Marketers are placing multimillion-dollar bets on customer relationship management, hoping the future return will justify their investment. Those that don’t do their homework, though, can be asking for trouble, according to Don Neal, senior VP-marketing for Rapp Collins Worldwide.
Neal, who joined the Omnicom Group Inc. unit in February, said that while companies have much to gain from CRM, the pitfalls of spending before planning are real and perilous. Those that apply a great deal of rigor in analyzing their CRM goals and objectives will be the most successful, he said.
Neal joined Rapp Collins’ New York office after a three-year stint at Focalpoint Marketing Inc., where he was CEO. Before that, he spent 15 years at Hallmark Cards Inc., where, among other jobs, he was director-marketing and strategic alliances for the company’s loyalty marketing group. At Rapp Collins, his b-to-b clients include Exxon Mobil Corp., Reuters Group plc and Dell Computer Corp.
BtoB: How’s business?
Neal: Well, I think anybody in the advertising and marketing services business would be less than honest if they said business is great. This is a very difficult year. I think the marketing services category is doing better than the general advertisers because there’s a relentless focus on results and accountability, which serves companies like Rapp Collins and direct marketing agencies pretty well.
We’re getting back to the fundamentals of what our clients’ business problems are and focusing on solving those issues as efficiently as we can. We have adopted a Six Sigma process at Rapp Collins to bring rigor and discipline to how we manage our business internally and how we manage our clients’ business. So that’s been very helpful to improve performance.
BtoB: CRM spending and alliances are on the rise, but return on investment is elusive. Are we headed for a CRM downturn?
Neal: I think there’s going to be a backlash, really, as a result of CEOs asking what the ROI on technology investment has been. What are we seeing for the investments we’ve made in CRM technology and systems and infrastructure over the last 24 months? They’re asking the same questions about their advertising and marketing budgets as well.
I think CRM as a genre of marketing has been put under the microscope, and I think technology is getting the greatest scrutiny because that’s where most of the spending has occurred.
BtoB: What mistakes do you see b-to-b companies making with regard to their CRM strategies?
Neal: The mistake that we see b-to-b companies making is that they had invested in the technology first. They spent a tremendous amount of time and energy without having a clear business case and endgame that quantifies results that’ll be driven by the investment in the technology and the systems and really the hardware and the infrastructure to deploy CRM.
BtoB: So does that suggest a lack of marketing structure?
Neal: CRM is really a means to an end to become customer-centric. Customer centricity is a business strategy, and CRM is a term of art that helps a company bring to bear technologies, systems, marketing communications and a series of processes that allow it to focus on its customers in a more disciplined, focused way. So even the definition of CRM is in the eye of the beholder.
BtoB: What as a marketing executive keeps you awake at night?
Neal: I am cautiously optimistic. I see a pretty bright future ahead. I continue to see that the shrinking of above-the-line advertising budgets is beginning to benefit marketing services firms as clients ask for more accountability and are looking for an ROI on their marketing, advertising and sales investments.
I think that companies that measure the effectiveness of marketing are going to be the winners going forward.