Building the Marketing-Ready Enterprise

Copyright © 2003, SAS Institute Inc. All rights reserved.
The CMO’s Strategic Agenda:
Building the
Marketing-Ready Enterprise
Alan See
Customer Intelligence Solutions
SAS Americas

When storm clouds build my weather alert radio
springs to life …
“The National Doppler Radar System has indicated that local conditions are
right to produce severe weather.
High winds, damaging hail, and flash floods are likely products of this storm.
Seek immediate shelter.”

Today’s business climate has the ingredients for
generating the perfect marketing-storm …
Mergers and Acquisitions –
Globalization of industry … Worldwide
competition
Regulations and Compliance –
Customer Privacy … Do Not Call, Can
SPAM, etc.
Operational & Financial – Must drive
top line revenue and bottom line profit …
Quickly
Customer Focus - Marketing the right
offer, to the right customer, with the right
message, at the right time. Imagine …
“The Enterprise CEO Alert System has indicated that conditions are right to
produce severe stock value turbulence. High discounts, damaging customer
churn, and flash flood mass marketing are likely elements of this storm.
Seek immediate shelter with a new Chief Marketing Officer.”

Today the marketplace is even more dynamic,
technology is even more advanced, and the
customer is even more sophisticated.
External Market Environment: Political, Economic, Social, Technology
Collapsing and
Blending of
Industries
Broader Reach
to Prospects
and Customers
More Informed
and Demanding
Customers
Greater Need to be “Marketing-Ready”

Facilitation - Learning Objectives
3 for 1 Special … (how to) generate free press / research results
/ CRM - CI knowledge
SAS point-of-view … “Building the Marketing-Ready
Enterprise.”
Introduce SAS / Aberdeen research … The CMO’s
Strategic Agenda: Building the Marketing-Ready Enterprise
The Marketing-Ready Enterprise … “If you build it … will
they come?”
Marketing Competence Areas:
Planning
Targeting
Acting
Learning
About SAS

The Marketing Strategy Planning Process is the
cornerstone of the Marketing-Ready Enterprise
Customers
Needs and other
Segmenting
Dimensions
Company
Mission & Goals
Competitors
Current &
Prospective
External Market Environment
Strengths
Weakness
Opportunities
Threats
Product Price
Target
Segment
Promotion Place
Targeting &
Segmentation
Positioning &
Differentiation
Political & Legal Economic Social & Cultural Technology

“The process of planning and
executing the conception, pricing,
promotion, and distribution of
ideas, goods, and services to
create exchanges that satisfy
individual and organizational
objectives.”
AMA – 1985
Marketing Evolution
1960’s to Present
70s and 80s
Beginning of direct marketing
Focus : identification
of the target group
2000s
Evolution of marketing …
New focus : creating value for the
customer and the organization.
Marketing Evolution Journey
Pre 60s
Rise of brand products
and advertising agencies
Focus : mass
communication
90s
Rise of loyalty programs
Focus : databases,
analysis systems
Segment marketing
Mass marketing
Relationship marketing
Target marketing
“The performance of
business activities that
direct the flow of goods and
services from producers to
consumers.”
AMA – 1948 & 1960
“Marketing is an organizational
function and a set of processes
for creating, communicating,
and delivering value to
customers and for managing
customer relationships in ways
that benefit the organization
and its stakeholders.”
AMA – 2004
“Consumers don’t know
what they want until we
tell them.”
“If you really watch the
consumer, they’ll tell
you what they wish.
And if you listen hard,
you can create better
products for them.”
Product
Focus
Customer
Focus

The Marketing-Ready Enterprise drives
Profitable Growth and Maximizes Customer Life-
Expand
Time Value (LTV)
Relationship
Duration
Number of
Profitable
Products per
Relationship
(“Most Growable
Customers”)
Retain
‘Primary’ Growth Drivers
Customer
Acquire
Number of Profitable Customer Relationships
“Marketing is an
organizational function
and a set of processes for
creating, communicating
and delivering value to
customers and for
managing customer
relationships in ways that
benefit the organization
and its stakeholders.”
(“Most Valuable
Customers”)
(“MGC & MVC”)

Technology Enables the
Marketing-Ready Enterprise
Drive
Acquisition,
Expansion &
Retention
Effectiveness
Optimize
Marketing
Spend
Improve
Return on
Data
Maximize
Services
Performance
Contact Strategy
Alignment
Customer
Segmentation /
Definition
Marketing
Effectiveness
Marketing
Efficiency
Capacity Planning
& Optimization
Possible
Initiatives
Marketing
Priorities
Marketing
Objectives
Corporate
Mission & Goals
Campaign Process
Optimization
Define & Drive
Data Strategy
ETL –– DW’’s –– CDI - Data Quality
Marketing Automation
Business Intelligence & Analytics
Technology
Enablers
Others?
Optimize
Customer
Experience
Improve
Customer
Profitability
Marketing Optimization
Interaction Management
Clear
Understanding
of the
Customer
Improve
Customer
Loyalty
Drive Profitable
Growth

Building the Marketing-Ready Enterprise
Customer
Targets
Deliver on Marketing’s Promise
Every company has a
unique business model &
strategy – there is no
single “right answer” –
marketing’s end goal is
to …
Create a Sustainable
Competitive
Advantage
Unconnected -
3rd Party Lists, etc
Product - Brand
Business Unit
Enterprise -
Integrated
Targeting & Acting
Planning & Learning
V
E
A
I
B
Shotgun
Marketer
Target
Marketer
Relationship
Marketer
One-to-One
Marketing
Customer
Segments
Mass
Markets

Building the Marketing-Ready Enterprise
Customer
Targets
Deliver on Marketing’s Promise
Every company has a
unique business model &
strategy – there is no single
“right answer” –
marketing’s end goal is to …
Create a Sustainable
Competitive Advantage
Unconnected -
Product - Brand
Business Unit
Enterprise -
Integrated
Targeting & Acting
Planning & Learning
V
E
A
I
B
Shotgun
Marketer
Target
Marketer
Relationship
Marketer
One-to-One
Marketing
Customer
Segments
Mass
Markets
Harrah’s
Show me the Loyalty
“Total Rewards Program”
Best Buy
Angel - Devil Strategy
“Looking for Barrys’ and Jills’”
Wal-Mart
Supply Chain Champs
“Low Prices Always”

Marketing-Ready Enterprise Journey
Customer
Targets
Marketing-
Willing
Unconnected -
Product - Brand
Business Unit
Enterprise -
Integrated
Shotgun
Marketer
Targeting & Acting
Planning & Learning
V
E
A
I
B
Marketing-
Ready
Marketing-
Able
Marketing-
Challenged
One-to-One
Marketing
Customer
Segments
Mass
Markets

Research Introduction – The CMO’s Strategic
Agenda: Building the Marketing-Ready Enterprise
Total 589
Participants
Services 23%
Consumer-Retail 17%
Financial Services 14%
High-tech 14%
Manufacturing 11%
Company Size – 18% >$1B; 27% Mid-Market; 54% <$50M
Geography – 80% NA, 20% APAC/Europe/SA
Roles – 20% CMO, EVP, SVP, VP; 32% Sr./Director; 47%
Marketing Manager
http://www.sas.com/events/cm/69809/
http://www.marketingpower.com/content.php?&Item_ID=28881
© 2005 AberdeenGroup
All Others (1-7%) 21%

Key Performance Indicators Benchmarks
Key metrics which are commonly used by most companies to assess
Metrics Most Often Used To Measure Marketing Performance
marketing performance
0 50 100 150 200 250 300 350 400
No. Repondents Reporting Use (Multiple Selections Permitted)
Gross annual sales growth
New customer acquisitions rate
Customer satisfaction rate
Branding: Reputation, Awareness Building or Rea
Return on marketing investment (ROMI)
Market share growth
Customer churn or retention rate
New Market/Channel Penetration
New product innovation

BIC Performance Advantage
Best In Class Marketers Were Select As Those Which Consistently Reported
Greater Than 15% Improvement in These Key Metrics

Identifying Best In Class Performers
Participants were stacked ranked in Best In Class, Average and Lagging
benchmark grouping based on reported performance in key metrics
ƒ Annual Sales Growth
ƒ Customer Acquisition Rate
ƒ Customer Retention Rate
ƒ Return On Marketing Investment
100%
80%
60%
40%
20%
0%
Benchmark Groupings By
Performance Level
BIC
21%
Industry Norm
48%
Laggard
31%
Key Metrics Use To Define
Performance Level

Return on Marketing Investment (ROMI) is a key metric tracked by
Best In Class performers, therefore included in the benchmark for comparison
Best in Class
1 Annual Sales Growth 64%
Customer Acquisition 58%
Rates
2
3 ROMI 55%
4 Customer Satisfaction 54%
KPI’s for Senior Marketers:
What Motivates Them?
Industry Norms
Rates
2
4 ROMI 44%
5 Branding 44%
5 Branding 52%
Laggards
Rates
2
4 Annual Units Sold 48%
5 Branding 43%
Top 5 Metric Ranking by Grouping

Building a Marketing-Ready Enterprise through
SAS - Aberdeen research finds that companies that adopt a life-cycle
marketing practices are more than three times as likely to report greater
Customer Intelligence
Create a
Sustainable
Competitive
Advantage
than 50% more ROMI

First of all … What is Customer Intelligence?
From the organization’s perspective …
Using intelligence to KNOW…
WHO to invest in
WHAT products, offers, & channels
WHEN to invest & stop investing
HOW to create customer intimacy
Customer Intelligence enables
profitable growth
RETAIN
Acquire
Expand
“The only profit center is the customer.” - Peter Drucker

What is Customer Intelligence?
From the customer’s perspective it’s about … Trust
TRUST

Building Customer Trust
TRUST =
X
Rapport Credibility
Risk

Building Customer Trust
TRUST =
Rapport X Credibility
Risk

Know me, and let me know you
Rapport
Rapport: A relation of harmony, conformity, accord, or
affinity. A sense of shared understanding.
Hot
Warm
Identification
Understanding
Lukewarm
Neutral
Cool
Levels of
rapport that
are good for
business
Being contacted when I want to be
by the method that best suits the
nature of the contact.
Being made to feel important.

Actions and words are in congruence
Credibility
Credibility: Worthy of belief or confidence.
Provides the basis for confidence.
Performance (employee and
corporate) metrics and
compensation plans support
the marketing strategy as well
as the desired customer
experience.
Being offered services and products
that are relevant to my needs.
Flexibility in the way I deal with your
company.

Safety and security (privacy) are not an issue
Risk
Risk: Exposure to the chance of injury or
loss; a hazard or dangerous chance.
What are you going to do with my personal
information?
How are you going to use it? How does that
benefit me?
Privacy policy is consistent across the enterprise.

Operational
CRM
Where CI fits
Analytical CRM /
Operational
Systems
Technology Enablers

If you build it … they will come …
Field of Dreams
Kevin Costner......as Ray Kinsella

Marketing’s Field of Dreams
Unconnected -
Customer
Targets
If you build it … will they come? …
Loyal Customers
Product - Brand
Business Unit
Enterprise -
Integrated
Marketing-Ready Enterprise Happy Stockholders
Targeting & Acting
Planning & Learning
V
E
A
I
B
Shotgun
Marketer
Target
Marketer
Relationship
Marketer
One-to-One
Marketing
Customer
Segments
Mass
Markets

“If you build it … they will come.”
Integration, Sophistication and Speed Expands Marketing Performance
Aberdeen benchmark research confirms increased integration and analytics
Return on
Marketing
Investment
sophistication expands marketing performance
Customer
Acquisition
Rate
Percent Co’s Reporting >15% Performance
By Benchmark Grouping
Spread-sheet
Data-marts
CRM/SFA Business
Intelligence
Real-time
Integration
Mass Market
Mass Customize
Target Market
Segmentation
Multi Channel
Optimized
Rules-based
Campaign
Execution
Micro-Marketing
Channel Optimized
Front/Back
Integration
Best In Class
Norm
Lagging
Technology Enablers
51%
Customer
Retention
Rate
76% 49%
36% 60% 45%
37% 45% 39%

MRE Benchmark Results – Companies > $500M
Marketing-Readiness
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Planning & Learning
Targeting & Acting
Industry
CPG / Retail &
Distribution
Financial Services
High Tech
Manufacturing
Services
Telecommunications
Health Care
Entertainment /
Hospitality
Other

MRE Benchmark – CPG / Retail & Distribution
CPG & Retail Marketing-Readiness
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Planning & Learning
Targeting & Acting

MRE Benchmark – Financial Services
Finanical Services Marketing-Readiness
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Planning & Learning
Targeting & Actinig

MRE Benchmark – High Tech
High Tech Marketing-Readiness
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Planning & Learning
Targeting & Actinig

MRE Benchmark – Manufacturing
Manufacturing Marketing-Readiness
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Planning & Learning
Targeting & Actinig

MRE Benchmark – Services
Services Marketing-Readiness
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Planning & Learning
Targeting & Actinig

MRE Benchmark – Telecommunications
Telecommunications Marketing-Readiness
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Planning & Learning
Targeting & Actinig

MRE Benchmark – Health Care
Health Care Marketing-Readiness
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Planning & Learning
Targeting & Actinig

Marketing Competence Areas
Plan: How well does the marketing
strategy support the corporate mission
and goals? Are people, processes, and
culture positioned to support
marketing’s goals? Is the data available
and well presented for the type of
marketing activities desired?
Those companies which reported utilizing a strong marketing
planning process consistently outperformed their peers in terms
of business and marketing performance
0% 20% 40% 60% 80% 100%
% of respondents with
greater than 15% improvement
Return on marketing investment
Increase in gross sales/revenues
40%
21%
34%
50%
Marketing Metrics
Company has strong marketing strategy planning process
Company does not have a strong marketing planning process

Target: The ability to consistently
identify and develop the right offer,
to the right customer at the right
time at the right price.
0% 20% 40% 60% 80% 100%
Customer profitability modeling
16%
51%
33%
BIC
Industry Norm
Laggard
% of respondents
Capabilities
Leaders reported using customer profitability modeling
techniques at significantly higher rates than average and
lagging marketing programs to assess customers and
marketing campaign investments

Act: Campaign execution and
optimization. The ability to
consistently provide the desired
customer experience by delivering the
right offer, to the right customer with
the right message at the right time.
43%
0% 20% 40% 60% 80% 100%
% of respondents with greater
than 15% improvement
Customer retention rate
Annual ROI per customer
20%
41%
24%
33%
50%
34%
50%
Agree that campaigns optimized to produce maximum efficiency
Disagree that campaigns optimized to produce maximum efficiency
Marketing Metrics
Those companies which leverage technology to raise
confidence and measure of execution activities, are more
likely to maximize results across most metrics

Learn: The ability to consistently adapt
and learn through marketing initiatives.
Processes and technology for gathering,
tracking, and reviewing performance
metrics.
Above average companies, those reporting >15% ROMI, were able to
monitor and proactively respond to changes in customer (channel)
behavior
Greater than 15% improvement
0% 20% 40% 60% 80% 100%
15% or less improvement
Greater than 15% improvement
15% or less improvement
41%
24%
36%
23%
77%
64%
76%
59%
% of respondents
Marketing Metrics
We monitor and proactively respond to changes in customer behavior patterns
We do not monitor and proactively respond to changes in customer behavior patterns

Marketing Evolution Levels
Basic
Intermediate
Advanced
Expert
Visionary

Marketing Focus Data / Reporting Focus
Capabilities - “Basic”
Think “Mass Marketing”
Emphasize a quality
service or product – not a
lifetime customer
experience
Largely TV, radio, print ads
Direct mail using shotgun
mass marketing
techniques
Message and offers not
differentiated
Limited recognition of
individual customers or
preferences
Provides undifferentiated
service levels to all
customers
Few channels
Very little data integration
No data cleaning
Manual querying and extraction
of data
Static, product-focused
reporting
Manual or no response tracking
Limited or no effectiveness
reporting
Product & transaction data
dumps
Page views
Sessions
Visits

Capabilities - “Intermediate”
Marketing Focus
Think “Segment Marketing”
Emphasize customer
satisfaction
Customer and product
focused
Use of demographic data
Some use of past
purchasing data
Some Customer focus but
still heavy product focus
Limited use of analytics
Regular & ad-hoc
outbound, some multi-stage
Simple testing of offers
and messages
Few channels
Data / Reporting Focus
Low CRM infrastructure / strategy to
manage the customer experience
Limited data cleaning
Manual querying and manipulation of data
to build customer lists and analyze
customers
All reporting based upon historical insight.
No forward-looking capability.
Limited, weekly reporting
Manual response tracking

Marketing Focus
Capabilities - “Advanced”
Think “Target Marketing”
Focus on satisfying customers to
ensure continued revenue
streams
Both customer and prospect
focused
Some application of predictive
analytics for segmentation
Segmentation driven offers and
messages
More advance campaign analysis
Rules-based contact strategy
Simple event-driven
Regular data cleansing
Marketing technology
infrastructure built
More advance campaign
analysis.
Forecasting begins - the
ability to look ahead.
Regularly refreshed prospect
data
Weekly updated customer
view
Looking at different targeted
segments and how they
respond online.

Marketing Focus
Capabilities - “Expert”
Think “Event-Based Marketing”
Create customer loyalty to ensure
continued revenue streams
Widespread use of “automated”
predictive analytics
Complex, analytically driven
segmentation and targeting
Highly differentiated offers and
messages
Technology enabled near real-time
recognition of customer names,
preferences and value
Automated, regular outbound, and
multi-stage campaigns
Event-driven and some “Right-time”
inbound
Complex, rules-based contact strategy
Data quality issues identified
and resolved at source
Comprehensive prospect data
Use of cross metric dashboards
and Comprehensive BI
Enhanced response tracking
enables complex automated
response analysis
More sophisticated forecasting
Full integration of data into the
multi-channel perspective, to
allow accurate offers of right
product, right channel, right
person, right time.
Scorecarding and ROI
visualization.

Capabilities - “Visionary”
Think “Interactive Marketing”
Marketing Focus
Heavy focus on integrating
all customer data
360 degree view of
customer across channels
Real time access to the
right information in order to
make customer-based
decisions
Totally integrated, fully
collaborative data access
Proactive BI allows micro-management
of campaigns
Use of rules and scoring
code to influence online
behavior in near real time
for cross sell and up sell.
Create customer advocates
(Promoters) to ensure continued
revenue streams
Real time access to the right
information in order to make
customer-based decisions
Real-time analytics drive
personalized offers during
inbound contact
Vary customer treatment based
on value across the enterprise
Segmentation is based on
customer needs, preferences,
behaviors and economic
potential.
Optimization of campaign offers
across channels and time to
maximize the returns to our
organization
Tailored content, tailored offers.

Communication Process
Marketer Customer
Message
Channel DDeeccooddiinngg RReecceeiivveerr
SSoouurrccee EEnnccooddiinngg Message
Channel
Product
A, B, C …
Price
A, B, C …
Place
A, B, C …
Promotion
A, B, C …
Noise
“There is a point at which
communication with
customers can turn into
harassment. You may
want to forge more
relationships with
affluent customers, but
do they want them with
you? Attempts to build
relationships with
disinterested customers
can quickly backfire, as
you may be perceived as
a pest.”
- Business Insights
Average U.S. Consumer
is exposed to:
„ 102 TV Channels
„ 49 Radio Stations
„ 10 Newspapers
100 million phone
numbers now on the
federal “Do Not Call”
list.

Customer Intelligence cuts through the noise
Broad generic market
Broad product
market
Specific market
segment(s)
Targeted
Marketing
Relationship Customer
Marketing
High personalization
Narrow audience
Deep relationship
Two-way; ongoing
dialogue
Low personalization
Broad audience
Shallow
relationship
One-way dialogue
Mass
Marketing
Bogota
Segment
Marketing

Marketer Customer
Message
Channel DDeeccooddiinngg RReecceeiivveerr
SSoouurrccee EEnnccooddiinngg Message
Channel
Relevant & Timely
The Right Customer
The Right Offer
The Right Message
The Right Time
Product
A
Price
A
Place
A
Promotion
A
Customer Intelligence Creates Trust
TRUST
& Feedback

Global Reach & Local Presence
ƒ 394 offices in 51
countries
ƒ 9,804 employees
ƒ 4.5 million users
worldwide
• 40,018 sites
• 110 countries
ƒ Hundreds of local
user groups globally

Corporate Strength & Stability
ƒ Consistent revenue
growth & profitability
ƒ Commitment to
innovation
ƒ Investment in domain
expertise
29 years
R&D Spend:
Percentage of Total Revenue
$1B
Revenue
26%

SAS: Employer of Choice
SAS continues its unbroken run on
FORTUNE’s list of 100 Best Companies
to Work For
SAS has appeared every year the list has been
compiled. This year the company comes in at No. 30.

Recommended Reading & Other helpful sites:
The Loyalty Effect
By Frederick F. Reichheld
Return on Customer
By Don Peppers and Martha Rogers, PH.D.
Angel Customers & Demon Customers
By Larry Selden and Geoffrey Colvin
www.BetterManagement.com
www.destinationCRM.com
www.marketingpower.com (AMA)
www.dmnews.com
www.CRMGuru.com

Thank You
Alan See
Customer Intelligence Solutions
SAS Americas
4555 Lake Forest Drive, Suite 150
Cincinnati, OH 45242
513-563-9444 Ext 8247

Building the Marketing-Ready Enterprise

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