In telecommunications, billions of dollars have been invested in high-bandwidth fiber-optic networks that transmit data at gigabits per second. Unfortunately, until this high bandwidth network is connected to individual homes and businesses, until the Final Mile is completed, the power of that high-speed network is of limited use.

Companies face the same problem with Customer Relationship Management solutions. They have spent hundreds of millions of dollars on CRM infrastructure. This infrastructure has enabled customer transactions through virtually every channel imaginable – from the telephone, right on through to the Internet. The infrastructure has been built on a data foundation that generates a complete 360-degree view of the customer. But this infrastructure has failed to deliver The Final Mile.

The Final Mile in Customer Relationship Management is the ability to adapt this infrastructure in Real Time to support the constantly changing needs of marketing executives. During one quarter, an executive needs to configure the CRM infrastructure to support a new product launch. The next quarter, the company shifts focus to profit leverage, followed by a need to respond to a particular competitive threat. These constantly changing needs are the reality in which marketing operates. The Final Mile solution for CRM reconfigures CRM infrastructure to deliver these short-cycle, high-priority, high-visibility objectives.

In this paper, we will describe the problems that marketing executives face when they try to adapt current CRM infrastructure to meet their Final Mile requirements. We’ll then show that the current “CRM” terminology is actually narrow and outmoded and should be replaced by a broader, more encompassing term: ARM, or Audience Relationship Management, which includes all audience outreach efforts to prospects as well as current customers. Finally, we will outline how a service can be structured to deliver the Final Mile Solution for ARM.

LIMITATIONS OF CRM INFRASTRUCTURE:
MARKETING IS NOT A DISCIPLINE THAT LENDS ITSELF TO STATIC PROCESSES BUILT ON INFLEXIBLE AUTOMATION TOOLS.

CRM Infrastructure is like a complex factory set up to enable customer transactions and record data.

CRM Infrastructure is complex, both in terms of gathering data and in terms of delivering services. Examining both sides not only highlights the complexity, but also reveals obstacles that prevent current infrastructure from providing Final Mile functionality.

On the data side, the CRM infrastructure has evolved from large-scale data management projects including Data Warehouses and Data Marts. These projects have focused on extracting data from sales order systems, provisioning systems, and customer service systems, and placing the data in a neatly defined, easily accessed master database.

The requirements for handling data in this fashion are intricate and involve many steps. A small army of information technology personnel must be used to access legacy systems, create standardized "meta-databases" with data definitions, establish data conversion and standardization procedures, schedule data loads, integrate query tools, and define processes to analyze and report on the data.

All of this work generates a standardized, 360-degree view of customers that can by used to service the customer through any channel. But this is an operational problem, not a marketing problem. The Final Mile issue for marketing is to convert data to “business intelligence” to support short term, tactical campaigns targeted at customers and/or prospects

LIMITATIONS OF CRM INFRASTRUCTURE:
IN MARKETING, AS IN THE MILITARY, OLD INTELLIGENCE IS NOT ONLY MISLEADING. IT MAY BE DANGEROUS AS WELL

Marketing Executives have trudged uphill for years to create a 360° view of the customer only to find that the climb was not worth the view.

For example, suppose a marketing executive is about to launch a new product. She wants to know who among her current customers is most likely to purchase the new product. The data that she needs to answer this question are not likely to be found in her current CRM data infrastructure because this is a new product.

She needs to think beyond traditional CRM. She needs a broader solution that goes beyond customer data and is relevant to a new target audience – a Final Mile solution that is an Audience Relationship Management (ARM) solution. She needs business intelligence that identifies the target market for her. She will need this target market information for a short period of time and then she will have no further need of it. Instead, she will start managing relationships with customers who begin purchasing the new product using her current CRM infrastructure.

Some time after her product launch, her needs will change again. Perhaps she has a need to increase repeat purchases to boost profitability. The question this time is, which of her existing customers are likely to increase their rate of purchase? Some of the data may exist within her current CRM infrastructure, but the business intelligence will not. So she will need to create yet another solution.

Finally, as the product matures, the marketing executive faces another complex problem. How can she stem the rate of attrition for her product? Her needs for business intelligence have changed again, while her data environment has remained static.

As these examples make clear, The Final Mile is all about configuring a solution to an immediate problem. Unfortunately, the company’s CRM data infrastructure is static. It must be modified using a complex series of steps to address each of these tactical marketing programs. Some of these tactical programs can’t be supported by the existing data at all. Clearly, the current CRM data infrastructures are not Final Mile solutions.

LIMITATIONS OF CRM INFRASTRUCTURE:
SETTING UP AUTOMATED CHANNELS FOR CUSTOMER SERVICE IS AN OPERATIONAL PROBLEM, NOT A MARKETING SOLUTION.

Can’t CRM channel solutions solve The Final Mile problem? After all, they make it easy for an executive to enable commerce through various channels.

The answer is "Yes" and "No."

CRM channel solutions are needed to give the customer access to the company for sales, service and support. You can’t have an on-line channel without having a CRM solution that supports e-commerce. Similarly, you can’t offer telesales and telephone support without a call center solution.

Like the CRM data infrastructure, CRM channel tools support static operational processes. The CRM tools do not easily adapt to rapid changes in the marketplace. The Internet boom was a classic example of how quickly needs change.

Not a single one of the CRM solutions available to companies before the Internet boom was prepared for the needs of e-commerce. Instead, dozens of new CRM solutions entered the market for on-line CRM products. Since many companies pursued a "best-in-class" approach to selecting CRM products, they selected different CRM solutions for different channels.

Setting up a program to launch a new product across multiple channels thus becomes a problem of programming several different CRM software solutions to do the same thing. Some of the CRM channel products may not have features that support the needs of the marketing executive.

In addition, not all of the CRM solutions available will operate off the same base of business intelligence. There may be smart tools for direct response marketing that cannot cross over to be used on the Internet.

Clearly, this is not a Final Mile solution.

SUMMARIZING THE FINAL MILE GAP:
USING EXISTING CRM SYSTEMS, MARKETING EXECUTIVES FIND THEMSELVES TETHERED TO A STEEL ROD THAT CANNOT MOVE THEM TO WHERE THEY NEED TO BE

Marketers need to respond quickly to events that happen in the marketplace – they need flexibility and innovation to accomplish their objectives.

Investments in CRM infrastructure have enabled companies to develop an integrated view of the customer. Further, they have facilitated transactions through multiple channels. These capabilities are hard-wired. They are static processes that enable transactions. As such, they are operational processes that are well suited to a factory environment.

Marketing is not a factory environment. It is ever changing, and the time frames in which marketing operates are too short to lock into fixed operational processes. As a result, marketing executives are often frustrated by the limitations of operational CRM systems.

The CRM infrastructure is like the backbone of a high-performance network. However, it is missing a critical link. It is missing The Final Mile solution, which will give marketing professionals a fast, flexible tool that adapts to real-time marketing needs.

The Final Mile solution needs to configure itself to the short-term tactical focus of the marketing professional, interface with the existing CRM infrastructure and deliver a solution quickly and at low cost.

THE FINAL MILE SOLUTION:
WHILE CRM INFRASTRUCTURE WILL CONTINUE TO DETERMINE "HOW" CUSTOMERS BUY, THE FINAL MILE WILL DETERMINE "WHO WILL BUY WHAT, WHEN." IT WILL DEMAND A TRUE ARM (AUDIENCE RELATIONSHIP MANAGEMENT) SOLUTION.

Final Mile Solutions will be delivered by service partners who will dynamically configure “Launch Networks” to support focused campaigns.

Marketing is all about action. Marketing executives reposition their brands by picking up the phone and giving a directive to their research partners and their ad agencies. In a similar manner, a marketing executive can organize a team to launch a new product and then reconfigure the team for the next activity. Priorities shift quickly as competitive threats arise.

The Final Mile Solution for ARM needs to enable any type of action by the marketing team in real time. There is no time for re-programming of CRM channel software nor is there time for collection and analysis of new types of data. There is only time to launch and go.

The Final Mile Solution needs to be fast enough to respond to an immediate need. It needs to be reconfigured from one campaign to the next, and it needs to adapt immediately to new media and channels as they evolve.

The Final Mile Solution will be offered by a new generation of Marketing Service companies. Like advertising agencies, PR agencies, and other service companies that evolved to meet specific needs over time, Final Mile Solution companies will become trusted implementation partners for a number of tactical marketing campaigns.

Companies will continue to evolve their internal CRM infrastructure to take advantage of evolutionary and revolutionary technology that enables sales and service transactions. Think of the CRM infrastructure as providing the answer to the question "How will they buy?"

Companies will turn to their Final Mile Solution partners to determine answers to the question, "Who will buy what, when?" Final Mile Solution partners will generate the answers to these questions using refined data management and analytic methods that pinpoint opportunities and present them to a marketing decision-maker in an easy-to-understand format.

THE LAUNCH NETWORK:
THE MARKET IS DISPLAYED NEATLY IN ORGANIZED SEGMENTS, WITH TARGETS TO ACHIEVE SPECIFIC OBJECTIVES HIGHLIGHTED

 

Launch Networks are configured to achieve a single objective.

With just a few data elements, usually no more than name and address information, as well as a decision variable such as "Annual Sales," Final Mile Solution companies will create an activity-centered network that breaks up the marketplace into segments of similar customers. We will call these networks "Launch Networks."

Each node of the Launch Network represents a segment of customers that exhibit similar, distinctive behavior.

For example, each node may represent customers having different lifetime values; or each node may represent customers who have a propensity to cross-purchase certain products. Different Launch Networks are configured to perform different marketing activities, whether those activities are targeted promotions, new product launches, cross-sells, up-sells, or retention activities.

 

THE LAUNCH NETWORK:
WITH A LAUNCH NETWORK, MARKETING EXECUTIVES ARE NO LONGER LIMITED BY THE CAPABILITIES OF THEIR CRM SYSTEM OR THEIR PROGRAMMING STAFF

By creating the Launch Network outside of the constraints of the existing CRM infrastructure, any objective can be supported quickly and efficiently.

Configuring a Launch Network takes just a few days and, once configured, a marketing person can reuse the network for hundreds of campaigns. The marketing person can also target different sub-networks without any programming assistance.

Once a sub-network has been targeted for a campaign, any media channel can be used to implement the campaign. With the click of a button, the marketing executive can send data to a mail production shop, a call center, or any channel. The decision-maker can create simple business rules that define on-line system responses for customers using the e-commerce channel.

Let’s review some examples of Final Mile Solutions for CRM using Launch Networks

THE NEW PRODUCT LAUNCH NETWORK:
YOU CAN QUICKLY EVOLVE YOUR TARGETING DURING LAUNCH

How can you target a product launch without historical data?

Suppose a company is about to launch a new product. In support of the launch, a marketing executive wants to drive customers into stores with a direct mail offer. There is no historical information about customers who have purchased this product in the past because it is a new category for this company. What can they do?

With a Launch Network, it’s easy. Starting with a random list of audience members, a Launch Network can be configured to promote the product. The target list is e-mailed to the mail production shop, with the click of a button.

Then, as purchase information is coming back from this initial campaign, the Launch Network is automatically reconfigured to pinpoint segments for future promotion. Within days, the Launch Network has been optimized to target those segments having the highest purchase likelihood.

With a Final Mile ARM Solution, there are no specialized programmers involved. The network is automatically configured to deliver pinpoint business intelligence at the time the marketing executive needs it

ON-LINE CROSS-SELLING VIA THE FINAL MILE:
SET UP A BUSINESS RULE FOR EACH ON-LINE CUSTOMER AND LET THE LAUNCH NETWORK TAKE CARE OF INCREASING REVENUES

When a customer makes a purchase through an on-line channel, it is the perfect time to cross-sell additional products that will increase the total value of the shopping cart. The right way to establish a cross-sell offer is to match the person making the purchase to their specific needs and then identify the cross-sell products that maximize the value for the customer and the company.

In order to cross-sell, a marketing executive normally has to get a whole team of programmers involved. One person on the team would need to gather data about needs-based customer segments, contents of shopping carts, and cross-purchase propensities. Then a team of specialists would need to analyze all the data and create cross-sell recommendations for each segment. Finally, a third set of specialists would need to program the e-commerce system with the different offers for different segments.

Unfortunately, this approach takes far too much time and is much too complex to be programmed into most of today’s CRM infrastructure products.

So, companies try a different approach. They perform a database lookup of products that have been included in other people’s shopping carts. For example, "People who bought that DVD have also purchased the following." – followed by a database generated list of products purchased by other people. This “collaborative filtering” approach is too simplistic. Everyone is being treated the same and we are taking a wild guess about cross-sell propensities.

With a Launch Network, we get the best of both worlds. We can accomplish the targeting of the first method, with the ease of the second. First, we configure the launch network into segments of customers targeted with cross-sell offers based on their needs. We then simply set up a business rule for each segment that targets the cross-sell offer to them. There is no complex programming involved and each segment gets its own targeted offer. It is a true Final Mile Solution.

Final Mile solutions are built upon basic technology that has evolved over the last 10 years.

How can Final Mile Solution companies deliver these capabilities so quickly? The answer is a technology architecture that utilizes more than 10 years of learning from the CRM revolution.

First, data management problems are solved by focusing on those few data elements which provide meaningful insight into the business problem at hand. Sometimes the data requirements are no more than the Zip Code of a store location. Other times, data requirements are as simple as a name and address accompanied by historical purchase information.

Second, the Final Mile Solution does not need to reinvent the network backbone of the existing CRM software infrastructure. There are dozens of companies with excellent products that provide CRM channel transaction capability. Final Mile Solutions just interface with this existing network infrastructure to provide a total ARM solution.

Third, the Final Mile Solution uses proprietary database architecture to support the selection of targeted Launch Networks and Sub-Nets. All this intelligence is deployed over the Internet and accessed/queried via a standard browser. A marketing executive no longer needs to use query tools, report generators, or programmers to select a target segment and take an action.

CONCLUSION:
THE FINAL MILE REALIZES THE FULL POTENTIAL OF CRM AT A PRICE POINT THE MAKES IT POSSIBLE TO GENERATE SUPERIOR ROI

The Final Mile is not a revolution – it is a smart response to the constraints imposed by the existing CRM infrastructure.

We now have the capability to realize the full potential of Customer Relationship Management and Audience Relationship Management at a price point that makes it possible to generate much better return on investment.

The Final Mile Solution, using Launch Networks, delivers the flexibility and speed needed to effectively compete in today’s markets.

Companies will begin using Final Mile Solution partners in the same way they have relied on advertising agencies and other key partners.

The Final Mile Solution partner will enable companies to fully leverage their existing CRM infrastructure and finally complete their implementation network.

Now is the time for marketing-services firms to become Final Mile Solution partners with their clients. Those who fail to do so will become obsolete.