Investment the only guarantee of bright future

The latest Marketing Trends Survey by the Chartered Institute of Marketing shows brand owners must invest in training and technology if they are to meet customer relationship management goals. By Louise Jack

While marketers are now growing more optimistic about the state of the economy and their companies’ fortunes, it appears their anxieties have now transferred to their own prospects. Marketers are concerned that they lack adequate training and are not confident of their databases, despite believing that customer relationship management (CRM) is more important than ever.

The latest Marketing Trends Survey by the Chartered Institute of Marketing, unveiled exclusively by Marketing Week, shows the majority of marketers believe the worst of the economic crisis is behind us but the industry still faces some major challenges.

One of this survey’s most surprising findings is that, despite CRM being used by 77% of the marketers taking part, many are concerned that their customer databases or CRM systems do not allow accurate analysis and profiling of customers and customer segmentation. Just 48% think they are “effective” but 46% say they are “ineffective” in this regard.

David Thorp, director of research and information at CIM, says: “CRM has been a big area of spend but half of the companies that are spending big in this area say that their databases are not really up to the job, which is staggering. “These days, it’s all about evidence.

Technology is driving the accumulation of evidence. It is clear that spend is going into technology, so when people express concerns about their databases they are effectively saying they don’t have the raw material to analyse in the first instance. That’s a problem.”

He continues: “I would expect marketing directors to be down on that like a ton of bricks, or else they’re going to pile money into things they are not sure about and that’s old model marketing – new model marketing is an analytical process and that’s where marketers have to go.”

Worryingly, 71% say investment in training or skills development in the marketing team in order to build financial competence and measurement abilities is “limited” or absent. And although 34% feel they can call on their finance function to collaborate on developing measurement capabilities, this is not the case for 51%.

Thorp says: “I don’t think marketers speak the language of the finance department. Marketing analysis and financial analysis are separate things and, dare I say, the standards of marketing analysis are not always as rigorous as those of financial analysis. They are the skills that need to be acquired.”

Thorp also has concerns that marketers are not getting the level of training they need to help them “make a better fist” of CRM. He concedes this is set against a general background of reduced training budgets, but warns: “When businesses go into survival mode, training is one of the things that is always cut.”

There is, however, some positive news from the survey – 51% of marketers think the economic conditions for the country will improve over the next year, compared with just 12% who think conditions will deteriorate further.

Thorp says: “Sales performance is up, marketing spend is up and redundancies are down, but it is going to be an uncertain year because it is still not known how deep this recession will be.”

However, the marketing community is feeling a lot more positive. For the first time since September 2006, more marketers now think the economy will improve rather than get worse.

“It’s all relative – if you’ve been down in the depths, it’s possible to go upwards,” says Thorp. Marketers working in the technology and telecoms sectors are the most optimistic – 62% think the economy will improve and just 3% think it will get worse, while 70% expect their business to improve in the next year.

This contrasts with those working in the public sector or a charitable organisation, who are the least positive – 47% think the economy will improve and 17% think it will get worse.

Similarly, 32% working in this sector expect it to improve in the next year, while 27% expect it to get worse. For those in the public sector, this may be a reflection of worries about potential cuts after next year’s general election.

Consolidating a trend seen in the last CIM Trends survey, marketers in large companies forecast less positive prospects for their company over the next year than smaller ones – 63% of those working for companies with turnovers below £1m expect their business to improve, compared to just 47% among those working for companies with a turnover in excess of £100m.

Those working for larger companies are also more likely to expect to downsize their marketing functions – 24% of marketers in companies with a turnover in excess of £100m say their businesses are likely to reduce their marketing staff, compared with just 5% of marketers working for companies with a turnover below £1m.

Although marketing job cuts in the UK may not yet have reached their peak, marketers are now less worried about losing their job than they were six months ago – 26% are now worried compared with 32% in spring 2009.

There are no significant differences in levels of concern between different industry sectors. Again, more notable are the differences by company size, with only 17% of those working in small companies (turnover below £1m) worried about being made redundant, compared to 29% among large companies (turnover of more than £100m).

More marketers than six months ago think the recession has forced them to change their products or service offerings (53% now, compared with 47% in spring 2009). And now business conditions seem to be improving, a higher proportion of marketers recognise that the recession has opened up a greater number of opportunities for them – 37% now compared with 28% six months ago. However, 40% are still not seeing this positive impact of the current economic environment.

51% Of marketers think economic conditions will improve over the next 12 months

63% Of marketers working for companies with a turnover below £1m expect their business to improve in the next 12 months

72% Of marketers agree that there has been a fundamental shift in consumers’ behaviour and spending patterns since the start of the recession

Nevertheless, 72% agree that there has been a fundamental shift in consumers’ current behaviour and spending patterns since the start of the recession, a view that is consistent across different industry sectors. As the spring 2009 survey found, there are again mixed views as to whether marketing is bearing the brunt of any cost-cutting measures in marketers’ companies, with 32% agreeing that this is the case, and 46% disagreeing. On average, 8.3% of turnover is accounted for by marketing spend (excluding salaries) – up slightly from 7.2% six months ago.

The most widespread marketing tools are branding (used by 83%), public relations (82%), email (81%) and CRM (77%). The least popular techniques are field marketing (40%) and telephone marketing (41%).

Most worrying perhaps is that while the survey shows that marketers are concerned that they are not well enough equipped to do a great job with their CRM databases, 21% of marketers believe CRM offers the best return on investment among marketing tools. The importance of data is being recognised, but the skills and technology to use it better do not appear to be available.

CRM’s ROI benefits are particularly noted among those working in financial services firms (27%). Other techniques that are considered to provide good ROI include online advertising (12%), email (11%) and public relations (11%).

While moods and company sales performances may be becoming more optimistic, marketers face many uncertainties in the next 12 months. Organisations should be wary that if they fail to invest in training and technology, their marketers will be ill-equipped to deal with CRM as it continues on its path to dominance.


The frontline

James Harper

Neighbourhood policing marketing officer, South Wales Police

Communication channels are changing, with a focus on direct marketing, as forces look to localise messages to micro-segments. Newsletters are being used to keep customers informed of the work being done by neighbourhood police teams to tackle crime and anti-social behaviour. Frontline officers are also being trained in marketing communications and are empowered to be “brand ambassadors”.

Online activity continues to grow with customer-centric websites, and bluetooth messaging has been used for crime prevention purposes. It’s expected that social media and engagement marketing will dominate future strategies. It also has performance measurement benefits within a climate of decreased public sector spending.