Anybody can launch an Internet business. However, not every e-business can acquire and retain customers, the necessary ingredients for growth and success.
The Internet has brought a fundamental shift in power from sellers to buyers. Increased competition and lower switching costs are forcing companies to readdress their overall business strategies.
One of the fundamental shifts and biggest challenges in today’s corporate marketing strategies is developing an increased focus on building customer loyalty and managing customer relationships. This is especially daunting because most organizations focus their marketing efforts on developing and selling products.
One of the most fundamental processes for marketing execution is the closed-loop campaign management process. Historically, CMP was born out of the database marketing industry. It is the mechanism by which database-driven companies:
• Define target subsets of their customers.
• Develop and design a program.
• Execute the program via direct mail, telemarketing or e-mail.
• Measure the number of people who responded and purchased, and determine the return on investment of the program.
The way CMP has been executed will not deliver on the needs of marketing in the Internet age because of gaps in the current methodology.
For example, CMP defines large segments of customers, but in the Internet age, it must define the audience on a much more granular level. Moreover, in the current CMP model, it takes months to get responses and close the feedback loop. In the Internet age, CMP should produce responses in hours and minutes.
Marketing execution in its current form will not be adequate for the new electronic age because it is mainly a reactive process that does not fundamentally address customer relationship management.
Marketing execution will need to incorporate a customer development approach, not a direct selling approach. This customer development process must focus on proactively managing the customer life cycle experience with the objective of building long-term and profitable relationships with customers.
The requirements can be summarized as follows:
• Proactive: Companies must anticipate customers’ needs by creating customer development goals and plans to execute relevant actions and messages.
• Customer-driven: Use customer profile and behavior information at a segment or individual level to differentiate treatment.
• Based on dialogue: Leverage every customer contact opportunity to exchange information that is relevant and specific to the life cycle stage of the customer relationship.
• Real-time execution: Use the Internet and other customer connecting technologies to deliver relevant activities at each moment of truth.
• Pervasive: Integrate all customer touch point processes to leverage every customer interaction.
• Business-rules driven: Depend on data mining and intelligence generation technology to automate the analysis of customer information and the delivery of relevant marketing actions.
The challenge for marketing executives is how to move their organizations from the old to the new marketing execution paradigm. To help this transition, it is important to refer to a marketing maturity model that outlines critical enterprise elements.
The marketing maturity model depicts three distinct stages:
• Closed-loop stage: Basic campaign management functionality has been implemented.
• Event-driven stage: Opportunity triggers have been defined to be executed automatically.
• Relationship-driven stage: Integrated and real-time marketing customer interaction infrastructure.
Managers trying to implement a true customer relationship model in their organization need to be aware that:
• Making the shift requires synchronized changes to various elements of the organization.
• It’s an evolution, not a revolution. Organizations will not be able to implement relationship-driven marketing unless they have understood and experienced the fundamentals of campaign management. Companies will not be able to skip stages, as each stage builds on the learning of the previous one and increases the overall execution sophistication.
• Pierre Charchaflian is director of the marketing solutions practice at DiaLogos Inc., Boston, a customer development firm.
