When Scott asked for content suggestions during the early stages of the conference planning, my reaction was that one thing everyone needs is a framework for relating marketing technology investments to larger business strategy. Scott was flatteringly enthusiastic and – I totally should have seen this coming – came back two weeks later with the suggestion that I present such a framework.
Every consulting engagement I do starts with the relationship between business strategy and marketing technology.** But I've always defined it on a case-by-case basis. Until Scott asked, I never had a reason to create the framework for a generalized approach.
So, where to begin? The first thing to remember about strategies is that they’re about making choices: a strategy is a method for reaching a goal; knowing the method gives you a way to decide whether a particular choice is consistent with it. More concretely, “make money” is a goal; “make money by building high quality products for which customers will pay a premium” is a strategy. Even a strategy as simple as that one tells you a great deal about where to invest, what kinds of systems to build, what kinds of marketing to perform, whom to hire, and much else. I do this analysis for my clients so we can be sure to find marketing systems that are consistent with their business approach and resources.
But here’s the thing: just about every discussion of marketing technology starts off with the (true) fact that today's customers demand a highly personalized experience informed by detailed knowledge of their history. The implication is that every business needs to adapt a strategy of customer intimacy. But if everyone has the same business strategy, then shouldn’t everyone use the same technology strategy as well?
I think the answer is no, for two reasons. First, everyone doesn’t have the same business strategy. Second, even the same business strategy could result in different technology approaches.
• Business strategies still differ. It’s true that customers today expect every company to track their interactions and respond intelligently across all touchpoints.† But precisely because that expectation is universal, meeting it isn’t enough by itself to be a successful strategy. Remember, strategy is about choices and there’s no choice about whether to meet those expectations. It's HOW you meet those expectations that involves choices that are strategy-driven.
• Tech strategies can vary for the same business strategy. Let’s say your business strategy is to be a low cost provider. You still have to deliver a reasonable degree of customer intimacy, just as you still have to deliver a reasonable degree of product quality. In this case, the goal of your tech strategy is always the same: “to deliver customer intimacy at low cost”. But the method could be “through extensive automation”, “through low labor cost via outsourcing”, or “through limiting services provided”. Each would imply a different technical approach.
Okay, the notion of a strategy-to-technology framework seems to make sense. [cheers] So what would that framework actually look like?
It would start with strategic options. The classic big three are high quality, low cost, and high service (i.e., close customer relationships). Each implies different requirements for marketing, product design, production, customer support, and administration, which in turn drive technology, core competencies, and organization.††
Those requirements are the goals of the technology strategies. Methods to meet them are technology options, such as integrated suites, best of breed systems, and platforms-and-apps. These are modified by other parameters such as in-house vs. outsource, scope of channels, sophistication level, resources, and scale. Note that some of these are choices while others are constraints.
The really critical challenge in setting your technology strategy is understanding the implications of each option so you can pick the technology strategy that best meets the business strategy requirements. Once the technology strategy is chosen, the final step is mapping the choices to the different layers of the marketing technology architecture: Data, Decisions, and Deployment (I just made that up but we all adore alliteration). The resulting framework would indeed be specific enough to give useful guidance. [more cheers]
I’m guessing this sounds like gibberish to at least some of you. Fair enough. Here’s an example of the framework for an online retailer trying to compete with Amazon by offering customers even lower prices. As you read this chart from left to right, each column provides guidance to the column that follows it.
|company strategy||company strategic choices||marketing technology strategy||marketing technology choices||marketing technology topics|
|low cost provider (online retail) ||• marketing: stress value to customer inc. low prices, ease of use, targeted offers; maximize marketing ROI (not revenue or profit) |
• product design: simplicity, low cost, clear savings, find bargains to offer
• production/ operations: efficiency, reliability, no frills
• support / service: efficiency, convenience
• administration: low cost
|deliver tightly integrated but limited services at low cost; give up some flexibility and sophistication |
rationale: keeps costs low while meeting primary customer needs for targeting and consistency
|integrated suite, outsourced, modest sophistication, |
rationale: suite is easiest to deploy, gives low total cost, tightly integration, data and models available for targeting; willing to accept limited channel options and flexibility
|• data: central database as part of suite if possible; must unify data from all channels; bring in outside data as needed |
• decisions: decision logic and analytics as part of suite if available, or supplement with external as needed
• delivery: use suite delivery systems in core channels if possible; otherwise, find external systems that can be fed by suite decisions
The recommended strategy in this example is to buy an integrated suite and outsource its operation, accepting limited flexibility in return for lowest possible cost. You might not feel that suites actually give the lowest cost, but that's okay. In fact, I recommended a suite specifically to make the point that the platform-and-app architecture seen as the future of marketing tech by many people (myself definitely included) isn’t always the right solution. Nor, alas, can a framework force you to make the best choice. What it can do is provide clarity about the options being chosen, so people can argue their case if they disagree, and then pull in the same direction once a decision is made.
So that’s what I’m thinking at the moment. It could well change by the time I reach Boston in August. Join us then and find out.
* The conference will provide a much-needed vendor-agnostic forum for understanding marketing technologies and how organizations can use best them. If you’re reading this blog, you should attend. Click here for more info and early bird pricing.
** You do know I make my living by helping companies define their marketing technology requirements and select tools, right? Some people seem not to realize this.
† Well, maybe not every company. Some still don’t identify individual customers. But even former bastions of anonymity like consumer packaged goods manufacturers now increasingly connect to customers through targeted advertising, social media, and promotions. So we can modify the claim to state that customers expect this tracking when they know the data could be available. It doesn’t change the rest of this analysis.
†† This is all basic “strategy map” stuff based on work by Robert S. Kaplan and David P. Norton. Wikipedia tells me that strategy maps are obsolete but I still find them useful.