Service bureaus expand with CRM

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Traditional database marketing services companies are increasingly seeking alliances with Internet customer relationship management.

But while the deals may provide small-budget marketers with less expensive ways to learn more about their customers' behavior, analysts say some of these marriages may be less than heaven sent and more of the shotgun variety.

Marketing service bureaus such as Fair, Isaac and Co. Inc., Experian Information Solutions Inc. and Acxiom Corp. are among those looking for ways to add CRM hosting services to their regular monthly, quarterly or annual contracts for maintaining customer databases, managing campaigns or other services.

The pricing for the hosted systems will be far less than the $2 million to $5 million a corporation might pay for software and services from Xchange Inc., Siebel Systems Inc. and E.piphany Inc. Last month, Xchange signed deals with Fair, Isaac; Experian; and Acxiom.

A natural progression

Richard Hackathorn, director of the e-Business Intelligence practice of industry analyst firm Enterprise Management Associates Inc., said the new crop of alliances carry risk.

"It is one thing for these bureaus to provide computer tape that provides cleansed customer data, but quite another to tie into business systems on a real-time basis," said Hackathorn. "These companies are going from a role of basic marketing service companies to an application service provider model."

Alliances between marketing service bureaus and CRM vendors are a natural progression, said Peg Smith, exec-VP of Experian North America.

Because marketing service bureaus have built their businesses on handling vast amounts of data, they are equipped to manage CRM software that relies on large volumes of information, Smith said. The marketing service bureau's data becomes the content used by CRM software to manage customer service, sales and fulfillment, she said.

"We have several hundred installed databases [for clients], and thousands of other potential customers for this solution," Smith said. Experian will charge about $25,000 a quarter for the most basic CRM service.

Another key to the marketing service bureau alliances will be the ability of those companies to create industry-centric databases used by multiple companies, Smith said.

In this scenario, a consortium of companies would share the expense of the database and the CRM application. Marketers would then be able to use the CRM application as a way to manage lead generation and campaigns that link directly to a service bureau's database.

These databases ought to appeal to small and midsize companies that aren't able to build their own files each quarter, Smith said. This year, Experian launched one such venture, Property Information, as a resource for home equity lenders. Similar databases serving other industries are in various planning stages, Smith said.

Alliances make sense

David McFarlane, president-COO of Xchange, said the deals make sense for CRM vendors.

Instead of spending millions marketing to the middle market, these deals allow CRM software developers to reach prospects through a third party. Xchange is one of the few CRM vendors to form a stand-alone sales force to sell into marketing service bureaus.

"This is an important channel, particularly for companies outside of the Fortune 1000," McFarlane said. "It is probably more palatable for those smaller organizations, rather than as a capital-intensive activity."

Dag von Ruden, senior VP-worldwide channel development for Fair, Isaac, said that obtaining CRM services through a marketing service bureau means corporate marketers don't risk implementing their own pricey systems only to have them become obsolete within months.

"We're taking on the human resource risk and the technology obsolescence risk, and allowing people to get state-of-the-art solutions without a capital investment," von Ruden said.

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