As businesses tighten their IT budget belts in the face of the economic storm, how can marketers justify their technology spend?
By Rob Walker, Chordiant
No one would dispute the fact that the key to achieving the best possible customer experience is to implement technology that responds most effectively to customers' needs. But whilst, in theory, this may just sound like common sense, in practice the age-old friction between the marketing and IT departments often becomes a barrier to achieving this goal.
As marketing budgets experience their steepest fall in two years, there is enormous pressure on marketing managers to justify their spend, particularly when it comes to technology, which has traditionally been seen as outside of marketing’s remit.
Reconciling marketing’s needs for technology to offer the best customer experience possible with IT's belief that it owns the remit in this area continues to be one of the greatest challenges to delivering exceptional customer service.
Every penny counts
The latest Bellwether report reveals that the last quarter of 2007 witnessed the steepest fall in marketing budgets in two years, resulting from reduced sales revenues and poor profits due to the credit crunch. The report confirms that marketing budgets are expected to continue to fall if profits fail to recover.
For marketers, this will result in increased pressure to make every single penny count and improve return on investment in relation to their marketing spend. Furthermore, marketing will more than ever need to shake off its traditional reputation for placing greater value on creativity than accountability if it is to maintain its profile and budgets during the downturn.
This is particularly true if chief marketing officer (CMOs) want to have an impact at board level. In recent years, we have reached a position where more than 50% of the Fortune 500 companies now have a place on the board for their CMO. However, ensuring that board presence is maintained and valued throughout turbulent economic times is dependent on a number of factors, not least building strong, productive relationships between marketing and IT, where the cost arguments around replacing or upgrading legacy systems often cause conflict.
In a period of economic downturn, it is more than likely that an IT director will not be able to provide a business case for overhauling legacy systems. However, from marketing’s point of view, implementing the latest technology to improve customer experience across all channels is vital, regardless of the economic situation.
It is clear that in such environments a balance needs to be struck. As a result, it is imperative that the CMO can demonstrate how the implementation of innovative marketing technology will impact the customer experience and consequently drive business growth.
The crux of the problem lies in the fact that whilst marketers overwhelmingly see technology as mission critical to the success of their campaigns, IT does not typically assign the same importance to marketing activities. The onus rests with marketing to ensure IT understands the importance of marketing to the company and how it can contribute to long-term business strategy.
During the past 10 years, the evolution of the internet has dramatically changed how organisations interact with customers. Companies have recognised that traditional marketing approaches, such as advertising, are less effective today, and marketers are struggling to deliver value. Customers and prospects no longer want 'interruptive' brand communications; they want interactions that occur within the context of their lives, addressing their unique needs and desires at the right time and through the appropriate channels.
Delivering unique and relevant propositions in the right context ensures greater responsiveness because customers will believe the company has their best interest at heart. Customers who participate heavily in Facebook and similar online communities will be predisposed to respond favorably to interactions initiated in these channels.
It takes two
In today’s age of 'interactive marketing', fostering a relationship between marketing and IT is key to success. Interactive marketing campaigns utilise many different channels, such as email, SMS, web, and emerging channels, and are heralding the introduction of a new set of marketing rules. Marketers are having to adapt traditional approaches to ensure that campaigns prove effective within these new channels.
Penetrating these online communities is extremely worthwhile as they are one of the most powerful tools that a marketer can deploy for customer retention, word of mouth and customer insight.
Leveraging both the marketer’s and IT director’s expertise in their individual domains and ensuring that the IT department appreciates the strategy behind such interactive campaigns is the best approach in terms of ensuring that marketing delivers ROI.
Only when the IT and marketing directors are working with the same goals in mind can marketing carry its full weight in boardroom level discussions on the purchase or development of technology to support the customer experience.
Rob Walker is VP decisioning & marketing at Chordiant