Elana Anderson Eric Schmitt Senior Analyst Senior Analyst

ForrTel:Relationship Marketing Trends And TechnologiesElana Anderson Eric Schmitt

Senior Analyst Senior Analyst

Forrester Research Forrester Research

June 28, 2004. Call in at 10:55 am Eastern Time

Agenda

• New market dynamics demand change

• The shift to Left Brain Marketing

• The evolution of the marketing technology backbone

• Recommendations

The big picture

Two technology trends are reshaping marketing

• Media fragmentation

• Addressability

Trend 1: Media fragmentation

• More media channels and content streams now compete for consumer attention

Media fragmentation: What it means

• Consumer choice grows

• Audiences fragment

• Competition for audience attention increases

• Per-contact costs rise

• Efficiency of advertising decreases

• Clutter results

• Attention spans shorten

Erosion of attention impacts advertising

Direct marketing response rates are in decline

Email

Catalog

Telemarketing

Responserate

Cost/contact

1.61%

1.46%

0.99%

2.32%

5.73%

$0.55

$0.18

$0.09

$0.63

$1.45

$3.95

$1.31

$1.28

$2.88

$6.17

7.2

7.3

14.2

4.6

4.2

Direct mail

Inserts

Revenue/contact

Revenue/cost

Source: Direct Marketing Association

The painful effects of clutter

January 2004

Trend 2: Predominance of addressable media

» Sometimes addressable

– Web

– Retail POS

– TV

» Not addressable

– Radio

– Newspapers

– Billboards

» Addressable

– Direct mail

– Email

– Telephone

Media addressability: What it means

• Targeting prevails

• Measurability increases

• Consumer privacy concerns grow

• Regulatory environment changes

• Data management gets tougher

• Consumer control grows

Addressability’s byproduct

Base: 470 responses recruited from PlanetFeedback.com membersSource: Intelliseek and Forrester Research,

Inc.

Personalvideo

recorder

Pop-upblocker

software

Spamblocker

software

Do notcall list

82%

56% 52%

14%

“Do you use, or have you signed up for any of the following services or technologies?”

Putting it all together

• Media fragment

» Marketers’ need to target grows

• Addressable media eclipse mass media

» Marketers’ ability to target increases

• Marketing becomes more measurable

» Analytical marketing techniques predominate

Welcome to the era of Left Brain Marketing

As the marketing environment changes . . .

• Traditional contact strategies are losing effectiveness

» Increasingly difficult to gain access to the audience

» Marketers exclusively focusing on “push marketing” are missing opportunities

• Focus on retention is more critical than ever

» High penetration in some consumer verticals

» Deeper penetration of the customer drives retention, value, and loyalty

• Visibility and accountability are a mandate

» Privacy legislation drives need for governance

To address these challenges, firms must . . .

• Centralize governance of customer communications

» Ensure compliance with consumer privacy legislation

» Migrate from product- to customer-centric marketing

• Integrate contact strategies across channels and lines of business

• Optimize the value of customer interactions

» Give marketing a voice in every interaction

» Transition from “push” to “pull” marketing

• Build a consolidated enterprise marketing technology infrastructure

To address these challenges, firms must . . .

• Centralize governance of customer communications

• Integrate contact strategies across channels and lines of business

• Give marketing a voice in every interaction

Marketing technology backbone

The marketing technology backbone

► Technology that supports and integrates marketing strategy, development, delivery, and measurement

Marketing automation platform

Marketing technology is evolving

MarketingCampaign

management

Customer

Sales

Service

Planning

Optimization

Sales

Service

Decisioningengine

Requirements of the enterprise infrastructure

Corporate governanceLine of businessOrganization

Traditional Emerging

Distributed modelSmall group of power

usersUsers

Higher volume and velocity, new types

Fixed schedule, few segments, batch-n-blastPrograms

External data, more timely access

Customer data warehouseData

Inline integrationAnalytics Separate environments

Direct mail, telemarketing

Inbound, transactional, etc.Channels

Recommendations

• Organizational and process change is a precursor to the success of the marketing technology backbone

• Get the right team in place

» Find a business sponsor with vision, power, and budget

» Understand the required skills

» Build a bridge with IT

• Prepare for organizational and process change

» Customer-centric

» Governance and accountability

• Start with the low-hanging fruit

» Work toward a long-term vision but deliver incrementally

» Crawl before you run

Elana Anderson

[email protected]

www.forrester.com

Thank you

Entire contents © 2004 Forrester Research, Inc. All rights reserved.

Eric Schmitt

[email protected]

www.forrester.com