Every year companies of all sizes invest enormous resources in marketing activities. Small and medium enterprises (SMEs), too, spend a sizable amount but much of the money is wasted.
Many companies still go by instinct and do not rigorously measure the impact of their marketing programmes. They do not have the information infrastructure to continuously improve the marketing process nor do they allocate resources based on an accurate assessment of opportunities.
They also do not fully consider the interactions between various marketing processes and between marketing and other business processes. Most importantly, they do not have the commitment or the tools to keep improving the marketing process.
Efficient, cost-effective
The first step in this improvement journey calls for improving the efficiency and effectiveness of every marketing process such as customer acquisition, cross-selling, and retention.
Every marketing process should be increasingly cost-effective from a customer lifetime value perspective. For example, the cost of acquiring a new customer should be measured and continuously reduced by developing better acquisition channels and more effective acquisition offers or models.
Marketing processes with unacceptable long-term return on investment (RoI) should be detected, reengineered, or discontinued. For example, a channel of acquisition that produces, at a cost of Rs 1.5 lakh a customer, new customers who return Rs 2 lakh during their lifetimes should be dropped or reengineered.
Improve allocation
The next step is to improve marketing resource allocation. The RoI in every marketing process should be monitored, and resources shifted from less productive processes to more productive ones. For instance, if RoI in customer acquisition is 120 percent, and the return on investment in customer retention is 150 percent, resources should be diverted from acquisition to retention.
The next challenge is to improve the integration of the marketing process with the new product, organisational development and other business processes.
It is a self-sustaining, never-ending process that once started, feeds itself with a fraction of the incremental profits it generates. Its ultimate destination is zero wasted marketing resources.
Build on knowledge
The fuel that propels the process is marketing information. Its engines are the marketing database and the marketing knowledge base.
The marketing database captures all the information on the relationship between a company and its customers. The database typically includes information on all purchase events, customer satisfaction events, promotion events, and inquiry events.
It also includes detailed descriptions of each customer's acquisition source, acquisition date, and demographic profile. This information enables the measurement of customers' lifetime value, customers' response to various marketing processes, and the RoI in specific marketing processes.
The marketing knowledge base captures the knowledge gained from implementing, measuring, and continuously improving marketing processes. It contains such information as the relative efficiency of different acquisition channels.
The marketing knowledge base should also capture information on relative ROI in various marketing processes and on the evolution of the efficiency of the major marketing process. It also captures information on the responses of customers to each marketing programme
To be more conclusive, both databases should be readily accessible to every marketing officer through user-friendly tools. They should also be enhanced with marketing decision support systems and expert systems to amplify their use. This could be built gradually by SMEs.
Without a commitment towards honing the marketing process and building a data as well as knowledge base, scarce resources will be allocated to unprofitable processes, while potentially profitable processes starve. As a marketer, you just cannot afford it.
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