The Emergence of E-Marketing
As recently as 25 years ago, some marketing professors at the Wharton School were stating that the marketing profession was half science and half art. The scientific part consisted of gathering valuable marketplace information about customer needs, customer satisfaction, and competitors. The artistic part consisted of applying this information to create marketing mixes to ensure that the right product/service was delivered to the right segments, and that the product/service was distributed, priced, and promoted in such a way so as to entice the segment buyers. It was suggested that there is no one right way to segment a market and that the two greatest tools that a marketing person could be born with are a nose to smell and a belly to feel shifts in the marketplace.
Has technology changed this way of thinking? Absolutely. Starting in the mid-1990s, several CRM software companies began to offer basic marketing automation functionality. This included helping companies to create marketing encyclopedias as repositories for valuable marketing information, to manage key events such as a trade show, and to manage basic marketing campaigns. Customer profiling, assisted by predictive modeling tools, also began to emerge.
In the late 1990s e-marketing vendors, taking advantage of the booming Internet and building on the work of marketing automation vendors, extended marketing functional capabilities. In fact, today's e-marketing can be defined as an expanding set of automation tools to help companies identify their most valuable prospects and customers, to convert and grow them, and to keep their loyalty for life. The expanding set of tools includes:
Targeted Web marketing (e.g., Web banner advertising)
Permission-based e-mail direct marketing (e.g., special promotions)
Online customer behavior analysis (e.g., click-stream monitoring)
Lead acquisition, distribution, and management for sales reps as well as for distribution channel partners
Customer profiling and segmentation
Integrated campaign management and measurements
Customer engagement tools (e.g., reward-based surveys)
Customer personalization tools
Customer-driven services (e.g., collateral fulfillment, event management and execution, inquiry processing, direct mail requests, placement of orders)
Today's leading e-marketing vendors and their key strengths include:
Annuncio— marketing process and marketing interaction automation
KANA— customer interaction platform and many of the above functions
Many of these players have been or currently are in an aggressive acquisition mode (e.g., KANA buys Broadbase, e.phiphany buys Octane). ISM sees these acquisitions as a way to compete within the more established CRM space by offering comprehensive e-CRM offerings rather than one or more “best-in-class” e-marketing “point” solutions. ISM recognizes that today's e-marketing vendors are focusing attention on the integration of data from operational CRM systems (e.g., sales, marketing, customer service, executives) as well as back-office ERP software packages such as Oracle, SAP, Peoplesoft, and others in order to create more universal customer profiles and increase the effectiveness of marketing efforts.
At the core of an e-marketing system is an effective knowledge base that continuously learns from it users. The knowledge base serves as a repository for the structured and unstructured data, drawn from various systems, and is critical to the execution of e-marketing functions. Some e-marketing vendors have written their own knowledge base whereas other e-marketing vendors opt to integrate a third-party “best-in-class” knowledge base solution.
E-marketing systems are red-hot for some very good reasons. For example, a recent Forrester Research finding stated that e-marketing, when properly implemented, can reduce costs for the production and delivery of promotional materials from $.50 to $1 (per unit) for a single catalog mailing to $.10 for a highly personalized e-mail campaign. E-marketing can also speed up marketing campaigns (e.g., e-mail direct marketing), allow you to test a marketing campaign before incurring large costs, and provide higher campaign response rates. Moreover, e-marketing can eliminate waste by focusing on the most profitable customer segments, helping to generate more revenues from the existing customer base, helping understand the behavior of your customer base, and helping to generate customer loyalty via personalization of services. Many companies are turning to e-marketing as a way to help them manage leads via distribution channels, as well as to provide headway into other CRM software modules (e.g., customer [self] service, cross-and up-selling).
While the future of e-marketing remains vibrant, there are challenges that users will likely confront and need to resolve. These challenges include traditional Web challenges such as:
What to offer once the customer gets to your site.
How to create an environment which makes the visitor want to stay on the site (i.e., site stickiness).
How to maintain customer loyalty given that competition is a mouse click away.
How to create a meaningful “Internet community” for e-customers to relate to.
How to use interactivity as a replacement for the loss of persuasive human interaction.
How to understand a customer's needs beyond inferential click-stream monitoring.
How to build trust. Customers may wonder whether the information they provide about themselves will be kept secret or used inappropriately.
There is an additional set of e-marketing challenges that revolve around the integration issue, e.g., the integration of new e-marketing tools with existing marketing automation tools (e.g., process management tools for campaign workflow, response management, lead management and routing, event coordination), the integration of e-marketing with other CRM core functions (e.g., sales, sales management, customer service, business intelligence, e-business), the integration of e-marketing with regular marketing activities (e.g., the integration between “click” marketing and “mortar” marketing), and the integration of e-marketing with classical marketing activities (e.g., decisions concerning which products for which segments at what prices).
While these challenges can be daunting, those companies that have successfully implemented e-marketing systems rave about the results. Here is a case in point. Recently, ISM worked with a leading DSL provider in North America. Prior to implementing their e-marketing project, the VP of Marketing explained that his company was being overwhelmed by the number of hot customer leads they were receiving from a variety of sources. Yet there was no system in place to efficiently send leads to the sales force nor was there a system in place to track these leads. Of greater concern, this DSL provider had no way to monitor the work of a key member of their distribution channel, namely the local telephone company who was responsible for provisioning the customer's DSL line. This DSL provider was often in the dark as to when provisioning had or would take place. Meanwhile, the hot customer leads were inundating the DSL provider with calls and complaints concerning the availability of their DSL and when it would be installed and unfortunately the DSL company had no way to accurately respond.
After installing their e-marketing system, which was eventually linked to the local telephone companies, the DSL provider was able to effectively capture, distribute and track their hot customer leads. Moreover, they could quickly provide hot customer leads with an exact status of their order over the phone or via their Web site using self-service.
As lead and order fulfillment problems began to ease, the DSL provider turned to other functions of their e-marketing system to obtain new customers (e.g., permission-based e-mail direct marketing) and to service these customers (e.g., direct ordering by customers and use of customer self-service built on a knowledge base to correct DSL line problems). Approximately six months after installing the e-marketing system, the VP of Marketing provided this good piece of news: the customer satisfaction rating had risen from below 60 percent to above 85 percent during the six-month period.