How to win on a budget in the
by David Bernard, Managing Director of
DB Marketing Technologies
can boil down a lot of the talk about CRM and Big Data into
three words--- spend, spend, spend. There is no shortage of
hawking for the latest and greatest CRM software or hardware
out there, and if you've managed to stash a huge chunk of
budget in your proverbial mattress, you have no shortage of
options on which to spend it.
But here’s the problem. It’s 2014, not 2004. Budgets are
routinely slashed, either through year-over-year cuts or
worse through forced budget give-backs mid-year. Despite
these cuts, marketers are expected to do more, or at least
the same, with less resources and cash. The big question is
how to spend less and not lose your edge.
Ready, Fire, Aim: When things go wrong
Unfortunately, when confronted with a budget shortfall, many
companies lose their cool and make some big mistakes:
Mistake #1: Scale Back
would seem that scaling back marketing programs is a
reasonable step to counter a budget shortfall. But looking
closer, it is best to take a few deep breaths before going
down that path:
- Depending on the programs and the environment,
the actual cost reductions can be minimal.
- More often than not, reactionary complexity
and volume adjustments to marketing programs result in a
considerable decrease in program effectiveness. This
decrease can result in fundamental weaknesses in the
overall CRM initiative, which limit the ability to
demonstrate value to the business (and therefore risk
future budget reductions).
Bottom line is that scaling back marketing programs
should not be a CRM marketer’s go to option.
Mistake #2: Treat CRM like any
When confronted with a
budget shortfall for CRM, senior management may turn to
their IT/Commercial Operations organization to reduce costs.
As expected, IT/Commercial Ops treat CRM as they do all
other systems, using the following solutions:
- Migrate Platform to Internal Systems,
Cloud/SaaS or Off-Shore Hosted Solution. IT/Commercial
Ops view CRM Vendors as specialized vendors that deliver
solutions at a high cost. The preferred option is to use
a platform with low overhead and leverage personnel
under their control to perform the ongoing management.
This is either leveraging existing internal
infrastructure, using a Cloud/SaaS vendor, or hosting
the platform in an off-shore environment.
- Replace high cost expert vendor teams with low
cost staff augmentation. And when taking into account
the ongoing management needs of CRM, IT/Commercial Ops
rely on staff augmentation vendors that provide
additional technical resources to meet the needs of CRM.
There are certainly good intentions here. But in many
cases, this turns out to be a big flop of a solution for a
number of reasons:
- CRM Systems are different than typical
IT Systems. The data structures and processes
needed to manage and reconcile customer marketing data
require specialized skills. The commitment required to
develop this expertise in-house is easily
- CRM Labor is different than typical IT
Labor. Migrating the platform forces migrating
the labor. Some CRM vendor resources can be replaced
through IT staff augmentation. However, replacement of
expert CRM resources needs to be done carefully. When
the smoke clears, you must not lose all of your domain
experts. If you do, any cost cutting you achieved will
be offset by huge additional costs and error.
- CRM capabilities must be managed
beyond Technology. The typical IT/Commercial
Ops management model does not provide sufficient
overlaps to marketing and marketing process. As a
result, significant gaps and errors emerge almost
Bottom line is that CRM initiatives driven by
IT/Commercial Ops have a very low success rate due to
exponentially more complex and difficult management
challenges that are often not accounted for in their
Making CRM Work—for Less
cutting is a worthy (and at times necessary) goal, cutting
has big risks that can far outpace any immediate benefit
from lower costs. If you cut the wrong initiatives, for
example, you may end up creating new problems that require
additional spending or you may reduce marketing
effectiveness and imperil your own job and your team.
Companies must keep their heads and not just start lopping
off programs and/or trading out people for technology. It
may seem to be an easy and quick way to achieve budget goals
at first, but it’s not necessarily effective as soon as
three to six months down the road. In short, CRM Marketers
must avoid “cutting into the bone” and instead find and
eliminate the fat. And in CRM, the fat a business takes on
is in the form of excessive billed labor.
Excessive billed labor is a treasure trove of cost
cutting opportunity. In almost every case, if done properly,
elimination of excessive billed labor not only resolves
budget issues, but also improves performance, accuracy and
quality of CRM practices.
Here are a few pointers to help you be a superstar when
the money is tight:
Standardize Marketing Programs
In a typical
environment, a huge chunk of cost is driven by reliance on a
custom/one-off approach to Marketing. And this is no
surprise given that Agencies of Record are not only the
chief advisers to CRM marketers but also the chief
beneficiaries of the “build every program from scratch”
approach, which allows them to bill significant labor to
clients. Yes, there situations where an ongoing reliance on
“build from scratch” marketing is needed, but they are few
and far between. In most cases, a set of standard campaign
templates that are reused with modular creative for each
campaign will sufficiently meet most needs, leaving custom
development only for the most tricky marketing activities.
The standard campaign templates not only streamline the
creative process, but also include pre-defined operations
and measurement specifications and interfaces. As a result,
the build and setup for campaigns with other vendors are
streamlined as well, reducing cost and error.
Streamline CRM Vendor Labor
Agencies of Record aren't the only place labor
costs are out of control. CRM vendors that provide Marketing
Operations staff augmentation are an obvious target, but
even database hosting Marketing Service Providers use a
considerable amount of labor at your expense.
how to identify the fat in your CRM Vendor Labor:
- Billable Rates, Billable Hours by
Task, Resource Allocation. An obvious place to
start is billable rates. Inflated rates add up, and that
can yield savings. But beware of CRM vendor “Three Card
Monty.” A reduced billable rate accompanied by an
increase in billable hours/allocation gets you nowhere.
Benchmarking billable rates along-side billable hours by
task against industry standards is an excellent first
- Team Management Overhead. If
the management resources on the CRM Vendor Team
represent more than 20% of the total allocated FTE
labor, chances are the vendor has over-allocated
resources on your team and is wasting your budget.
- Team Skill/Expertise Distribution.
Teams that deliver effectively, both in terms of quality
and in terms of cost, share three distinct properties:
Expertise/Skills. Each team member
must have sufficient skills to perform the tasks at
hand efficiently. When vendors rely on lower cost
junior resources with limited skills this drives up
cost and error overall.
Allocation. Teams that deliver
effectively have sufficient allocation of team
members. When vendors provide a fragmented workforce
with a large number of individuals allocated over
small slices of time, risk of error and coordination
overhead is increased, raising overall cost.
Sufficient Team Member
Engagement. The anchor team members
must have broad and deep knowledge of the business,
skills they needed to complete the project and
understanding of the project goals. When too many
team members have too narrow a focus, incidents and
errors are elevated, increasing cost.
Improve CRM Integration
important way to cost optimize your CRM capability may be in
CRM Integration. What is CRM Integration? Well, CRM
Marketers need to harness a whole bunch of vendors to make
their programs work, including agencies, channel vendors and
database vendors. More often than not, CRM Marketers just
let the agency drive and the other vendors follow their
lead. This is where costs can mount and marketing
effectiveness takes a hit, as most agencies do not have
sufficient skill in CRM Integration. Poor integration of
project tasks, inefficient solution designs and unproductive
processes across vendors increase resource demand, reduce
performance and increase costs.
To improve CRM Integration, companies need a CRM
Integrator, often a hired gun with domain expertise who
manages the workflow between agency, brand and CRM vendor to
ensure optimal use of each team’s core competencies. CRM
Integrators optimize the operating model, how work is
defined, allocated and executed. CRM integrators manage the
individual vendors by filling in the gaps in instruction and
providing marketers with honest evaluation of teams and
skills. CRM integrators also eliminate the need for cross
functional experts at each vendor.
There are many drivers of
cost, and successful CRM Managers need to address these
drivers directly so they can reduce costs while still
achieving their objectives. And if you follow the guidelines
in this article, you can too.
For more information
about CRM Integration or how DBMT®
can help your group reduce its budget but maintain its
marketing programs, please email us at
or call us at 212-717-6000.
We'll make your CRM infrastructure work, no matter the