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High Performance Marketing:
Marketing Infrastructure: Deciding When to Do It Yourself

online columnist Steve Schultz     Column published in DMReview.com
October 13, 2005
 
  By Steve Schultz

Sometimes a state-of-the-art marketing infrastructure is like that huge banana split we would always order but never finish when we were small children. The lesson about our eyes (vision) being too big for our stomach (organization capabilities) is one that we learn early in life, but we sometimes need help remembering it in each new situation. How can you tell when your marketing infrastructure vision is too big for your organization to handle alone?

There are three primary considerations when making a determination about your organization's ability to create the envisioned marketing infrastructure on its own. They are:

1. Capital Investment: How much money do you have available to spend on acquiring the hardware, software and network to make the infrastructure a reality? The greater the restrictions, the more likely you will be forced to scale back that vision or leverage outsourcers to extend your available investment dollars.

2. Scale: What is the overall number of customers and prospects, and what is the overall activity level that will exist for key processes? The smaller your customer/prospect or activity base, the less likely you are to be able to create cost-advantaged processes.

3. Skills: What are the gaps between your organization's current human-capital experience base and that which is required to successfully leverage the new environment? The greater the gap, the more time and investment will be required to enable you to realize your future vision.

While there are no hard and fast rules for when an in-house or an outsourced solution is the right solution, you may want to consider some industry heuristics that exist for the various aspects of your marketing infrastructure. In the next portion of this article, we will review seven aspects of the typical marketing infrastructure and review some of these heuristics that may aid you in your decision-making process. The seven marketing infrastructure areas to be addressed are: data quality, database, creative, list, reporting, analysis and real time.

We will use a high, medium and low scale to evaluate each marketing infrastructure area. High, medium and low are defined in Figure 1 for our three considerations:

Figure 1: Some Marketing Infrastructure Areas

Data Quality: These tools are commonly called "householding" tools. They allow you to cleanse the quality of the information to be loaded from your sources' systems and to ensure that data is properly associated with the correct account, individual or address. These tools also allow you to standardize the format of addresses and understand the deliverability of addresses. To make your data quality function work well, you will need to invest in a software package to meet your needs and train key IT resources to use the package. Optimizing the tool's ongoing execution will be dependent upon leveraging experienced software tool assistance to create automated data processing routines.

Capital Investment

t

Scale

t

Skills

t

Bottom Line: Explore outsourcing if you are capital constrained and /or want to achieve high levels of operational efficiency without making investments in creating specialized skilled individuals.

Database: Database options for hardware and software can vary dramatically. However, even with a low-cost hardware and software solution, the costs of defining and populating a data model require significant hardware and some specialized training for IT resources. Additionally, without a customer/prospect population in excess of 1 to 2 million, the ability to achieve good operating scale without outsourcing is limited.

Capital Investment

F

Scale

F

Skills

t

Bottom Line: Unless your customers/prospects number more than 1 to 2 million, your up-front and ongoing cost structures are likely to be better with an outsourcer.

Creative: The number of hardware and software solutions to aid in creative development and execution continues to expand. While some level of specialized skills training is required, no significant scale is typically required to create operational efficiencies.

Capital Investment

E

Scale

E

Skills

t

Bottom Line: If you are willing to hire the talent and can keep resources fully occupied, you may want to bring this one in house. The only caveat is that breadth of talent may be better at an agency.

List: There are a variety of hardware and software options that provide a tremendous opportunity to automate and standardize the definition and execution of target marketing lists. Typically, these tools will require some level of specialized training and source data knowledge, and the scale to achieve returns typically requires an organization to be creating 10 to 20 lists per month to be able to justify the capital expenditure and achieve efficient operating scale. Without such size, many organizations will either remain wedded to inferior tools or outsource this function to leverage the scale of an outsource provider.

Capital Investment

t

Scale

t

Skills

E

Bottom Line: Once you have the scale, bringing this one in-house garners most companies superior ROI.

Reporting: Tools that support standard and ad hoc report creation are numerous and high quality. There is a wide range of hardware and software options to meet most organizations' budgetary restrictions as well as permit them to achieve sufficient scale for good operational efficiencies. Some minimal training in the selected tools is required, but most organizations can leverage application support personnel and simply extend the breadth of their toolset coverage.

Capital Investment

E

Scale

E

Skills

E

Bottom Line: Get yourself a tool and get it implemented. Most organizations have a tremendous amount of hidden costs tied up in various reporting solutions that can be consolidated to realize operational and quality improvements.

Analysis: The variety of tools that help create advanced analysis (predictive models, segmentations, etc.) is immense, and there is little to no scale needed to reap benefits from analysis activities and achieve reasonable operating costs. Historically, the largest issue facing most organizations was the ability to attract and retain the highly skilled talent required to ensure that conclusions drawn from analyses were appropriate. Given the continuing advancement of these tools, the skills needed to use these tools effectively continues to decline.

Capital Investment

E

Scale

E

Skills

t

Bottom Line: If you can invest in a more user-friendly tool, now may be the time for you to increase your in-house analytics capabilities. Some of the most valuable business insight comes from this function when used adroitly.

Real Time: Focusing on improving the targeting and personalization of messages by using information accumulated in real time to refine the parameters for the customer interaction remains the ultimate vision for many marketing infrastructures. However, the costs to arm multiple disparate channels is often extraordinary. Further, outsourcers rarely offer a significant cost advantage unless the operating environment is also provided by the outsourcer integration into operating environments is required to achieve the real-time advantage.

Capital Investment

F

Scale

F

Skills

t

Bottom Line: Make sure you vet your business case and start small. Real time is expensive no matter how you slice it, and no scale advantage is typically available from an outsource provider unless the outsourcer is providing both your operational and marketing infrastructures.

...............................................................................

For more information on related topics visit the following related portals...
Analytics, CRM and ROI.

Steve Schultz is a leading customer relationship management (CRM) practitioner who combines an understanding of information technology with extensive business process design experience and information-based decision-making methodologies. As executive VP of Client Services for Quaero (www.quaero.com), he helps clients identify, justify, implement and leverage leading edge analytical CRM environments to create or/and improve their database marketing capabilities. Schultz has worked with companies in the financial services, telecommunications, retail, publishing and hospitality industries. Contact him at schultzs@quaero.com.



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