How Marketing BPO Will Help the CMOs of Tomorrow
This article originally appeared in Outsource Magazine Issue #26 Winter 2011
I was planning a vacation recently, which included poring through fellow travellers’ online reviews for hours. As I browsed through the many experienced delights and gripes with major hospitality brands, I noticed that one hotel chain was doing something different. They were actually listening to their customers. As obvious as that activity might sound, on the ground, it meant the hotel chain was responding meaningfully to thousands of customer opinions on all the major social media and user-generated websites. They were visible and responsive on the websites. They thanked everyone, noted issues and reported back with action plans for improvements, handed out discounts, and clearly had won many new customers along the way, including myself. It would take the company a large dedicated team to focus on these interactions, for hundreds of its hotels worldwide. It got me thinking about the expanded responsibilities that marketing departments (especially in B2C industries) now face.
The customer data explosion, along with social media, the proliferation of channels and devices and shifting consumer demographics, are the top challenges facing Chief Marketing Officers today (IBM and Economist Intelligence Cell, 2011). CMOs have it tough, whichever geography or market you look at. They’re stretching dollars for myriad activities in a function that’s undergoing major change. The slow recovery from the recent credit crunch has only made the job tougher for marketers. Rising pressure on company profits has increased the need for companies to renew focus on issues such as pricing strategies, customer buying behaviour, campaign management, and customer engagement. The most disconcerting aspect of this study was that, of the over 1,700 responses by CMOs, less than half of the respondents felt they were prepared to handle these complexities. Yikes! How will businesses market themselves in the future, what’s the action plan, you ask? The worldwide consensus revolves around three major pillars of marketing improvement, as IBM and EIC’s C-Suite study found:
Delivering value to empowered customers by bridging the digital divide and getting to know individuals as well as their markets. This also means implementing new technologies (e.g. to handle big data, mobile apps, social media) and advanced analytics to understand and predict buying behaviour better.
Fostering lasting connections by focusing on online and offline community-building to manage the customer lifecycle better, and developing strong ‘corporate characters’ that employees can internalise.
Capturing value and measuring results, which is where the dreaded marketing ROI is tackled through financial analysis, internal and external resource allocation and analytics adoption to measure and act on the results of marketing programs better.
These are ambitious plans indeed, and they’re not going to be implemented overnight. Checking everything off that list will call for a broad multi-disciplinary team working on several new processes and technologies. This isn’t something that every marketing department can maintain successfully. In a lot of cases, this function has become a morass of (often dysfunctional) processes, data and workflows, with the CMO becoming an increasingly tactical executive, primarily providing support for the sales team. Conversely, the cost and importance of marketing has risen as the effectiveness has fallen away.
From an operational perspective, there is a strong need for process streamlining, globalising brands and integrating services within marketing departments worldwide. CMOs are beginning to understand the importance of tools and technologies within marketing processes in order to standardise and simplify their campaigns. In order to improve efficiency and reduce costs, marketers need to improve integration between processes and technologies and build a seamless marketing workflow structure. From an outsourcing point of view, companies will find it convenient to approach providers who offer streamlined, globalised marketing platform solutions. And here lies the strong case for external help that CMOs can seek today, and the opportunity for outsourcing service providers. (See figure 1)
As recent HfS research shows, 25 per cent of the marketplace currently outsources – or intends to evaluate – marketing outsourcing opportunities in the next 12 months. Moreover, we are seeing first-time-buying intentions in the utilities, media, financial services and consumer goods industries, with roughly 10 per cent of organisations expecting a first foray into marketing BPO services over the course of the next year.
Even as demand is growing, what do outsourced marketing operations really entail? When we speak of specific services that can qualify as ‘outsourceable’, the truth is most marketing departments traditionally already outsource certain activities, though this may not be construed as outsourcing. For example, most marketing departments use advertising agencies, promotions companies, and event organisers. Over the years, the services outsourcing industry has started to fulfill demand for a lot more support services under the broad ‘sales and marketing BPO’ category, including customer support and demand generation. The outsourcing of marketing as a horizontal service is in a very nascent stage currently. However, given the increasing pressures for CMOs we just discussed, we believe the scope for outsourced marketing services has expanded exponentially. The pull from the buy-side is multi-dimensional and includes demand for a wide range of services, solutions and engagement types. (See figure 2)
Recent research by HfS shows that the near-term demand for these marketing services is certainly nowhere near other segments like finance and accounting or sourcing and procurement. However, we believe that over the next three years CMOs will make more decisions to outsource their operations, especially in the areas of lead management, customer and data analytics, direct/relationship marketing, and call centre management.
It will be some time before these services are structured and formalised in the same manner as other horizontal offerings. Strategy teams for service providers are trying to place their fingers on the best approach to this vastly untapped market. The two crucial investments for these services include the right talent and technology/infrastructure. The high level of creativity and judgment in these activities necessitates the need to have people with a strong background in marketing, advertising, campaign management and other allied activities. High-end services within marketing require a lot of investment in the correct tools and technology to work on custom process frameworks and delivery for functions such as design, content management, analytics and database management. And developing sales relationships amongst marketing leaders will require additional investment.
The larger BPO service providers are beginning to develop marketing BPO offerings by leveraging existing capabilities, such as technical support and customer support. However, these services won’t appeal to most marketers because they are too operational in nature and not focussed on the outcomes marketers want to create (brand loyalty, satisfaction, and sales). The expansion of marketing BPO will only occur once service providers offer solutions that directly correlate to CMO needs. And, even then, these services will only be outsourced once trust has been established between the client and the service provider.
While other areas of outsourcing are still higher priority, the pressures of operationalising marketing while improving effectiveness of marketing spend are increasing interest in marketing BPO. Since most BPO service providers lack relationships and marketing expertise, the level of sophistication needed will take time to develop.
In the meantime, expect smaller “piecemeal” deals. Buyers and service providers are likely to make bigger investments in the category as service offerings mature and buyers start to take stock and implement long-term plans to transform their marketing activities.