomers with similar needs andbehaviors were created. Thissegmentation was used to drive a new marketing plan and supportingprocesses that enabled the company to shift its efforts from mass-marketing within a few large segmentsto ‘real-time’ marketing that addressesthe current needs of each customercluster. In addition, Bouyguesimplemented a marketing automationto help orchestrate and manage the new marketing approach, whichencompasses three customer segments,hundreds of customer clusters andmultiple offers communicated via eightto ten different interaction channels.

Now, with its more narrowly definedcustomer clusters, Bouygues canconduct more granular analyses of

customer data, make more accuratepredictions of customer behavior andpersonalize its marketing campaignsand messages. Furthermore, thecompany can now more accuratelyidentify the return on investment andcost/response ratios for each marketingcampaign it conducts, which enablesBouygues marketing executives tocreate more efficient and effectiveprograms. And, perhaps mostimportantly, Bouygues’ ARPU has gone from last to first among telecomcompanies in France.


It’s important to note that data mining and analytical tools alone won’t transform the marketingfunction. Indeed, there are a number of cultural and organizational factorsthat come into play as well. Forinstance, shifting one’s mindset frommass-marketing to targeted marketingis a major challenge for manyorganizations. It’s certainly much easier to create and launch one largemarketing campaign several times a year to the whole customer base than dozens of smaller, more focusedprograms on a monthly basis.

Another challenge – particularly inhighly product-focused companies – isgetting people across the organizationto believe that product data, while stillimportant, is no longer king. That’s asignificant cultural shift, an issue forindividuals at the highest levels of theorganization. But it’s also a test thatmany companies are flunking.

“Lots of companies give lip service tohow important customer information is to their business,” noted John Hagel,chief strategy officer of venture-capital firm 12 Entrepreneuring. “But how many CEOs are focused onturning customer information intotangible value?”25

A proof-of-concept approach may bethe best way to turn such lip serviceinto action. It’s understandable thatcompanies may be hesitant to makewholesale changes in how they market.They may be afraid that the new way won’t work, or may be unwilling to commit a large investment insomething that, in their minds, isunproven. In these situations, acompany should test the approach in a more focused setting – say, a specificbrand or a certain promotional period –and compare it with the establishedapproach. The results will demonstratethe efficacy of customer-focusedprograms and help clear up some of the uncertainty and apprehension.


When people think about a marketinginvestment to improve CRM capabilities,they are usually referring to operationalmarketing. Its efforts encompass all the activities that relate to creating a positive customer interaction.

Companies leading the way intransforming operational marketingrecognize that customer insights playa large role, as do data mining anddata warehousing, which continuouslyharvest customer information from a variety of contact points. Thesecompanies are assessing andconverting this information intomeaningful insights that drive ongoing marketing efforts.

Furthermore, leaders are making greatstrides in using operational marketingas the link between their overallmarketing function and their sales andcustomer service efforts. For example,online booksellers that remember ashopper’s past transactions and, based

on his or her preferences, provide bookrecommendations on the next visit aresignificantly increasing the shopper’spropensity to buy. Similarly, call centerrepresentatives who have access to acustomer’s previous transactions andinteractions are better prepared toprovide that individual with theproduct or service he or she would bemost interested in – and most likely tobuy. Such scenarios are not possible ifthe operational marketing capabilitiesaren’t integrated with the sales andservice activities.

Consider the major automotivemanufacturers. In most of thesecompanies, there are separatedatabases for each of the major typesof customer interaction: warranty,service history, recall notices, websitevisits and inquiries, call center activityand contact with dealers etc. As aresult, a call center employee handlinga customer question about a certainissue would have little to no

knowledge of the caller or his historywith the company without asking hima string of questions – which issomething that few, if any, call centeremployees have time for.

Now, what if that same call centeremployee could, from her desktop,access the electronic files of all of the caller’s interactions with thecompany? She would know withinseconds that the caller has had his carin for service five times in the past fourmonths, that he tried to get the issueresolved at the dealership but wasn’tsatisfied and that he had visited twocompetitors’ websites after stopping at the company’s home page. Perhapsmost importantly, she also would know that the caller was a longtimecustomer who had purchased fourvehicles from the company. With allthis information at her disposal, thecall center employee would be betterprepared to address the caller’sconcerns and head off a possible

Operational MarketingAnalytical • Operational • Creative

switch to a competitor by a valuablebut unhappy customer.

In fact, many leading companies are employing such personalized‘conversations’ with customers and are reaping the benefits from it. Furthermore, these organizations are implementing measurementmechanisms that enable them tounderstand how effective theseconversations are at any given timeand to make adjustments – both on the fly and to future efforts – to improve them.

Personalize Marketing Messages and Offers

Once a company has integrated itscustomer data sources and segmentedits customer base into manageableclusters, it can take advantage of a powerful marketing tool:personalization. The most progressivecompanies have found that

segmentation, combined withinteractions that are tailored to theneeds and behavior of each segment,are much more effective in capturingcustomers’ attention in today’s noisy,cluttered marketplace.

In many ways, today’s personalizationefforts hearken strongly back to thepast – in the days before globalizationand national chains, when the worldwas simpler. Then, most companies hadnearly perfect knowledge about theircustomers: when and how often theyshopped, what they wanted and howgoods and services fit into their livesand filled their needs. In such anenvironment, it was easy for companiesto give their customers highlypersonalized service. The local butcheralways knew which cuts of meat eachcustomer preferred. The suit salesmanwould put aside certain new items forparticular customers based on what heknew of their styles, occupations andpast purchases.

The bank teller knew customers’investing habits and financial needs atparticular moments in their lives andwould look out for ways to help themthrough demanding times.

Today, the butcher, suit salesman andbank teller more than likely have beenall but subsumed by large regional ornational companies that have beenforced to sacrifice personalized servicein the name of scale and efficiency.While such practice may havebenefited customers by providingconsistency in product quality or lower prices, it has also alienated many customers, who have ended up feeling like another faceless, namelesscustomer who’s getting the samehomogenous direct-mail piece, hearingthe same radio ads and being offeredthe same merchandise or services astheir counterparts in a city 3,000 milesaway. By trying to appeal to the largestpossible group of potential customers,the companies have virtually ensured


‘Leading companies areenabling personalizedconversations withcustomers and arereaping the benefits.’

that their marketing messages andcustomer offers would truly resonatewith only a small segment of theiraudience – which is not an efficient or effective use of marketing dollars.

But companies don’t have to choosebetween consistency and personalization.New tools are making it possible forcompanies – regardless of their size orgeographic coverage – to gain a deeperunderstanding of their customers’ needsand behavior, and tailor their messagesand offerings to an increasinglygranular customer segment (in somecases, segments of one).

London-based Virgin Wines is one such company. The online wine sellerhas made it its business to reach theheights of personalized marketing and offerings, as it uses a varietyof customer data to present wines

that the company believes have an extremely high probability ofmatching the customer’s specific

tastes. The company’s personalizationefforts are aided greatly by the ‘WineWizard’ on its site, which enablescustomers to define their individualwine preferences. Taking this input into consideration – along with othercustomer-specific data such as saleshistory, customer survey answers, and customer ‘reviews’ of their pastpurchases – the Wine Wizard thentailors the offerings presented to eachcustomer. As customers continue toshop, the Wine Wizard further refineseach customer’s preferences andprovides even more tailored offeringsand experiences during future visits.

The company is so confident of itspersonalization capabilities that itoffers a money-back guarantee that itswine suggestions will tickle the fancyof each respective customer. Accordingto Rowan Gormley, president of thecompany, the philosophy on whichVirgin Wines was based is prettysimple. “Customers want us to show

them the wines they’d be interested inbuying, not just give them a giganticcatalogue that they have to find theirway through. They want us to rememberwho they are when they visit. And ifwe’re going to send them special offers,they want the promotions to beappropriate to who they are.”

Hotelier Wyndham International andretailer Lands’ End are two othercompanies that are looking topersonalization to help them buildstronger relationships with theircustomers. Wyndham’s By Requestprogram enables customers tocomplete profiles indicating a varietyof preferences, ranging from favoritesnacks and magazines to roomlocation. The hotel then uses theseprofiles to tailor each By Requestmember’s stay according to his or herpreference.26 Lands’ End, the Dodgeville,Wisconsin-based apparel merchant, hasstrengthened its position as a leadingonline retailer by developing an onlinepersonal shopper system. Thistechnology, based on artificialintelligence, presents suggested itemsto shoppers based on answers toseveral short questions aboutthemselves andwhat they’re lookingfor. It also uses customers’ purchasinghistory to present tailored suggestionsto them each time they visit the site.27

While personalization is proving to beeffective for business-to-consumercompanies, it is also being used withgreat success in the business-to-businessarena. New England Business Services, aMassachusetts-based direct marketer offorms and services for small businesses,has been personalizing itscommunications and offers to its 1 million customers and 12 millionprospects for more than two years. Using an off-the-shelf software package, NEBS is able to understandwhich customer segments are potentiallymore valuable than others, and thendevelop personalized marketingcampaigns to address those segments. In addition to tailoring each campaign’smessages and offers, NEBS’ softwareenables the company to customize thedelivery of the campaign via the mostappropriate channel – printed piece bypost, electronic ‘brochure’ via email, or a phone call – based on what customershave expressed as their preferredmethod of contact with the company.28

While some companies choose to create personalized campaigns andoffers for segments of their customers,others find it most effective to tailortheir messages to each individualcustomer. The route taken depends on a variety of factors, including thesize of the customer base, the productor service sold and the level of effortand money associated with personalizingfor increasingly granular segments. For instance, NEBS believes thatcreating a different communication for each of its 1 million customerswould not be practical. As a result, it chooses to focus on segments ofcustomers who happen to be lookingfor the same things.29 On the otherhand, Gormley of Virgin Wines, with60,000 customers, believes strongly intreating each customer as an individualwith very specific needs and requests.And, he says, that practice won’t changeas the company continues to grow.


“Managing the complexity ofpersonalization is pretty simple, really,”Gormley observed. “You establish a rulethat says if someone does A, B, C, andD, but not E, F, and H, we recommend I.And if they don’t take that, suggest J.Once you have established such a rule,you can implement it across as manypeople as you want, whether it’s 1,000,100,000 or a million.”

Importantly, the efficacy ofpersonalization efforts will becompromised if they’re not based on real-time access to and analysis of customer data. In essence,personalization can be seen as part of the company’s ‘conversations’ withits customers across all channels. Butthese conversations will only becomean ongoing dialogue that’s meaningfulto the customers if they are based on the most up-to-date knowledge of each customer. Typically, companiesattempt such conversations based on ‘batch’ analysis of data, which,because of the lag time between therequest for analysis and the processingof the request, doesn’t always providethe most current picture of theaudience. In such instances, the resultscan range from embarrassing tooffensive to even a termination of the customer relationship. With real-time analytics, customer-facingemployees always have access to thelatest information on every customerand his or her most recent interaction with the company, which enriches the conversations and reinforcescustomers’ perception that “they really do know me”.

Personalization is proving to be one of the most potent weapons thatmarketers have today to address themyriad challenges they face. It helpscompanies demonstrate an effort toget to know their customers, and toserve as their agent in sorting throughthe choices available to them, which, in turn, generates a high degree ofcustomer loyalty and helps retainvaluable customers. Virgin Wines notes that its shoppers who use thecompany’s personalization tools arenine times more likely to be repeatbuyers than those who don’t.

Furthermore, personalization goes a longway toward cutting the waste typical ofmass-marketing approaches. By executingsmaller, more targeted campaigns, NEBSsays it is cutting mailing costs andconserving its IT resources.30

Finally, personalization boosts the returnon marketing investments – and, as aresult, revenue returned to the company– by more closely matching goods andservices offered with customer needs.Gormley of Virgin Wines said thecompany’s customer conversion rate for direct-mail campaigns is three timeshigher than the direct-mail average, and more than half of the company’scustomer base spends more than $500 a year with the company. RhondaBertozzi of NEBS said the company’spersonalization efforts are boostingNEBS’ cross-sell and up-sell rates, which– combined with the cost savings thatpersonalization has generated – “addsup to significant incremental revenuefor NEBS”.31

‘Personalization is provingto be one of the mostpotent weapons thatmarketers have today to address the myriadchallenges they face.’

Measure the Results of Marketing Efforts

Integrating customer information,creating segmentation-driven customerstrategies and personalizing campaignsand offers can all significantly improvea company’s marketing efforts. Butunless a company measures the resultsof its activities, there’s no way ofknowing just how much improvementhas been made. Furthermore, without a solid measurement program in place,a company can’t monitor existingcampaigns and make adjustments as needed, and it can’t learn from its mistakes and apply those learnings to future campaigns.

The vast majority of companiesinterviewed in the Accenture surveyreported using some type of metric to measure the performances of theirmarketing campaigns. Response rate is the most popular metric, used by 79 percent of respondents, followedclosely by revenue generation (78 percent). Less frequently used, but still popular, are customerretention (used by 69 percent) andprofit generation (66 percent). Justover 40 percent of respondents saidtheir companies use all four measures,while 23 percent use one or two –usually the non-financial metrics(retention and response rate).

E*TRADE has adopted a comprehensiveset of metrics to gauge theeffectiveness of its marketing efforts.As part of its rebranding campaign, thebrokerage implemented mechanisms

that enable marketers to measure theresults of specific campaigns by eachcustomer segment. These measuresinclude the response rates to the offer,the increase in number of stock tradesthat result from those responding, theadditional revenue those tradesgenerate for the company and thetotal cost of the campaign. With thesemeasures in hand, E*TRADE marketerscan easily determine the profit and ROIof each campaign, which subsequentlygives them a much better handle onthe effectiveness of various offers, thebest channels for reaching particularsegments, and when certain segmentsexhibit the highest propensity to buy.For instance, the firm found thatpropensity modeling has doubled itsdirect-mail response rates andgenerated 30 percent savings in directmail costs. It also discovered that click-through rates for personalizedmessages increased 100 percent over asix-week period, and that over a 12-dayperiod nearly 23 percent of customerswho clicked on a personalized offer alsoaccepted the offer.

Interestingly, however, the Accenturesurvey of US and UK marketingprofessionals found that the use of multiple performance measures does not in itself improve campaigneffectiveness. In fact, respondents that reported having highly effectivecampaigns, moderately effectivecampaigns and ineffective campaignsall, on average, use the same number ofperformance measures (2.8, 2.9 and 2.7,respectively). This suggests that simplyhaving the ability to measure campaign

performance does little to makemarketing efforts better unless thosemeasurements are understood and usedby management when developing and executing future campaigns.

To help ensure that the results ofmarketing measurement actuallybenefit both the marketing departmentand the organization at large, acompany must realign the organizationaround these metrics to ensure processexcellence. This realignment shouldshift the company out of a product orgeographical emphasis and into a morecustomer-centric framework in whichall behavior within the company isgeared toward – and rewarded for –creating superior customer value.


As the number of customer channelshas exploded, so has the need forcreative marketing, which involves allthe activities associated with buildingand sustaining a compelling brand andensuring that customer interactionsreflect a satisfying brand experience. In the past, creative marketing effortshave been applied to CRM in much thesame way as technology – that is, inthe rush to meet perceived demand,creative marketing campaigns wereslapped onto the larger CRM initiativesin a haphazard and fragmented way.

It’s been far too easy for companies to develop a host of messages – fromad campaigns to customer servicerepresentative scripts – that areunintentionally inconsistent. Suchinconsistent messages delivered via anumber of different channels – whencoupled with poor understanding ofwhy brand and message consistency isso critical to the customer experience –often produce fragmented experiencesthat frustrate current and potentialcustomers alike. This frustrationincreases the likelihood that currentcustomers may ‘leave the fold’ andprospective customers may never even give the company a chance.

As targets of marketing efforts, we’veall experienced such inconsistency – atleast one instance in which we receiveda beautifully designed, expensivedirect-mail piece or product catalogonly to be left scratching our heads asto what was being promoted or whywe got it. Apparently, the sender of thematerial either was using the ‘blanketthe earth’ method of promotion ornever took the time to ensure that thetargets of the mailing at least had anaffinity to the message or offeringscontained in the pieces. The marketerresponsible for the campaign likelyended up being disappointed with theresults of the campaign and – lackingany in-depth knowledge about thetarget audience – probably concludedthat the creative did not communicatestrongly enough just how incompletethe audience’s lives would be without a10-speed power saw (never mind thefact that half the list who received the

catalog were apartment dwellers whose need for such a tool wasvirtually non-existent).

Integrate Creative with Analytical andOperational Marketing

A minority of participants in theAccenture survey – only about one in three – said that better creativedesign will help them get customers’attention. Interestingly, however, mostof the respondents holding this viewalso are more likely to describe theirmarketing campaigns as ineffective. In fact, 64 percent of managers whothink their campaigns are ineffectivebelieve better creative will improvetheir campaigns – compared with 35 percent of respondents with largelyeffective campaigns. Conversely, the‘ineffective’ marketers are much lesslikely to believe analytical tools forsegmentation and modeling willimprove their campaigns than‘effective’ marketers (29 percent versus 58 percent, respectively).

Apparently, the ineffective marketersare seeking an easy fix to theircampaign problems – in essencesaying: “The campaign didn’t work, so bring in a new designer andcopywriter.” But the more effectivemarketers recognize that clever copyand compelling images can only go sofar in helping a company connect withaudiences, because hitting the marketwith interesting ads will do little goodfor the bottom line if the wrongmarkets are being reached with thewrong messages. These companies

Creative MarketingAnalytical • Operational • Creative


understand that the analytical andoperational aspects of marketing mustbe mastered for creative to have thedesired impact. As one UK participantin the Accenture survey noted: “It’s allabout customer knowledge and whatthey want. [It’s critical] to know whattheir business is about and have goodinformation to keep one step ahead of the opposition – as well as one stepahead of the customer to anticipatetheir needs in the ‘big picture’.”

To help ensure that a campaign’scontent and visuals hit the mark,companies must change the way they approach the creative aspects ofmarketing. They must integrate theircreative marketing processes withthose of their analytical andoperational marketing efforts – and focus on the total customerexperience – to build a unified brandacross all of their online and offlinechannels. And they must no longertreat creative marketing as an‘afterthought’. Instead, companiesmust leverage their integratedcustomer databases to developcreative marketing efforts in tandemwith analytical and operationalmarketing, as well as with other salesand service efforts. In doing so, theywill ensure that their creative isappropriate to the target audience and that they are delivering a seamlesscustomer experience across all touchpoints. The result will be not onlyfewer wasted marketing dollars, butalso higher returns from campaigns,improved customer satisfaction andheightened brand value.

Virgin Wines, in fact, has proven that‘high-style’ creative is not necessary to generate customer interest andloyalty. As a start-up, the companycould not afford a large investment in promotional activity and had to be creative and resourceful in itsmarketing efforts. The companyinitially relied on ‘viral marketing’ – a ‘word of mouse’ campaign in which30,000 ‘seed’ emails were sent toexisting customers of other Virgincompanies – and later on marketing to corporations that employ high-net-worth individuals. As customersresponded to these early efforts and began using the personalizationfeatures, Virgin Wines has been able to develop marketing messages andproduct offers that are increasinglytargeted to its visitors, based on the full spectrum of data and inputgenerated by customers.

Today, marketing at Virgin Wines is done in three distinct phases – allWeb- and email-based to keep costslow. In the first phase, the goal is toeducate prospects on the Virgin Winesexperience and encourage them to visitthe site and use the personalizationfeatures. For instance, the companymight team up with a financial serviceswebsite such as The Motley Fool andoffer visitors to that site a voucher for £15 off a case of wine.

In the second phase, specific offers are emailed to individuals on a periodicbasis. These offers are usuallypersonalized – for example, offering a mixed case of wines that reflect

the individual’s preferences. In a fewinstances, customers may receive ageneral offer promoting, say, a specialallocation of an award-winning wineor a rare wine that’s difficult to find.

The third phase involves customers who haven’t ordered for a period of time. In this case, they receive an email that asks if there’s been aproblem with the product or serviceand offers a special price on a case to encourage them to ‘come back tothe fold’. Again, the emphasis is onpersonalizing the offers as much aspossible to make them relevant to theindividuals receiving them. “The moreyou mail people with offers they’re not interested in, the less attentionthey pay to them,” observed RowanGormley, the company president.

The Future of CRM


To be successful in today’s difficulteconomic environment, companiesneed to stop preaching the buzzwordsof CRM and ‘customer insight’ andstart practicing the techniques tocreate a customer-centricorganization, achieve greater share of wallet, and maximize the lifetimevalue of customers. For inspiration,one can look to the manufacturingorganization in the 1970s. Companiesbought manufacturing resourceplanning (MRP) packages, thinkingthey were the answer to theirproblems. They later figured out that a software package alone isn’t a silver bullet. With this realization,manufacturers were able to makegreat strides in eliminating waste andtime from their production processes.

Likewise, to truly transform the way they interact with customers,companies must go beyond simplyimplementing ‘CRM software’ withintheir marketing functions. They mustcomplement these powerful tools with more integrated workflows,collaborative processes, andappropriate measurements that enablemarketing to become more efficientand effective at a time whencustomers and ROI can be elusive.

The experiences of E*TRADE, VirginWines, DuPont and others detailed in this report represent the future of CRM. This is a future in whichmarketing, sales, customer service, and IT all work together to deliver a seamless, consistent customerexperience across all channels. It’s afuture in which the analytical, creativeand operational marketing capabilitiesare integrated to strengthen acompany’s brand position, enhancecustomer value and spark intelligent,profitable interactions with everycustomer across every channel. And it’s a future that’s close at hand forcompanies that are serious aboutmaximizing the return on their existing CRM investments.

Section 2:Research Findings

In recent years, many companies have embracedcustomer relationship management tools andtechniques for their sales and customer servicefunctions. Although it’s early in the process, thesecompanies are beginning to see some payoff fromtheir efforts. Many are reducing their costs toserve customers. Others are improving theirresponsiveness to customers’ requests for help.Still others are enhancing the ability of their salesforces to manage their prospect pipeline, respondto sales opportunities more quickly and effectively,and convert more of the ‘right’ kinds of deals. A select few companies are doing all of these.

Research Findings 40

In recent years, many companies have embraced customer relationshipmanagement tools and techniques for their sales and customer servicefunctions. Although it’s early in theprocess, these companies are beginningto see some payoff from their efforts.Many are reducing their costs to servecustomers. Others are improving theirresponsiveness to customers’ requestsfor help. Still others are enhancing theability of their sales forces to managetheir prospect pipeline, respond to sales opportunities more quickly andeffectively, and convert more of the‘right’ kinds of deals. A select fewcompanies are doing all of these.

Unfortunately, in their quest toimprove sales and service, manycompanies have ignored a critical linkin the customer-management chain:marketing. In fact, the exclusion of marketing from CRM efforts has, in many cases, severely limitedcompanies’ ability to generate greaterbenefits from their CRM applications.As CRM has taken root in sales andservice, it has become more obviousthat new marketing processes andtechnologies must be adopted andintegrated with existing CRM efforts if CRM is to fulfill its potential.

To get a better understanding of the challenges that today’s marketingexecutives face, the effectiveness of companies’ marketing efforts, and organizations’ experiences withemerging marketing automation tools,Accenture conducted a survey ofmarketing professionals in the US and UK in spring 2001. The goal of the survey was to understand theoverall effectiveness of targetcompanies’ marketing campaigns; how these companies measurecampaign performance; and whatmajor challenges in creating andexecuting effective campaigns thesecompanies experience. The followingsection provides an in-depth look atthe results of this research.

Demographics and Methodology

Few marketing executives will argue that there’s ever been a morechallenging time to be a marketer –particularly in the area of creating and executing effective marketingcampaigns. To discover exactly what is challenging these executives today,how they’re faring in campaign designand execution, and what bottom-linebenefits their efforts deliver to thecompany, we interviewed by telephone175 marketing and customerrelationship managers in the US and UK in spring 2001.

The largest group of respondents(40 percent) comprises seniormarketing executives, and about one-third of participants are ‘specialists’,i.e. managers of a specific marketing

function such as direct marketing ormarketing analysis. Finally, about onein four is responsible for managingcustomer relationships or anotherfunction (Figure 6).

Respondent companies, selected in part for their size, tend to be large.More than half (58 percent) have 5,000 or more employees, while just 12 percent have fewer than 1,000employees. In our sample, the meannumber of employees is about 5,200.For the most part, the senior marketingexecutives we interviewed are fromslightly smaller companies than are the marketing specialists and customerrelationship managers (Figure 6.1).

Participants represent a diverse mix ofindustries, which we broadly categorizedin six groups: automotive (19 percent);consumer products (19 percent);financial services (17 percent); powerand utilities (14 percent); services (13 percent); and high-tech and othercompanies (18 percent) (Figure 6.2).Respondents also are splitgeographically, with 57 percent fromthe US and 43 percent from the UK.


Figure 6.2

Respondent Industry Group (%)

Financial Services

Automotive Retail/Manufacturing

Power & Utilities

ServicesConsumer Products

(Retail/Manufacturing/Distribution)

High-Tech & Other0 5 10 15 20

Figure 6.1

Respondent Company Employment (%)

Less than 1,000

1,000 to 3,499

3,500 to 4,999

5,000 to 7,499

7,500 or more0 10 20 30 40 50

Figure 6 Respondent Title (%)

Chief Marketing Officer

EVP, SVP or VP Marketing

Marketing Director

Direct Marketing Manager/Head

Marketing Analysis HeadCustomer Knowledge/

Value Director or Manager

Head/Director of CRM StrategyHead/Director of

Customer ManagementCRM Program Director

Others

0 5 10 15 20 25 30

On the following pages, we reviewrespondents’ input on five key issues:

• Challenges in creating and executingeffective campaigns.

• Marketing campaign effectiveness.• Measuring campaign performance.• Campaign cycle time.• Ways to improve campaign

effectiveness.

To further illuminate the differencesbetween companies’ marketingcampaign efforts, we at times discussrespondents as they fit into differentgroupings based on the reportedlength of their marketing campaigns,measures of campaign effectivenessused and level of campaigneffectiveness reported.

Challenges to Marketing Campaign Creation and Execution

Marketing executives face a number of significant challenges in theirefforts to uncover, attract andmotivate prospects to buy theircompany’s products or services. In speaking with our surveyparticipants, we were able to get abetter understanding of what thosechallenges are, how frequently theyare encountered and the severity ofimpact on respondents’ businesses.

Frequency of Challenges

The challenges that marketers mostfrequently encounter when creating and executing marketing campaigns run the gamut from problems with data access and technology tools toconnecting with prospective customersand identifying campaign ROI (Figure 7).A large majority of respondents (70percent) said that capturing customerattention amidst the noise and clutterin the market today is a challenge that they encounter regularly –

not surprisingly, given the barrage of marketing messages received daily by consumers. A large percentage ofexecutives also noted that they’re oftenchallenged by an inability to measurethe return on investment of campaigns,and by the time it takes to implementthe technology tools and infrastructurethat marketing requires to do its job (68 percent each). Two-thirds citedfrequent or occasional problems withtrying to increase the return onadvertising and marketing expenditures,while 65 percent identified beingchallenged to develop a single view ofcustomers derived from all interactionswith the company.

While respondents generally agreed on the challenges that they typicallyencounter, there are some differencesbetween executives in the US and in the UK. Just 58 percent of USexecutives said they frequentlyencounter problems related to a lack of a single view of the customer,

but a full three-quarters of UKprofessionals cited this as a recurringproblem. Similarly, 68 percent of UKexecutives said they often haveproblems transforming overwhelmingamounts of data into actionablecustomer insight, compared with just 42 percent of US respondents. In one instance, the reverse is true: 63 percent of US respondents,compared with just 49 percent of UKexecutives, said they frequently havetrouble getting campaigns from idea to execution in a timely manner.

Overall, it appears that there is moreconsensus among UK executives thantheir US counterparts in the types ofchallenges that they regularlyencounter.


0 10 20 30 40 50 60

Figure 7.1 Most Problematic Marketing Campaign Challenges (%)*

Establishing a single viewof the customer

Measuring campaign ROI

Lacking tools to monitorthe marketing process

Lacking information oncustomer profitability

Implementing technologyin a timely manner

*Ranked by percent of respondents who note the challenge to be very to extremely problematic to their business

Figure 7 Most Frequent Marketing Campaign Challenges (%)*

Capturing customer attention



Increasing marketing/advertising ROI


*Ranked by percent of total respondents who experience the challenge ‘frequently’ or ‘occasionally’

0 10 20 30 40 50 60 70 80

Impact of Challenges

The frequency with which a challengeis encountered is only part of the story.The other part involves how problematicthat challenge is for the business. Toprobe this issue, we asked participantsto tell us how much of an impact eachof the challenges identified earlier hadon their organization. The results areilluminating (Figure 7.1).

In general, the challenges thatrespondents most frequently encounteralso cause the most trouble forrespondents’ organizations – with oneglaring exception. While 70 percent of respondents cited regularlyencountering difficulty cuttingthrough marketplace clutter to capturecustomers’ attention, just 40 percentsaid that this challenge has a majorimpact on their organizations. Inessence, respondents seem to be sayingthat marketplace clutter is a frequentannoyance, but one that doesn’t

significantly impede their ability to dotheir jobs effectively.

Other challenges, however, are havinga big impact on marketers’ efforts,according to survey participants. Fifty-five percent cited not having a single view of the customer as onesuch challenge, while nearly the samepercentage noted their inability tomeasure the ROI of their campaigns.Other challenges that hamstringmarketing’s efforts are the lack ofmanagement tools to monitor theentire marketing process; lack ofcustomer profitability information to help target campaigns appropriately;difficulty increasing the ROI ofadvertising and other marketingexpenditures; and the amount of time it takes to implement necessarymarketing technology tools andinfrastructure.

As was the case with the frequency of challenges encountered, there issome disagreement between US and UK respondents on the level of impactof these challenges (particularly inregard to the lack of real-time access to data on which campaigns are based).However, the amount of discrepancybetween the two groups on the issue of impact is much less pronounced.

Severity of Challenges

To determine most accurately which challenges have the greatestinfluence over respondents’ companies,it is necessary to consider both achallenge’s impact on the business and the frequency with which thechallenge is experienced – a measurewe call the ‘severity index’. To arrive at a severity measure for eachchallenge, we multiplied eachchallenge’s frequency percentage by its impact percentage, then dividedthat figure by ten to create a number

suitable for a scale of one to 1,000. Thehigher the number, the more severe theproblem (Figure 7.2).

Using this method of problemmeasurement, two challenges tocreating and executing marketingcampaigns stood out over all others as the most severe: measuring thereturn on investment (scored at 366)and achieving a single, company-wideview of the customer (360). Other key,though somewhat less severe,challenges include implementing thetechnology tools and infrastructuremarketing needs on a timely basis(314); increasing the return onadvertising and marketing spending(309); and capturing the attention of customers in a noisy, clutteredmarketplace (280).

The severity of challenges, once again,differs for US and UK executives. Whileinability to measure campaign ROI isthe most severe challenge for the US

group (with a factor of 330), the lackof a single view of the customer topsthe list for UK respondents (with ascore of 440). Similarly, taking too longto implement marketing IT tools andinfrastructure received a severity factorof 400 from UK participants, but just250 from their US counterparts. Andwhile transforming overwhelmingamounts of data into actionablecustomer insight scored a 307 inseverity for UK executives, it rang upjust a 160 among US professionals.

The top obstacles to creating andexecuting marketing campaignseffectively also vary greatly by industrygroup, as do the degree to which theychallenge managers in those industries.The most severe challenge for financialservices firms is the length of time ittakes to implement technology toolsand infrastructure for marketing (533). For the automotive industry, it’s theinability to integrate or coordinatecampaigns with other customer

touch points (383). Managers in theconsumer products industry are mostchallenged by the need to develop asingle view of their customers (455).Power/utilities companies also are most pressured by a lack of a singleview of the customer, along with theinability to measure campaign ROI (417 each). For service industryexecutives, the most severe challengeis not having real-time access to data

for designing, analyzing and executingcampaigns (392). And, for firms in thehigh tech/other industries group, theirinability to measure the return oncampaign investment (354) is the most severe challenge.

Figure 7.2 Severity of Marketing Campaign Challenges*




Increasing marketing/advertising ROI

Capturing customer attention

Lacking tools to monitorthe marketing process

Lacking information oncustomer profitability

Gaining real-timeaccess to data

Integrating campaignsacross customer touch points

Long campaign cycle times(creation through execution)

Transforming large amounts of data into actionable insight

Declining customer responsiveness to marketing campaigns

Leveraging statistical tools for effective segmentation

Applying learnings from a campaign to subsequent projects

Diminishing campaign effectiveness

Inaccurate or outdatedcustomer data

Achieving anticipated ROI from marketing automation software

*Ranked by a problem severity score calculated as follows: (% experiencing problem frequently or occasionally) x (% finding problem very or extremely problematic)

100

TotalUSUK

0 100 200 300 400 500


Marketing Campaign Effectiveness

Although marketers have a difficultjob, many believe they’re succeeding in spite of the challenges they face.Half of the respondents describedtheir marketing campaigns as‘effective’, 35 percent called theirmarketing campaigns ‘very effective’,and six percent said their campaignsare ‘extremely effective’. Just eightpercent rated their marketing programsas largely ineffective (Figure 8).

From a geographical perspective, there are some – albeit not dramatic –differences among respondents’ self-ratings. Nearly all UK managers (97 percent) describe their marketingefforts as primarily successful,compared with 88 percent of USrespondents. The biggest differencescan be seen in the percentages of respondents rating their efforts‘effective’ and ‘not at all effective’.Fifty-six percent of UK respondentssaid their campaigns are ‘effective’versus 46 percent of US executives.

And, while four percent of USprofessionals said their campaigns are ‘not at all effective’, no respondentfrom the UK shared this view. Theseresults may reflect differences inconsumers and market environmentsbetween the two countries, or perhapshigher expectations for campaignperformance among US companies. It also may indicate that UK firms,indeed, have more effective marketingcampaigns than US companies.

Levels of campaign effectiveness alsovary by industry group. Respondents in the consumer products group ratedtheir campaigns the most favorably,with a strong majority (64 percent)describing their marketing efforts as ‘extremely’ or ‘very effective’.Representatives of the high-tech/othersgroup are the most critical of theirprograms – none rated his or hercompany’s campaign as ‘extremelyeffective’, and just 26 percent calledtheir marketing programs ‘very

effective’. These respondents are alsotwice as likely as other managers torate their campaigns as downrightineffective (19 percent versus eightpercent average). Three other industrygroups – financial services, automotiveand power/utilities – share similarviews of their marketing campaigns,with about half of the respondents ineach group describing their campaignsas simply ‘effective’. Managers in theservices group stand out somewhat,with nearly two-thirds (65 percent)calling their campaigns ‘effective’ and none rating them as ‘ineffective’.


Figure 8 Respondent Company Marketing Campaign Effectiveness (%)

Extremely Effective

Very Effective

Effective

Not Very Effective

Not At All Effective

TotalUSUK

0 10 20 30 40 50 60

Converting respondents’ ratings tointerval values on a scale of zero tofour (where ‘extremely effective’ isfour, ‘very effective’ is three, ‘effective’is two, ‘not very effective’ is one and‘not at all effective’ is zero) generateseven more illustrative statistics oncampaign effectiveness (Figure 8.1).With this approach, the consumerproducts group has the highest self-rating of marketing campaigneffectiveness at 2.73. On average,companies in the high-tech/othersgroup rated their campaignperformance the lowest at 2.03. Theremaining industry groups have almostidentical average scores, ranging from2.32 in the automotive sector to 2.43in the services group.

Figure 8.1 Average Campaign Effectiveness by Industry Group*

Financial Services

Automotive Retail/Manufacturing

Power & Utilities

ServicesConsumer Products

(Retail/Manufacturing/Distribution)High-Tech/Other

*Key: 4=Extremely Effective

3=Very Effective2=Effective1=Not Very Effective0=Not At All Effective

0 1 2 3 4

Measuring Campaign Performance

And just how do these executives knowwhether their campaigns are effectiveor missing the mark? By and large, mostrespondents measure their campaignsin some way – although the techniquesand metrics used vary widely.

Four different measures stand out as being the most commonly used:response rate (cited by 79 percent ofall respondents), revenue generation(78 percent), customer retention (69 percent) and profit generation (66 percent) (Figure 9). Indicators usedless frequently to measure marketingperformance are level of sales activity(15 percent), brand awareness (five percent) and cost of customeracquisitions (two percent). Just fivepercent of respondents – all from theUS – indicated that they can’t measurethe performance of their marketingcampaigns. These organizations aremostly small companies and, perhapsnot surprisingly, generally rated theirmarketing campaigns as ineffective.

More than two-fifths (41 percent) of our survey respondents use all four of the key performance measurements(Figure 9.1). This practice is moreprevalent in the UK, where 45 percentof respondents reported using all four measures, compared with 38 percent of US firms. The topmeasure of marketing performanceused in the US is revenue generation(cited by 75 percent versus 81 percentby UK respondents), while the mostcommonly used measure of campaigneffectiveness among UK firms isresponse rate, used by virtually all UK managers (91 percent, versus 70 percent of US respondents). Ingeneral, there’s greater consensus on the use of measures among UKparticipants than those from the US,and UK respondents, on average, usemore measures than their UScounterparts. Furthermore, UK firmsare more likely than US companies touse a variety of other, less scientificmeasures in addition to standard

financial and customer responsefigures. As one executive remarked:“We have an emotional attachment to what we do. Therefore we havecertain [other] measures that we needto track.” Although the four mostprominent performance measures in our survey are the same across all sixindustry groupings, preferences for theiruse vary by sector. Revenue generationis the most frequently used measure ofmarketing campaign performance in the services (87 percent) and financialservices (83 percent) groups, while theautomotive and consumer productsindustries favor the use of responserates (85 percent each). And, reflectingthe competitive pricing wars that havefollowed deregulation in most areas,power and utilities companies relyextensively on customer retention ratesto determine campaign effectiveness(88 percent). There is no clear front-runner for performance measurementin the high-tech/others group, whosecompanies rely with about equal


Figure 9 Most Commonly Used Campaign Performance Measures (%)

Response Rate

Revenue Generation

Customer Retention

Profit Generation

0 20 40 60 80 100

TotalUSUK

Figure 9.1 Number of Key Campaign Performance Measures Used (%)

Use All Four

Use Any Three of Four

Use One or Two

Do Not Use

0 10 20 30 40 50

TotalUSUK

frequency on revenue generation (74 percent) and response rate (71 percent) to assess marketingeffectiveness. This group is also theleast likely to use profit generation asa measure of campaign performance.

Not surprisingly, the larger thecompany, the more performancemeasures it uses – particularly financialmetrics that help them understandhow their significant investments inmarketing are paying off. For instance,83 percent of companies with morethan 7,500 employees use revenuegeneration as a campaign performancemeasure, compared with 72 percent of companies with fewer than 3,500people. Similarly, 69 percent of thelargest companies in our surveyevaluate their campaigns with a profit-generation yardstick, versus 57 percentof the smallest participating companies.Interestingly, smaller and midsizecompanies appear to be slightly more

likely than larger companies to usecustomer retention as a measure ofcampaign performance.

Typically, firms using three of the four key performance measures favorfinancial measures. Indeed, essentiallyall of these companies (98 percent) use revenue generation to measurecampaign effectiveness and nearlythree-quarters (74 percent) also useprofit generation. On the other hand,companies using just one or two of the four main performance measuresare primarily focused on non-financialmeasures, relying on response rate (76 percent) and customer retention(49 percent) much more than eitherrevenue generation (37 percent) or profit generation (15 percent).

Time to Complete Campaigns

As noted earlier, nearly 60 percent of managers reported that theyfrequently struggle with shortening thetime it takes to create and launch amarketing campaign. Furthermore, 43percent said the fact that it takes themtoo long to get a campaign from ideato execution is negatively affectingtheir organization’s ability to do its job.But how long is too long? We askedparticipants to tell us how long, onaverage, it takes them to create andexecute a typical marketing campaign.Here’s what we found.

The average participating companytakes 2.5 months to conceive of and launch a marketing campaign.However, while firms in both the USand UK have similar average times,there is more variance in marketingcampaign cycle time among UScompanies (Figure 10). Indeed, 23 percent of US organizations (versus 11 percent of UK companies)said they create and launch marketingcampaigns in less than one month. On the other hand, 25 percent of US respondents (compared with nine percent of those from the UK)reported that it takes them more than four months to develop andexecute a given campaign. A plurality(43 percent) of UK respondents saidtheir campaign cycle time is betweentwo and four months.

From an industry perspective,marketing campaign cycle times vary considerably. Continually underthe gun to reach today’s mobile and

finicky consumers with innovativeitems, the consumer products industryis the most adept at quickly moving a campaign from the drawing board to the streets: just nine percent ofconsumer goods respondents said theircampaign cycle time is more than fourmonths, while 21 percent noted it’s lessthan one month. Financial services also move relatively quickly, while thepower and utilities industry – with amuch less active product-innovationengine and customers with fewerchoices of providers – and the generallylarge and bureaucratic automotivecompanies tend to be the slowest in getting campaigns off the ground.

Importantly, we’ve found that the time it takes to complete a marketingcampaign is inversely related to itseffectiveness (Figure 10.1). More thanhalf (51 percent) of our respondentswho have a short campaigndevelopment and execution process(i.e. taking less than two months from


US

UK

3%

20%

27%25%

25%

3%

8%9%

37%43%

Total 3%

15%

31%33%

18%

Less than 2 Weeks2 Weeks to 1 Month1 to 2 Months2 to 4 MonthsMore than 4 Months

Figure 10 Time to Complete Marketing Campaigns

Highly EffectiveEffectiveIneffective

0 20 40 60 80 100

Figure 10.1 Effectiveness of Campaigns by Length of Time to Complete Them (%)

Less than 1 Month

1 to 3 Months

2 to 4 Months

More than 4 Months

idea creation through execution) ratethem as extremely or very effective,compared to just one-third of themanagers whose campaigns are long(taking two months or more tocomplete). Yet, while there is obviouslya point at which too long a marketingcycle time is ineffective, there is also a point at which too short a cycle isineffective: companies with very long(more than four months) or very shortcampaign cycle times (less than onemonth) are four times more likely toreport having ineffective marketingcampaigns than others (16 percentversus four percent).

One of the principal reasons that a long campaign cycle time impairscampaign effectiveness is theperishable nature of data. The longer it takes to get from idea conception to campaign execution, the less likelyit is that the data on which the ideawas based is still accurate and fresh –

and, subsequently, the less likely the campaign will be to hit the mark. Our survey figures bear this out. A large percentage of respondentsreported that the effectiveness of their campaigns is diminishing due to outdated or inaccurate data. For 60 percent of these individuals, more than one-tenth of their data is inaccurate or outdated. In fact, 21 percent said that at least one-fourth of their data is suspect –making it difficult for them to craftand launch highly effective campaigns.

Ways to ImproveCampaign Effectiveness

Despite the largely satisfactory gradesthat respondents give their marketingcampaigns, most also recognize thatthere’s always room for improvement.In general, executives noted that theycould improve the effectiveness oftheir campaigns by having access tobetter data, addressing a number ofinternal corporate issues and adoptingbetter tools (Figure 11).

For example, a strong majority of oursurvey respondents (68 percent) saidfresher, more accurate data could helptheir campaign efforts – notsurprisingly given the large percentageof respondents who reported having asignificant percentage of suspect data.The desire for better data seems to bestronger in the UK (79 percent) than in the US (60 percent). A majority ofrespondents also believe that severalinternal changes would bolster campaignperformance. Sixty-seven percent citedthe need for better integration of thevarious customer touch points, whichwould help them create a morecomplete view of each customer andmaintain consistency among theirmarketing messages. Sixty-five percentbelieve their marketing campaignswould be more effective if they werecentered on a better overall customerstrategy. And 59 percent said theircampaigns would perform better if they had a faster process fordeveloping and executing them.

While managers are aware that they must overhaul their marketingstrategies and processes to fosterlasting customer relationships, theyalso recognize the important roletechnology plays in thistransformation. Among theprofessionals we surveyed, more thanhalf cited their need for specific toolsto foster collaboration betweendepartments (59 percent), to controlthe campaign process from creationthrough execution (58 percent), and to effectively segment and model their markets (56 percent). A minorityof respondents – about one in three –believe better creative design will help them get customers’ attention.


0 10 20 30 40 50 60 70 80

Figure 11 Number of Key Campaign Performance Measures Used (%)

More accurate,fresh data

Better integration betweencustomer touch points

Better overallcustomer strategy

Tools to foster collaborationbetween departments

Faster process

Tools to controlthe process

Analytical tools to dosegmentation & modeling

Better creative design

TotalUSUK

J. Patrick O'Halloran

Patrick O'Halloran is a Partner inAccenture's Customer RelationshipManagement practice and specializesin helping companies use informationabout their customers to shape eachinteraction to accelerate profit growth.In his 18 years of experience, Mr. O'Halloran has worked with clients in a variety of industriesincluding retail, products and heavymanufacturing. Mr. O'Halloran holds an MBA in Management InformationSystems from the University ofMinnesota and a Bachelor of Sciencedegree in Accounting from ArizonaState University.

j.patrick.o’[email protected]

Todd R. Wagner

Todd R. Wagner is a Partner inAccenture's Customer RelationshipManagement practice and specializes in helping companies integrate customer insight into marketing, sales, and service interactions. In his 12 years of experience, Mr. Wagner has worked with clients in a variety ofindustries including consumer products,telecommunications, automotive andfinancial services. Mr. Wagner holds aBachelor of Science degree in ElectricalEngineering from Stanford University.

[email protected]

Theodore Ansusinha

Theodore Ansusinha is a Partner inAccenture's Customer RelationshipManagement practice and specializes in helping companies to use customerinsight to positively shape real-timecustomer interactions. Mr. Ansusinha has worked with clients in a variety of industries including energy, retail, consumer products, andtelecommunications. Mr. Ansusinhaobtained his Bachelor of Science degree in Industrial Engineering and his Master of Science degree inQuantitative Analysis from TheUniversity of Wisconsin at Madison.

[email protected]

About the Authors

Richard Lawrence

Richard Lawrence is a Partner inAccenture's Customer RelationshipManagement practice and specializes in customer analytics and customercontact strategies with an emphasis on the business architecture and thetechnological infrastructure required tosupport these initiatives. In his 22 yearsof experience, Mr. Lawrence has workedwith clients in a variety of industriesincluding automotive, electronics andhigh technology, telecommunications,insurance, banking, resources, industrialproducts, retail, and consumer products. Mr. Lawrence earned an MBAfrom The Wharton School, University of Pennsylvania with specialization inMarketing and Strategic Planning.

[email protected]

Kevin N. Quiring

Kevin N. Quiring is a Partner inAccenture's Customer RelationshipManagement practice and specializes in assisting clients create CRMcapabilities which contribute to top-line growth through the acquisition,development and retention of theircustomers. Mr. Quiring has worked in a variety of industries includingmarketing services, retail, media &entertainment, travel & transportation,automotive, health care, financialservices and high technology. Mr. Quiring holds a Bachelor of Science degree in Computer Science from the University of Wisconcin.

[email protected]


Bibliography

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2 Retailers Gear up for ZealousExpansion, Will Pollock, Shopping Center World, December 1997.

3 Customer Loyalty: Going, Going…, Steve Schriver, American Demographics,September 1997, pg. 23.

4 2000 Trends in Telephone Services,Federal Communications Commission,Washington, DC.

5 According to the 2001 Mutual FundFactbook, published by the InvestmentCompany Institute, there were 8,200mutual funds available at the end of 2000.

6 The National Restaurant Association’sFoodservice 2001 Report noted thatthere were 844,000 total outlets inthe US serving food, including single-location and ‘mom-and-pop’restaurants. The Franchise FinanceCorp of America's 2001 Chain IndustryReview & Outlook reported that as ofDecember 31, 2000, there were 217,917chain restaurant locations in the US.

7 Wolf, Naomi, pp. 78-79, The BeautyMyth, New York, Anchor/Doubleday,1992; and A New Era of Eros inAdvertising, Mark Muro, The BostonGlobe, 1989.

8 Shenk, David, Data Smog. (June 1998)San Francisco, Harper.

9 Statistical Fact Book 2000, Direct Marketing Association.

10Statistic reported onantitelemarketer.com.

11In the spring of 2001, Accentureconducted telephone interviews with175 senior marketing executives atleading companies in the US and theUK on their marketing challenges.Complete results of this survey arefound in Section 2 of this report.

12Don’t Let Customers Short Circuit YourRetention Efforts, Terry Vavra, Ph.D.,Customer Relationship Management,March 1996, pp. 33-35.

13Ibid, 3.14Wireless Carriers to Their Customers:

‘Frankly, My Dear…,’ Brian McDonough,Wireless NewsFactor, June 14, 2001.

15Estimate from the study CustomerRelationship Management Confrontsthe Financial Services Crisis, December2000, by Peppers and Rogers Groupand Roper Starch Worldwide.

16Survey: Big Databases Just KeepGetting Bigger, Rick Whiting,Informationweek, January 26, 2001.

17This statistic, attributed to GartnerGroup, was cited in an internaldocument from Seisint Inc.

18Wal-Mart Puts on More High-TechFace, MMR, March 20, 2000.

19Ibid, 16.20Ohio Bank Pulls Its Act, Er, Apps,

Together, Eileen Colkin,Informationweek, April 3, 2001.

21Borders Wants a Catalog ofCustomers, Rick Whiting,Informationweek, August 15, 2000.

22Capital One Leads Credit CardInnovation, Data Warehousing: WhatWorks?, Data Warehousing Institute,Volume 7, April 1999.

23This statistic was reported in aninternal document published by Seisint Inc.

24Measuring Client Value, Len Ptak, CMA Management, June 2001.

25Information Waste, Scott Kirsner,Darwin, June 2001, pp. 52-53.

26Customer Relationship ManagementUncovers Revenue From Loyal Guests,Bruce Adams, Hotel & MotelManagement, May 21, 2001.

27Lands’ End: Sweaters to Software,Cheryl Rosen, Informationweek,January 16, 2001.

28Please Pass The Spam, Sara Frankl,TeleProfessional, March 2000.

29Ibid.30Ibid, 28.31Ibid.

Introduction

‘It’s a difficult time to bea marketing professional.’

About Accenture

Accenture is the world's leadingmanagement and technologyconsulting organization. Through itsnetwork of businesses approach – inwhich the company enhances itsconsulting and outsourcing expertisethrough alliances, ventures and othercapabilities – Accenture deliversinnovations that help clients across allindustries quickly realize their visions.With more than 75,000 people in 46countries, the company generated netrevenues of $11.44 billion for the fiscalyear ended August 31, 2001. Its homepage is www.accenture.com

Acknowledgements

The authors wish to thank the manyexecutives who shared their valuableperspectives in order to make thisresearch possible. In addition, theauthors wish to acknowledge thefollowing individuals for their supportand contributions to the development of this research report: Karim K. Emara,Allen Valahu, Scott D. Egler, Heather G. Dyke.

EditorBernard A. Thiel – The Bloom Group LLC

To speak to one of our Insight DrivenMarketing experts please callAccenture at +1 312 737 7777.

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