MARKETING TECHNOLOGY: Getting ahead with systems - IT is an essential weapon in the marketing armoury, but marketers still have a great deal to learn, writes Sharon Smith

Ask any company executive a question about computers and they will expound on how vital a role IT now plays in an organisation’s survival.

Ask any company executive a question about computers and they will

expound on how vital a role IT now plays in an organisation’s

survival.



Prod them a bit further and they will also reel off how marketing has

long been recognised as a vitally important weapon in a corporation’s

fight to gain a crucial competitive edge over rivals in the

marketplace.



It could be argued a company only has to give its marketers free access

to the latest IT to be way ahead of its rivals.



Not according to research by KPMG. Far from being happy with their cache

of IT, marketers claim it is not only failing to meet their needs, but

that it is actively hampering their efforts (see box).



So what has gone wrong and who is to blame? Marketers? Company

boards?



IT suppliers? All of them, according to industry observers who are not

at all surprised by KPMG’s findings.



Mike Juer, managing director of Matrix Workstations, supplier of sales

and marketing IT systems and now part of the Baan Group, considers that

only around 30% of marketing departments in UK companies are using IT

effectively.



If that seems bad, the situation is even worse in Europe. Nick Hewson,

managing director of the Hewson Group, calculates that a mere 2% to 3%

of major corporations in Europe - the equivalent to the FT 5000 -

operate strategic customer management systems.



Both Juer and Hewson admit that, to be fair, IT specifically targeted at

marketing departments only really started appearing six to 12 months

ago. The fact that the marketplace is such a new one is a fundamental

part of the problem because many marketing directors, in their 40s and

50s, were not brought up with IT and simply do not understand it.



IT-illiteracy



’They missed out on the IT revolution at school and are therefore

probably IT-illiterate, whereas marketing managers immediately below

them and in their 30s are more IT-literate,’ says Juer.



This lack of understanding and knowledge is exacerbated by boards of

directors of the same age group and suffering from the same problem, who

tend to view IT purely in money terms and how much it is costing the

company.



When the IT fails to perform they are outraged that anything with so

large a price tag attached to it does not deliver exactly what is

needed.



This situation is not helped by the fact that the price of personal

computers is falling yet most companies still seem to be throwing more

and more money into a bottomless pit for their IT systems.



’The reason for this rising cost is that companies are becoming

ambitious in what they are trying to achieve with their IT. There has

been a tremendous surge in the past five years toward customer service

systems but a lot of companies are worried because the expected benefits

are not forthcoming,’ says Professor Robert Shaw, a consultant at the

Chartered Institute of Marketing.



The reason for this failure is a simple one but one which most companies

have yet to grasp: you can spend all the money you like on

state-of-the-art computer systems but unless you are installing the

right systems to be used in the right way, it is money down the

drain.



In order to be able to select the right systems, marketing personnel

have to be able to scale a huge culture gap that exists between the

business side of a company and IT personnel, whether from the company’s

own IT department or an outside IT supplier.



It is a gulf in understanding that is not easy to cross, admits Roger

Taylor, manager in marketing systems, operations and development at the

Automobile Association. ’There is always going to be friction between

the two sides because often the business side is asking for things that

are expensive to deliver.



’So there has to be a compromise in what is delivered and that seems to

be something that marketing people in particular are never keen to

accept,’ says Taylor.



Bridging the divide



Mark Godfrey, marketing manager at Direct Line insurance, agrees that

both sides of the divide must make an effort to see the other point of

view. But he adds: ’A lot of it comes down to the attitude of the IT

department and how integrated it is with the rest of the business.



’It is a case of making sure that the IT personnel are working closely

with the business side and understanding its needs rather than existing

in an ivory tower.’



IT suppliers themselves also come in for some of the blame, often

talking to marketing directors in deliberately unintelligible IT-speak

in a bid to sell them systems they neither understand nor want.



’There’s a lot of pressure from suppliers to buy their solution but it’s

often presented in a very technical way and not understood. For example,

data warehousing is just the name of a type of technology and that

doesn’t tell marketing directors how it can be used effectively in their

department,’ says Shaw.



But, in an ironic twist of events, if the gap between IT and the

business sides is causing harm, it is the lack of division between the

business departments themselves that is creating further confusion and

difficulties.



All too often, boards of directors are attempting to develop their

computer systems by committee, in order to install the same system to

cater for all of the departments, including marketing.



The result is a system that cannot possibly satisfy the disparate goals

of disciplines as diverse as marketing, finance and human resources, so

it ends up failing to deliver what any department wants.



Companies fail to get to grips with IT at their peril because it is

becoming a vitally important weapon, particularly in the hands of the

marketing department.



’IT is an absolutely integral part of our whole business,’ agrees Direct

Line’s Godfrey. ’We have just finished building a data warehouse so that

we can get very quick data feedback on our customers. But that is only

one part of our IT system, which we use to measure and to increase our

marketing performance.



’We use IT to understand how different marketing activities are

delivering results and to understand our customers better by examining

data on who we are attracting, who we are failing to attract, who is

buying insurance and who is ringing up for quotes.’



Profile builders



Being able to store and analyse data is an invaluable tool for a

marketing department because it enables it to build up detailed profiles

of customers. This in turn enables it to devise strategies and campaigns

directly targeted at specific customers to retain their custom through

special offers, and details of new products tailored for their

particular needs.



’If a company understands its customers better it increases its

profitability,’ says David Stone, principal consultant with KPMG.



IT also enables a company to find out who it is failing to attract so

that it can devise ploys to bring new business on board. Computers allow

telesales and direct sales teams to assemble data at the touch of a

keyboard, a particularly helpful aid when trying to win new business or

when dealing with existing customers. Doing business with somebody who

can produce instant and accurate data is always impressive.



But even if the right IT system is installed, it has to be used

correctly.



Industry observers agree that a fatal flaw among marketing directors is

a tendency to become obsessed with the operational side of IT, using it

for quick-fix tactical solutions to today’s problems, rather than

recognising it as a powerful tool for long-term strategic planning.



Juer says: ’The decision to buy IT should be nothing to do with just

wanting to automate a function such as telemarketing. It’s all to do

with strategy. Neither a department nor a company can now fulfil its

strategic plans without IT.’



While the evidence of KPMG’s research suggests that there is still a

long way to go, observers are optimistic that things are moving in the

right direction. Hewson says: ’There are many marketing people coming to

us because they want to learn more about IT and what it can do for

them.’



The good news is that their needs are likely to be met in a way that

would have been unheard of two years ago. New products are hitting a

marketplace that is consolidating into major global suppliers, and sales

of marketing and sales IT are expected to increase by 60% in 1998.



’In just two years’ time a lot more marketing directors will be using IT

effectively for the first time,’ predicts Juer.



However, Shaw has yet to be convinced: ’About 10% to 20% of companies

will be doing better in this area in five years’ time. But most will end

up merely copying what their competitors are doing, and making a lazy

job of it at that.’



The Windows 98 Show is being held at the Grand Hall, Olympia from March

10 to 13. It is organised by IT Events which can be contacted on 01256

381456.



KPMG: THE HIDDEN ADVANTAGE



’The Hidden Advantage’, a 1997 survey by KPMG of more than 200 UK

companies revealed:



- 46% of respondents did not consider their IT to be effective.



- Fewer than one in ten rated IT as ’extremely effective’ in creating or

improving customer information systems.



- 11% of respondents blamed the ineffectiveness of their IT systems on a

lack of information.



- 53% cited ’maintaining customer loyalty’ as a key marketing

priority.



But only 15% planned to invest more than half their marketing budget in

customer retention, while 32% intended to spend more than half the

budget on attracting new customers.



- Almost one in three respondents were unaware of the term ’data

warehousing’.



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