Relizon buys its way into CRM

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In a bid to erase database marketing and analytic weaknesses that have kept it from realizing its customer relationship management aspirations, The Relizon Co., Dayton, Ohio, plans to acquire analytics and campaign management company Epsilon Inc.

The deal, expected to close later this month, makes Relizon a soup-to-nuts direct marketing platform provider overnight, putting it in direct competition with established players in the space, including Harte-Hanks Inc. and Oracle Corp. Financial terms of the deal were not disclosed.

For Relizon, whose roots are in the slow-but-steady document and billing management software businesses, the deal underscores a desire to go whole-hog into CRMone of the few marketing technology areas that companies are still spending freely on. The companys leaders, meanwhile, hope that its expanded product reach will be enough to bring back b-to-b clients that had previously found its software roster lacking.

Achilles heel

Potential and current customers were telling Relizons sales reps that their companys lack of database management and analytic software and consulting services made it a poor choice as a complete direct marketing provider, said Rodney Hedeen, Relizon CEO. In fact, Hedeen said when he announced the acquisition to his employees, one sales rep admitted he once lost a sale to Epsilon because of its analytic concentration.

"Our clients wanted more," Hedeen said. "They wanted more data analytics, and they wanted to know the return on investment theyd get on smaller, targeted campaigns, and we couldnt do that."

Relizon began its search for a CRM acquisition by looking at 300 database management and analytic developer companies. It dismissed most of them for financial frailty or holes in their software roster, Hedeen said. It visited 30 companies and eventually narrowed its search down to three, he said, declining to name the other two.

Relizon chose Epsilon for its financial soundness and keen marketing management, Hedeen said. Corey Torrence, a McKinsey & Co. and AT&T Corp. veteran, is Epsilons president-CEO.

Torrence, who has also worked at SHL Systemhouse Inc., said the combined company is betting that the current economic downturn wont hurt its prospects because of its expanded direct marketing focus. "We have clients whove cut their overall marketing spend, but increased their direct marketing spend," Torrence said.

No matter how integrated its direct marketing platforms, Relizonwhose major b-to-b clients include Mellon Financial Corp.has an uphill battle in building its CRM brand to the point where it could be recognized as quickly as those of its established competitors. Indeed, this lack of CRM brand recognition could be Relizons greatest challenge and one that it doesnt plan to address with much advertising.

Limits on advertising

"We will be doing limited advertising, not just brand or image," Torrence said. "It will consist of Webinars and white papers, saying, Wheres the beef?’"

The approach could be a mistake. While such methods are good at convincing clients in one-on-one presentations, they typically have little effect in generating initial interest.

While the acquisition gives Relizon the analytic capabilities it needs to compete, it lacks a well-known presence, said Sue North, VP-client relations at Nykamp Consulting Group.

Torrence will be president of Epsilon as it transforms into Relizons de facto CRM unit. In a nod to Epsilons brand strength in the CRM space, the unit will keep its name. Relizons 700 CRM employeesit has 4,600 altogetherwill become employees of Epsilon, which currently has 700 employees. No job cuts will result from the acquisition, Torrence said.

Last year, Relizon had $70 million in CRM-oriented sales and Epsilon, $120 million.

Epsilon will remain headquartered in Burlington, Mass., with its office in the Dallas area, a hub for analytic work, likely to be merged with a nearby Relizon office, Torrence said.

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