building the marketing-ready enterprise

Copyright © 2003, SAS Institute Inc. All rights reserved.

Alan SeeCustomer Intelligence SolutionsSAS Americas

The CMO’s Strategic Agenda:Building the

Marketing-Ready Enterprise


“The National Doppler Radar System has indicated that local conditions are right to produce severe weather.

High winds, damaging hail, and flash floods are likely products of this storm. Seek immediate shelter.”

When storm clouds build my weather alert radio springs to life …


Today’s business climate has the ingredients for generating the perfect marketing-storm …

“The Enterprise CEO Alert System has indicated that conditions are right to produce severe stock value turbulence. High discounts, damaging customer

churn, and flash flood mass marketing are likely elements of this storm. Seek immediate shelter with a new Chief Marketing Officer.”

Mergers and Acquisitions –Globalization of industry … Worldwide competition

Regulations and Compliance –Customer Privacy … Do Not Call, Can SPAM, etc.

Operational & Financial – Must drive top line revenue and bottom line profit … Quickly

Customer Focus - Marketing the right offer, to the right customer, with the right message, at the right time. Imagine …


External Market Environment: Political, Economic, Social, Technology

Collapsing and Blending of Industries

Broader Reach to Prospects

and Customers

More Informed and Demanding

Customers

Today the marketplace is even more dynamic, technology is even more advanced, and the

customer is even more sophisticated.

Greater Need to be “Marketing-Ready”


Facilitation - Learning Objectives3 for 1 Special … (how to) generate free press / research results

/ CRM - CI knowledge

SAS point-of-view … “Building the Marketing-Ready Enterprise.”

Introduce SAS / Aberdeen research … The CMO’s Strategic Agenda: Building the Marketing-Ready Enterprise

The Marketing-Ready Enterprise … “If you build it … will they come?”

Marketing Competence Areas:PlanningTargetingActingLearning

About SAS


The Marketing Strategy Planning Process is the cornerstone of the Marketing-Ready Enterprise Customers

Needs and otherSegmentingDimensions

CompanyMission & Goals

CompetitorsCurrent &Prospective

StrengthsWeakness

OpportunitiesThreats

TargetSegment

Product Price

PlacePromotion

Targeting &Segmentation

Positioning &Differentiation

Political & Legal Economic Social & Cultural TechnologyExternal Market Environment


Marketing Evolution Journey

Pre 60sRise of brand productsand advertising agenciesFocus : masscommunication

70s and 80sBeginning of direct marketingFocus : identificationof the target group

90sRise of loyalty programsFocus : databases,analysis systems

2000sEvolution of marketing …New focus : creating value for the customer and the organization.

Mass marketing

Segment marketing

Target marketing

Relationship marketing

“The performance of business activities that

direct the flow of goods and services from producers to

consumers.”AMA – 1948 & 1960

“The process of planning and executing the conception, pricing,

promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational

objectives.”AMA – 1985

“Marketing is an organizational function and a set of processes

for creating, communicating, and delivering value to

customers and for managing customer relationships in ways

that benefit the organization and its stakeholders.”

AMA – 2004

“Consumers don’t know what they want until we

tell them.”

“If you really watch the consumer, they’ll tell you what they wish.

And if you listen hard, you can create better products for them.”

ProductFocus

CustomerFocus

Marketing Evolution1960’s to Present


The Marketing-Ready Enterprise drives Profitable Growth and Maximizes Customer Life-

Time Value (LTV)Rela

tionship

Duration

Number ofProfitable

Products perRelationship

(“Most Growable Customers”)

Number of Profitable Customer Relationships

‘Primary

’ Grow

th Driv

ers

Acquire

Expa

nd

Retain

Customer

“Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”

(“Most Valuable Customers”)

(“MGC & MVC”)


Drive Acquisition, Expansion &

Retention Effectiveness

Optimize Marketing

Spend

ImproveReturn on

Data

Maximize Services

Performance

Contact Strategy Alignment

Customer Segmentation /

Definition

Marketing Effectiveness

Marketing Efficiency

PossibleInitiatives

MarketingPriorities

MarketingObjectives

CorporateMission & Goals

Campaign ProcessOptimization

Define & DriveData Strategy

ET

L E

TL

––D

W’s

D

W’s

––C

DI

CD

I --

Dat

a Q

ualit

yD

ata

Qua

lity

Mar

keti

ng A

utom

atio

nM

arke

ting

Aut

omat

ion

Bus

ines

s In

telli

genc

e &

Ana

lyti

csB

usin

ess

Inte

llige

nce

& A

naly

tics

TechnologyEnablers

Others?

Capacity Planning & Optimization

Optimize Customer

Experience

Technology Enables the Marketing-Ready Enterprise

ImproveCustomer Profitability

Mar

keti

ng O

ptim

izat

ion

Mar

keti

ng O

ptim

izat

ion

Inte

ract

ion

Man

agem

ent

Inte

ract

ion

Man

agem

ent

Clear Understanding

of the Customer

Improve Customer

Loyalty

Drive Profitable Growth


Building the Marketing-Ready EnterpriseDeliver on Marketing’s Promise

Every company has a unique business model &

strategy – there is no single “right answer” –marketing’s end goal is

to …

Create a Sustainable Competitive Advantage

Unconnected -3rd Party Lists, etc

Product - BrandBusiness Unit

Enterprise -Integrated

Targeting & A

cting

Planning & Learning

V

E

A

I

B

Shotgun Marketer

TargetMarketer

RelationshipMarketer

One-to-OneMarketing

CustomerSegments

MassMarkets

CustomerTargets


Building the Marketing-Ready EnterpriseDeliver on Marketing’s Promise

Every company has a unique business model &

strategy – there is no single “right answer” –

marketing’s end goal is to …





Targeting & A

cting

Planning & Learning

V

E

A

I

B

Shotgun Marketer

TargetMarketer


One-to-OneMarketing

CustomerSegments

MassMarkets

CustomerTargets

Harrah’sShow me the Loyalty

“Total Rewards Program”

Best BuyAngel - Devil Strategy

“Looking for Barrys’ and Jills’”

Wal-MartSupply Chain Champs“Low Prices Always”


Marketing-Ready Enterprise Journey




Shotgun Marketer

Targeting & A

cting

Planning & Learning

V

E

A

I

B

Marketing-Willing

Marketing-Ready

Marketing-Able

Marketing-Challenged

One-to-OneMarketing

CustomerSegments

MassMarkets

CustomerTargets


Research Introduction – The CMO’s Strategic Agenda: Building the Marketing-Ready Enterprise

Company Size – 18% >$1B; 27% Mid-Market; 54% <$50MGeography – 80% NA, 20% APAC/Europe/SA Roles – 20% CMO, EVP, SVP, VP; 32% Sr./Director; 47% Marketing Manager http://www.sas.com/events/cm/69809/http://www.marketingpower.com/content.php?&Item_ID=28881

© 2005 AberdeenGroup

21%All Others (1-7%)

11%Manufacturing

14%High-tech

14%Financial Services

17%Consumer-Retail

23%Services

589Total Participants


Key Performance Indicators Benchmarks

Key metrics which are commonly used by most companies to assess marketing performance

0 50 100 150 200 250 300 350 400No. Repondents Reporting Use (Multiple Selections Permitted)

Gross annual sales growth

New customer acquisitions rate

Customer satisfaction rate

Branding: Reputation, Awareness Building or Rea

Return on marketing investment (ROMI)

Market share growth

Customer churn or retention rate

New Market/Channel Penetration

New product innovation

Metrics Most Often Used To Measure Marketing Performance



BIC Performance Advantage

Best In Class Marketers Were Select As Those Which Consistently Reported Greater Than 15% Improvement in These Key Metrics



Identifying Best In Class Performers

Annual Sales GrowthCustomer Acquisition RateCustomer Retention RateReturn On Marketing Investment

0%

20%

40%

60%

80%

100%

Laggard31%

Industry Norm48%

BIC21%

Benchmark Groupings ByPerformance Level

Participants were stacked ranked in Best In Class, Average and Lagging benchmark grouping based on reported performance in key metrics

Key Metrics Use To DefinePerformance Level



KPI’s for Senior Marketers: What Motivates Them?

44%Branding5

44%ROMI4

52%Customer Satisfaction3

61%Customer Acquisition Rates

2

64%Annual Sales Growth1

Industry Norms

52%Branding5


55%ROMI3


2


Best in Class

43%Branding5

48%Annual Units Sold4



2


Laggards

Return on Marketing Investment (ROMI) is a key metric tracked byBest In Class performers, therefore included in the benchmark for comparison

Top 5 Metric Ranking by Grouping



Building a Marketing-Ready Enterprise through Customer Intelligence


SAS - Aberdeen research finds that companies that adopt a life-cycle marketing practices are more than three times as likely to report greater

than 50% more ROMI



Using intelligence to KNOW…

WHO to invest in

WHAT products, offers, & channels

WHEN to invest & stop investing

HOW to create customer intimacy

Customer Intelligence enables profitable growth

Acquire

RETAIN

Expa

nd

“The only profit center is the customer.” - Peter Drucker

First of all … What is Customer Intelligence?From the organization’s perspective …


TRUST

What is Customer Intelligence?From the customer’s perspective it’s about … Trust


TRUST =Rapport Credibility

Risk

X

Building Customer Trust


TRUST =Rapport CredibilityX

Risk

Building Customer Trust


Rapport

Rapport: A relation of harmony, conformity, accord, or affinity. A sense of shared understanding.

Know me, and let me know you

HotWarmIdentificationUnderstandingLukewarmNeutralCool

Levels of rapport that are good for business

Being contacted when I want to be by the method that best suits the nature of the contact.Being made to feel important.


Credibility

Credibility: Worthy of belief or confidence. Provides the basis for confidence.

Actions and words are in congruence

Performance (employee and corporate) metrics and compensation plans support the marketing strategy as well as the desired customer experience.

Being offered services and products that are relevant to my needs.Flexibility in the way I deal with your company.


Risk

What are you going to do with my personal information?

How are you going to use it? How does that benefit me?

Privacy policy is consistent across the enterprise.

Safety and security (privacy) are not an issue

Risk: Exposure to the chance of injury or loss; a hazard or dangerous chance.


Operational CRM

Analytical CRM / Customer Intelligence

OperationalSystems

Where CI fits

Tec

hnol

ogy

Ena

bler

sT

echn

olog

y E

nabl

ers


If you build it … they will come …

Field of Dreams

Kevin Costner......as Ray Kinsella


If you build it … will they come? …

Marketing’s Field of Dreams

Loyal Customers

Happy StockholdersMarketing-Ready Enterprise




Targeting & Acting

Planning & Learning

V

E

A

I

B

Shotgun Marketer

TargetMarketer


One-to-OneMarketing

CustomerSegments

MassMarkets

CustomerTargets


“If you build it … they will come.”Integration, Sophistication and Speed Expands Marketing Performance

Percent Co’s Reporting >15% Performance By Benchmark Grouping

Spread-sheetData-marts

CRM/SFA BusinessIntelligence

Real-timeIntegration

Mass MarketMass Customize

Target MarketSegmentation

Multi ChannelOptimized

Rules-basedCampaignExecution

Micro-MarketingChannel Optimized

Front/BackIntegration

Best In Class

Norm

Lagging

Technology Enablers

51%

Return on Marketing Investment

CustomerRetentionRate

76% 49%

CustomerAcquisitionRate

36% 60% 45%

37% 45% 39%

Aberdeen benchmark research confirms increased integration and analytics sophistication expands marketing performance



MRE Benchmark Results – Companies > $500MMarketing-Readiness

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Planning & Learning

Targ

etin

g &

Act

ing

IndustryCPG / Retail &

DistributionFinancial ServicesHigh TechManufacturingServicesTelecommunicationsHealth CareEntertainment /

HospitalityOther


MRE Benchmark – CPG / Retail & DistributionCPG & Retail Marketing-Readiness

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Planning & Learning

Targ

etin

g &

Act

ing


MRE Benchmark – Financial ServicesFinanical Services Marketing-Readiness

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Planning & Learning

Targ

etin

g &

Act

inig


MRE Benchmark – High TechHigh Tech Marketing-Readiness

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Planning & Learning

Targ

etin

g &

Act

inig


MRE Benchmark – ManufacturingManufacturing Marketing-Readiness

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Planning & Learning

Targ

etin

g &

Act

inig


MRE Benchmark – ServicesServices Marketing-Readiness

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Planning & Learning

Targ

etin

g &

Act

inig


MRE Benchmark – TelecommunicationsTelecommunications Marketing-Readiness

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Planning & Learning

Targ

etin

g &

Act

inig


MRE Benchmark – Health CareHealth Care Marketing-Readiness

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Planning & Learning

Targ

etin

g &

Act

inig


Plan: How well does the marketing strategy support the corporate mission and goals? Are people, processes, and culture positioned to support marketing’s goals? Is the data available and well presented for the type of marketing activities desired?

Marketing Competence Areas

0% 20% 40% 60% 80% 100%

% of respondents with greater than 15% improvement

Return on marketing investment

Increase in gross sales/revenues40%

21%

34%

50%

Company has strong marketing strategy planning process

Company does not have a strong marketing planning process

Mark

eti

ng

Metr

ics

0% 20% 40% 60% 80% 100%



Increase in gross sales/revenues40%

21%

34%

50%

Company has strong marketing strategy planning process

Company does not have a strong marketing planning process

Mark

eti

ng

Metr

ics

Those companies which reported utilizing a strong marketing planning process consistently outperformed their peers in terms

of business and marketing performance



Target: The ability to consistently identify and develop the right offer, to the right customer at the right time at the right price.


0% 20% 40% 60% 80% 100%

Customer profitability modeling

16%

51%

33%

BIC

Industry Norm

Laggard

% of respondents

Cap

ab

ilit

ies

Leaders reported using customer profitability modeling techniques at significantly higher rates than average and

lagging marketing programs to assess customers and marketing campaign investments



Act: Campaign execution and optimization. The ability to consistently provide the desired customer experience by delivering the right offer, to the right customer with the right message at the right time.


0% 20% 40% 60% 80% 100%



Increase in gross sales/revenues

Customer retention rate

Annual ROI per customer20%

41%

43%

24%

33%

50%

34%

50%

Agree that campaigns optimized to produce maximum efficiency

Disagree that campaigns optimized to produce maximum efficiency

Mark

eti

ng

Metr

ics

0% 20% 40% 60% 80% 100%




Customer retention rate

Annual ROI per customer20%

41%

43%

24%

33%

50%

34%

50%

Agree that campaigns optimized to produce maximum efficiency

Disagree that campaigns optimized to produce maximum efficiency

Mark

eti

ng

Metr

ics

Those companies which leverage technology to raise confidence and measure of execution activities, are more

likely to maximize results across most metrics



Learn: The ability to consistently adapt and learn through marketing initiatives. Processes and technology for gathering, tracking, and reviewing performance metrics.


0% 20% 40% 60% 80% 100%

Greater than 15% improvement

15% or less improvement





41%

24%

36%

23%

77%

64%

76%

59%

We monitor and proactively respond to changes in customer behavior patterns

We do not monitor and proactively respond to changes in customer behavior patterns

% of respondents

Mark

eti

ng

Metr

ics

0% 20% 40% 60% 80% 100%







41%

24%

36%

23%

77%

64%

76%

59%

We monitor and proactively respond to changes in customer behavior patterns

We do not monitor and proactively respond to changes in customer behavior patterns

% of respondents

Mark

eti

ng

Metr

ics

Above average companies, those reporting >15% ROMI, were able tomonitor and proactively respond to changes in customer (channel)

behavior



Marketing Evolution Levels

Basic

Intermediate

Advanced

Expert

Visionary


Capabilities - “Basic”Think “Mass Marketing”

Emphasize a quality service or product – not a lifetime customer experience

Largely TV, radio, print ads

Direct mail using shotgun mass marketing techniques

Message and offers not differentiated

Limited recognition of individual customers or preferences

Provides undifferentiated service levels to all customers

Few channels

Very little data integration

No data cleaning

Manual querying and extraction of data

Static, product-focused reporting

Manual or no response tracking

Limited or no effectiveness reporting

Product & transaction data dumps

Page views

Sessions

Visits

Marketing Focus Data / Reporting Focus


Capabilities - “Intermediate”Think “Segment Marketing”

Emphasize customer satisfaction

Customer and product focused

Use of demographic data

Some use of past purchasing data

Some Customer focus but still heavy product focus

Limited use of analytics

Regular & ad-hoc outbound, some multi-stage

Simple testing of offers and messages

Few channels

Marketing Focus

Low CRM infrastructure / strategy to manage the customer experience

Limited data cleaning

Manual querying and manipulation of data to build customer lists and analyze customers

All reporting based upon historical insight. No forward-looking capability.

Limited, weekly reporting

Manual response tracking

Data / Reporting Focus


Capabilities - “Advanced”Think “Target Marketing”

Focus on satisfying customers to ensure continued revenue streams

Both customer and prospect focused

Some application of predictive analytics for segmentation

Segmentation driven offers and messages

More advance campaign analysis

Rules-based contact strategy

Simple event-driven

Marketing Focus

Regular data cleansing

Marketing technology infrastructure built

More advance campaign analysis.

Forecasting begins - the ability to look ahead.

Regularly refreshed prospect data

Weekly updated customer view

Looking at different targeted segments and how they respond online.



Capabilities - “Expert”Think “Event-Based Marketing”

Create customer loyalty to ensure continued revenue streams

Widespread use of “automated” predictive analytics

Complex, analytically driven segmentation and targeting

Highly differentiated offers and messages

Technology enabled near real-time recognition of customer names, preferences and value

Automated, regular outbound, and multi-stage campaigns

Event-driven and some “Right-time” inbound

Complex, rules-based contact strategy

Marketing Focus

Data quality issues identified and resolved at source

Comprehensive prospect data

Use of cross metric dashboards and Comprehensive BI

Enhanced response tracking enables complex automated response analysis

More sophisticated forecasting

Full integration of data into the multi-channel perspective, to allow accurate offers of right product, right channel, right person, right time.

Scorecarding and ROI visualization.



Capabilities - “Visionary”Think “Interactive Marketing”

Marketing Focus

Heavy focus on integrating all customer data

360 degree view of customer across channels

Real time access to the right information in order to make customer-based decisions

Totally integrated, fully collaborative data access

Proactive BI allows micro-management of campaigns

Use of rules and scoring code to influence online behavior in near real time for cross sell and up sell.

Data / Reporting FocusCreate customer advocates (Promoters) to ensure continued revenue streams

Real time access to the right information in order to make customer-based decisions

Real-time analytics drive personalized offers during inbound contact

Vary customer treatment based on value across the enterprise

Segmentation is based on customer needs, preferences, behaviors and economic potential.

Optimization of campaign offers across channels and time to maximize the returns to our organization

Tailored content, tailored offers.


SourceSource EncodingEncoding MessageChannel

MessageChannel DecodingDecoding ReceiverReceiver

Communication ProcessMarketer Customer

ProductA, B, C …

PriceA, B, C …

PlaceA, B, C …

PromotionA, B, C …

Noise

“There is a point at which communication with customers can turn into harassment. You may want to forge more relationships with affluent customers, but do they want them with you? Attempts to build relationships with disinterested customers can quickly backfire, as you may be perceived as a pest.”- Business Insights

Average U.S. Consumer is exposed to:

102 TV Channels49 Radio Stations10 Newspapers

100 million phone numbers now on the federal “Do Not Call” list.


Customer Intelligence cuts through the noise

Broad generic market

Broad product market

Specific market segment(s)

CustomerRelationshipMarketing

Targeted Marketing

High personalizationNarrow audienceDeep relationshipTwo-way; ongoing

dialogue

Low personalizationBroad audienceShallow

relationshipOne-way dialogue

MassMarketing

Bogota

SegmentMarketing


SourceSource EncodingEncoding MessageChannel

MessageChannel DecodingDecoding ReceiverReceiver

Marketer Customer

The Right CustomerThe Right OfferThe Right MessageThe Right Time

Relevant & Timely

ProductA

PriceA

PlaceA

PromotionA

Customer Intelligence Creates Trust

TRUST& Feedback


Global Reach & Local Presence

394 offices in 51 countries

9,804 employees

4.5 million users worldwide • 40,018 sites • 110 countries

Hundreds of local user groups globally


Corporate Strength & Stability

Consistent revenue growth & profitability

Commitment to innovation

Investment in domain expertise

R&D Spend:Percentage of Total Revenue

29 years

Rev

enue

$1B

26%


SAS: Employer of Choice

SAS continues its unbroken run on FORTUNE’s list of 100 Best Companies to Work For SAS has appeared every year the list has been compiled. This year the company comes in at No. 30.


Customer IntelligenceRecommended Reading & Other helpful sites:

The Loyalty EffectBy Frederick F. Reichheld

Return on CustomerBy Don Peppers and Martha Rogers, PH.D.

Angel Customers & Demon CustomersBy Larry Selden and Geoffrey Colvin

www.BetterManagement.comwww.destinationCRM.comwww.marketingpower.com (AMA)www.dmnews.comwww.CRMGuru.com


Thank You

Alan SeeCustomer Intelligence SolutionsSAS Americas

4555 Lake Forest Drive, Suite 150Cincinnati, OH 45242

513-563-9444 Ext 8247