Managing Customer Relationships in Uncertain Times 11 of 13

Option 9: Focus on return on investment

The immediate response to uncertainty will be to trim both variable and fixed costs. In these times, management will focus on what they can control (operating expenses) not on those they cannot (demand). As the economy stabilizes and returns to a growth mode, many will focus initial investments in areas that can be managed as variable costs.

As a result, we forecast an increase in investments for consulting and temporary staff over new permanent hiring and an overall acceleration of outsourcing. Outsourcing will likely involve both personnel and systems.

Calculating the return on investment of major customer initiatives can be complex. Management typically does lacks in its ability to continuously measure ROI. Most companies develop an ROI case for new initiatives, but subsequent measurements are infrequent.

We recommend that companies use the following three-level ROI analysis: begin with strategic business objectives, then separate those objectives into operational objectives—business unit or geographic—and further into tactical objectives at the group level. Once this model is developed, it should be reviewed as each new investment is made.

Focus on your timeframe

Our series entitled "Cut your marketing budget, not your strategy," spread over the past eight posts, dealt primarily with the short-term. While these methods may be all you need to cut your costs for the time being, many marketing departments are facing longer-term cuts and reductions in their budgets. Given the current economic climate in which nothing is for certain, it may be time to take a look at ways you can cut back on spending in the longer-term. Studies have shown that making strategic investments in marketing technology, while they might decrease the overall operating budget in the short term, have a long-term effect in reducing marketing costs. Our next blog series will deal with ways companies can invest in the long-term to decrease marketing costs. If you'd like to read the content of our most recent blog series in one PDF document, check out our resources page. Downloading a white paper requires filling in a quick form. Enjoy!

Cut your marketing budget, not your strategy- part 8

For our last installment, we have the cost-cutting idea of leveraging every contact with your customers. Each and every touch-point with your customers, from mailing an invoice to waiting on hold, provides an opportunity to communicate with them. Be creative! 8) Leverage every contact with the customer. Look at all the ways a customer has contact with your organization and try to leverage all the relevant touch points. Postage is expensive, so make sure you optimize any mail-based touches. Statements, invoices and even the physical delivery of your product may all be great places to drop in a marketing message. Think about the inbound touches as well-- can service reps up-sell or get a product message across? What are your customers listening to on hold– music or the pitch on the value of upgrading to the newest version of your product? Treat every customer-related interaction as an opportunity to educate them on your products and services.

Cut your marketing budget, not your strategy- part 7

Today, we have the short-term budget idea of assessing your rented data. If you buy lists of leads, this point is particularly relevant to you. Keep in mind that data always needs refreshing! 7) Assess your rented data. Most of the time, only a small amount of the data offered by data providers are relevant and being used in analytics or to drive programs. Of the hundreds of demographic or firmographic data elements you purchase, how many are actively being used? Are you using this information to drive a single program? Is the program generating enough ROI to justify the expense? Not only is this information expensive to purchase, but maintaining it carries a cost. This cost includes storing the information and maintaining the integration points or load routines into the database. Many times, the process is on autopilot with the data coming regularly through automated feeds set up by past previous process owners and over time, the organization forgets why it was important. Remember, the information contained in your rented data is always changing and has a limited lifespan so make sure you are using it right away. You should also keep in mind that the firms selling this information will always be there ready to sell you new data when you need it.

Cut your marketing budget, not your strategy- part 6

Today, we have "review process for savings." It might be difficult to track down all the business units sending their own e-mail campaigns, but if you can consolidate all the company's e-mail blasts into one area, it might help cut back on the time and money spend on each campaign. 6) Review process for savings. Process improvement can also save you money and improve your brand. Do you have several business units creating and executing their own e-mail campaigns? Now is the time to improve the brand and the process by consolidating down to one e-mail center of excellence. One central group ensures all e-mails are consistent to the brand, are executed using the best processes, and are not competing with other units trying to market to the same customer or prospect.

Cut your marketing budget, not your strategy- part 5

For our fifth day in our series on how to cut your marketing budget and not your strategy, we have "clean up your system or platform." Take a look at your existing technology and licences to see if you can cut any corners or consolidate tasks. 5) Clean up your system or platform. It’s a great time to tighten up how you are spending budget on your marketing platform and/or tools. Do you need those ten years of historical data in the marketing database or would the last four years be enough? How much disk space and cost can be saved by archiving old data? Just make sure you are not actively using this data in your analytic algorithms for scoring, or other processing. Some tools change by the number of customer and prospects loaded into the database. Will archiving old data get you to a lower pricing level? Make sure you are using all the licenses you are paying for. Do you have people that use the tool once a week to pull a report? Can this task be given to someone else and save the separate license fee?

Cut your marketing budget, not your strategy- part 4

Today's post revolves around rethinking your testing and creative strategies. Creative testing is very expensive, but can you cut costs and improve deliverability by testing operations? 4) Save money in the short term by changing testing strategies. Under no circumstances should you stop testing your campaigns altogether. On the other hand, now maybe a time to focus on testing lists, copy, offers, timing, etc. and reduce the costly new creative package testing. New creative testing means incurring costs in multiple areas: creative development, account management, printing, lettershop, reduced postal discounts, new data entry and response processes, and even the analysis of the results. By focusing on the less expensive operations-based testing, you can still increase the effectiveness of your campaigns and tweak where necessary without burying yourself in the expenses associated with creative-based testing

Cut your marketing budget, not your strategy- part 3

Today we have our third installment in our series of cutting marketing costs while maintaining your marketing plan's quality. This series focuses on the short-term options for saving money. Our next series, debuting right after this one, will cover how to save your budget in the long term. 3) Reevaluate communication volume. Do a simple test: take the top 20% of your customer base and find out the average number of times they received some form of marketing communication from your company in the last twelve months. In addition, take a look at the type of communication (mail, call, e-mail, etc.) and what business unit within your organization sent it. Do you have the right number and mix of touches? Don’t be surprised if don’t realize number of times you are bombarding your best customers with various touches. It’s not uncommon for multiple business units within the same company to be marketing in an uncoordinated way to the same customers. With so many groups sending out daily or weekly recurring programs (newsletters, etc.), touches can add up quickly. Are they all really necessary or are you overcommunicating, thus negatively impacting the success of individual programs? How are you enjoying our series? Let us know in the comments!

Cut your marketing budget, not your strategy- part 2

2) Join forces with sales. The sales team is most likely facing the same cuts you are facing in marketing. Why continue to send the same number of leads into the sales force if the team does not have the capacity to follow up? Become more selective and drive only the highest-value leads into the sales channel. Reduce the outbound volume for your sales reps, allowing them to focus on the most qualified leads and attend to underperforming prospecting programs or lists when the reps need to fill their funnels. Less qualified leads can be driven to the less expensive channels like web-based information collecting or inside sales or put into your nurture program track until they are ready to go to sales. What are you doing with regards to linking marketing and sales? Tell us in the comments!