The Road To CrossChannel Maturity

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1 A Forrester Consulting Thought Leadership Paper Commissioned By Experian Marketing Services The Road To CrossChannel Maturity Build On Skills And Established Digital Channels To Achieve Cross-Channel Mastery August 2014

2 Table Of Contents Executive Summary... 3 The Customer Life Cycle Calls For True Cross-Channel Marketing... 4 Cross-Channel Marketing Has Considerable Room For Improvement... 4 Follow The Lead Of Customer-First Marketers... 6 Key Recommendations... 9 Appendix A: Methodology Appendix B: Respondent Demographics Appendix C: Endnotes ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2014, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to [1-Q7LD6K]

3 3 Executive Summary Your customers are like college students, and you are their parent: They only want to hear from you when it s right for them, and when that happens, it s probably because they need something. To capitalize on this fleeting attention, marketers must make every interaction count by matching content and device with the person and his or her context. Of course, this is easier said than done and requires extensive integration of channels, mastery of complex processes, and sophisticated use of data. To understand marketers maturity in these areas, Experian Marketing Services commissioned Forrester Consulting in June 2014 to evaluate digital marketers attitudes about, experiences with, and challenges related to cross-channel marketing, as well as the role marketing has and will have in delivering cross-channel interactions. To further explore this trend, Forrester developed a hypothesis that tested the assertion that marketers have core competencies that other digital marketing channels can build on for more integrated, relevant campaigns. Maturity in this new era of marketing is decidedly low, with crucially important factors all having vast room for improvement. In conducting an online survey of 428 digital marketers in various industries in the United States, Canada, the United Kingdom, France, Germany, Spain, Japan, China, Australia, New Zealand, and Brazil, as well as four in-depth interviews of digital marketers in the United States and Canada, Forrester found marketers are quickly adopting various digital channels and are keenly aware of the myriad benefits of a cross-channel approach to marketing that delivers relevant messages to the right customer at the right time. However, maturity in this new era of marketing is decidedly low, with crucially important factors such as integration of data sources, adoption of data management technologies, proper skill sets, and organizational structures conducive to cross-channel success all having vast room for improvement. All hope is not lost, though. Marketers who do demonstrate cross-channel maturity across various technical and organizational indicators have better success with crosschannel execution across the board. Furthermore, the decade-plus track record of the most tenured digital channel, , is full of lessons on best practices for integrating with other channels that are fundamentally important in today s marketing practices. The data shows that those marketers with these characteristics and experiences are poised to lead the transition to a crosschannel world, but it s incumbent on them to act. KEY FINDINGS Forrester s study yielded three key findings: Digital channel adoption is table stakes. The vast majority of companies are using digital channels as part of their marketing programs. Cross-channel marketing remains a work in progress. Despite the adoption of multiple channels, integration and coordination do not occur consistently. marketers have the skills to lead. Look to the marketers who have critical experience and competencies to improve cross-channel marketing performance.

4 4 The Customer Life Cycle Calls For True Cross-Channel Marketing FIGURE 1 Marketers Must Reach Customers With The Right Message At Every Stage Of The Life Cycle Customer expectations are on the rise, powered by unlimited information at customers fingertips via multiple devices. Customers have more choices than ever to get what they need more quickly, at a lower cost, and with a higher degree of personalization and service. In this environment, the customer must be at the center of marketing, which forces marketers to think not about the marketing action, but the customer need. To meet this challenge, marketers: Increasingly embrace the customer life cycle. Unlike the acquisition-focused and mass-messaging approach of the marketing funnel, the customer life cycle provides a framework for marketers to understand customers as they 1 pass through each phase (see Figure 1). As the VP of marketing at a major Canadian retailer explained: We re moving away from the idea of the funnel that s not a healthy way to think in We re now thinking in terms of a consumer cycle. We think of what triggers resonate in a particular category, how [customers] consider competitors, and how they make the decision to purchase. Sixty-one percent of marketers agree that the life cycle is better for mapping consumers attitudes toward brands, while only 11% think the marketing funnel 2 is the better choice. Consider cross-channel an important business driver. Marketers credit cross-channel marketing as an effective tool for driving sales, improving customer experience, and retaining customers. One marketer told us, There s full commitment from the executive team to pursue a crosschannel media mix, and they understand that the future is driven by content and personalization. And as part of this effort, digital channels are widely used; in fact, 89% of survey respondents reported using text messaging and that was the lowest overall adoption rate out of seven key digital channels. Digital makes up 24% of media spend 3 today, up from 21% a year ago. Developing digital markets are well deserving of attention, too. In Latin America the region with the lowest average digital channel implementation at 71% at least 85% of the online population in its three largest countries uses popular social media sites. The mobile online population is projected to reach 95 million within three years in the 4 largest two of those countries, alone. Marketers know that cross-channel marketing, and digital s role in it, is critical for a customer-life-cycle-based approach. Source: The Customer Life Cycle: A Blueprint For Customer-Obsessed Enterprises, Forrester Research, Inc., April 14, 2014 Continue to rely on as a stalwart. Ninety-seven percent of respondents use today, and 65% have been running programs for at least three years. s veteran status isn t limited to well-established consumer markets; 25% more Chinese respondents than the average marketer said they ve been running for more than five years, for example, and even in Latin America, 83% of respondents have programs, 57% of which have been in place for three years or longer. s maturity hasn t discouraged investment, either: it s still growing at more than an 8% compound annual 5 growth rate (CAGR). Consumer attitudes toward and actions taken as a result of receiving s remain 6 high, as well. Cross-Channel Marketing Has Considerable Room For Improvement Despite wide agreement about the value of cross-channel marketing, marketers aren t doing it very well today. As a digital marketing manager at a regional US department store chain told us, Those of us in the trenches see a need for [marketing across channels] better.... We all see a need for a better strategy. The reality is that what marketers consider cross-channel is a rudimentary version: essentially, traditional campaigns running on multiple channels. But true cross-channel marketing is about

5 5 FIGURE 2 Multiple Channels Proliferate The Global Marketing Landscape Note: Social feeds/updates is a weighted average of adoption of two social media networks. Source: A commissioned study conducted by Forrester Consulting on behalf of Experian Marketing Services, July 2014 integrated channels and, ultimately, about reaching customers in context with the best content on the right device at their moment of need. Key inhibitors of this type of marketing include: FIGURE 3 Current Rates Of Channel Integration Fall Far Short Of What Is Needed Limited integration between channels. We asked marketers about the integration between various channels that make up their marketing programs. The results were sobering. Even a mature, effective channel like had limited integration only 54% of respondents said was integrated with search retargeting, and that was the most of any channel (see Figure 3). On average, any two channels are integrated by only 45% of respondents. Immature use of customer data. Cross-channel marketing requires effective use of data to be successful. But among our survey respondents, 60% of marketers use data in the two least mature ways, and a paltry 24% said they use contextual data and customer data for a real-time view across channels (see Figure 4). While the APAC region Source: A commissioned study conducted by Forrester Consulting on behalf of Experian Marketing Services July 2014

6 6 FIGURE 4 Few Marketers Harness The Potential Of Customer Data demonstrated the highest prevalence of this mature use of customer data at 36%, with China leading the pack at 47%, North America came in dead last at only 13%, with 44% of US respondents telling us they only apply customer data to individual, discrete channels. Asked about the biggest challenge his organization faces in its cross-channel journey, the Canadian retailer s VP of marketing left no ambiguity. Data, data, data, he lamented. We have a ton of data but no data-centric model for our systems, which makes analysis and execution challenging. Source: A commissioned study conducted by Forrester Consulting on behalf of Experian Marketing Services, July 2014 FIGURE 5 Most Marketing Organizations Lack The Most Critical Skills For Cross-Channel Underutilization of critical tasks. Marketers claim to be prepared for cross-channel marketing, and yet they adopt key processes in small numbers. The most important task to execute cross-channel marketing, according to respondents, is data quality management. But only 33% of respondents said they would consider their organization to be expert at it (see Figure 5). Only 18% of marketers said data segmentation was the most important task, and only 35% would consider their organizations as expert. French marketers are particularly apathetic toward segmentation, with not a single respondent ranking it in their top three most important tasks. Follow The Lead Of Customer-First Marketers The considerable gap between how prepared marketers think they are for cross-channel marketing and their actual readiness for it requires a reset on the core competencies that lead to successful cross-channel marketing. In particular, marketers should look to the marketers who show the greatest aptitude for cross-channel. We segmented respondents to our survey against their responses to various questions regarding their organizational structure, data and measurement practices, use of tools and technologies, and budgeting plans. Those who consistently demonstrated best practices were designated as sophisticated marketers (see Figure 6). To become one of these cross-channel gurus, marketers should: Source: A commissioned study conducted by Forrester Consulting on behalf of Experian Marketing Services, July 2014 Build the skills that set sophisticated marketers apart. Sophisticated marketers demonstrate significantly higher cross-channel preparedness than their peers, but they remain the minority. Only 41% of our survey respondents fall into this category, with wide variation across regions and seniority levels. What we found about this sophisticated group was striking; these practitioners demonstrated far higher maturity in critical skills and data 7 applications for cross-channel marketing. In addition,

7 7 FIGURE 6 Sophisticated Marketers Show Greater Cross-Channel Maturity Across Various Measures But Remain The Minority (174 sophisticated marketers) Source: A commissioned study conducted by Forrester Consulting on behalf of Experian Marketing Services, July 2014 they indicated across-the-board higher adoption and appreciation of tools that enable cross-channel 8 execution. Of note, among the top five cross-channel tasks of which this group rated their organizations as expert, four pertain to data management and application, and their expertise is no less than 20% higher than the nonsophisticated group (see Figure 7). Also intriguing, 75% of sophisticated marketers use data in real time to send relevant and timely messages, while 64% of overall marketers do the same. Learn from these marketers strengths to unlock higher cross-channel marketing performance. Build on s foundation to improve crosschannel. is the veteran among digital channels, having established presence and experienced growing pains long before its peers. Sophisticated marketers have above average integration between and other digital channels. As one marketing manager we spoke with summed it up: has the most experience with playing nice with other channels. I think leveraging the learnings from ... against newer [channels] like social and mobile will be a key driver. A digital marketing manager for a regional department store chain concurred, FIGURE 7 Sophisticated Marketers Are Far More Savvy At Critical Cross-Channel Tasks Than Their Counterparts Source: A commissioned study conducted by Forrester Consulting on behalf of Experian Marketing Services, July 2014

8 8 marketers are adept at segmenting and optimizing communication, which applies to any channel. In addition, sophisticated marketers are especially poised to lead the way on customer data use and application, as they report significantly higher rates of best practices twice as much as the average respondent (see Figure 8). Master cross-channel to get to contextual marketing. The future of marketing is about identifying and using context to create a repeatable cycle of interactions and insights to drive deeper engagement and learn more 9 about the customer. Customers don t wait on campaigns to drive awareness or plan their shopping trips. They make decisions on their own time, and thus marketers need to move toward marketing in context providing contextually relevant content to customers to meet their needs on their terms. Mastery of true cross-channel is the step that precedes contextual marketing, tomorrow s remit for all marketers. Sophisticated marketers, unsurprisingly, are ahead of others when it comes to how they leverage contextual data today though even they show room for improvement. FIGURE 8 Sophisticated Marketers Demonstrate More Mature Customer Data Applications Than Any Other Group Source: A commissioned study conducted by Forrester Consulting on behalf of Experian Marketing Services, July 2014

9 9 Key Recommendations Marketers embrace of digital channels and the customer life cycle were important steps in readying marketing for today s customer-driven world. Next up is to become more proficient with true cross-channel before transitioning into the next phase in marketing s evolution: contextual marketing. To begin, marketers should: Prioritize channel integration and start with . To integrate all marketing channels online and off is not a question of simply adding touchpoints to a campaign. True cross-channel marketing requires coordinating data, content, and workflows across the different channels so that the interaction with the customer is optimized for the device and individual. should be your starting point for this integration. Identify where is most relevant and influential in the customer s path to purchase, and then incorporate additional channels along that path that tie all the communications together. Audit use of customer data. The fact that the majority of marketers in our survey are in the lowest two tiers of data maturity underscores one of the greatest obstacles to cross-channel marketing success. To leverage data across channels and campaigns necessitates people with the right analysis skills, processes that mandate the methodical collection and sharing of the data, and technology that centrally collects and stores the data for access. Start with an audit of what data you currently use for campaigns and what data exists in your organization that would make for more relevant interactions with customers. Work with IT to formulate a road map to connect the systems that store disparate data sources for use in marketing and in other parts of the enterprise. Identify uses of for contextual marketing. innovation has stagnated somewhat in recent years. As a stalwart of the marketing effort, both in terms of scale and efficiency, there hasn t been much demand to do more with than marketers already get out of it. But can do two things in a contextual marketing era: exploit and establish context. To establish context, an can provide a consumer with information or incentive to engage with other channels. As one of the most reliable, consistently used channels, has an opportunity to be more than another transaction-driving medium. To exploit context with , marketers can get hints about the customer s context by virtue of the device the customer is using, who they are with, and what they like. With cues from , marketers can better provide interactions in other channels and touchpoints.

10 10 Appendix A: Methodology In this study, Forrester conducted an online survey of 428 digital marketers in various industries in the United States, Canada, the United Kingdom, France, Germany, Spain, Japan, China, Australia, New Zealand, and Brazil, as well as four interviews of digital marketers in the United States and Canada, to evaluate digital marketers attitudes about, experiences with, and challenges regarding cross-channel marketing, as well as the role marketing currently or will play in this new era of marketing. Survey participants included decision-makers responsible for search, , social, website, mobile, and/or display marketing strategy and execution. Questions provided to the participants asked about their perceptions of crosschannel marketing, if and how their companies are adjusting to it, the tools and technologies they use to facilitate its execution, and the skills necessary for practitioners to optimize its performance. Respondents were offered a small incentive, administered by their respective survey panels, as a thank you for time spent on the survey. The study began in June 2014 and was completed in July Appendix B: Respondent Demographics FIGURE 9 Survey Respondent Demographics Note: Percentages may not add to 100% due to rounding. Source: A commissioned study conducted by Forrester Consulting on behalf of Experian Marketing Services, July 2014

11 11 Appendix C: Endnotes 1 Source: The Customer Life Cycle: A Blueprint For Customer-Obsessed Enterprises, Forrester Research, Inc., April 14, Source: The State Of Customer Life-Cycle Marketing, 2013, Forrester Research, Inc., October 16, Digital media defined as , display, paid search, social, and SEO. Source: Forrester Research Online Display Advertising Forecast, 2014 To 2019 (US); Forrester Research Search Engine Marketing Forecast, 2014 To 2019 (US); Forrester Research Social Media Forecast, 2014 To 2019 (US); and Forrester Research Marketing Forecast, 2014 To 2019 (US) 4 Source: The State Of Consumers And Technology: Benchmark 2013, Latin America, Forrester Research, Inc., January 7, Source: Forrester Research Marketing Forecast, 2014 To 2019 (US). 6 Source: Consumer Attitudes Continue To Improve, Forrester Research, Inc., June 24, Sophisticated marketers rated their organizations as expert at the following tasks at significantly higher rates than nonsophisticated marketers: data quality management, data integration, exploratory data analysis, data segmentation, data collection/aggregation, data mining/extraction, testing, interpreting/synthesizing reports from various sources, modeling, measurement, campaign/scenario planning, and content/message creation. 8 Sophisticated marketers rated the following technologies as extremely effective at contributing to cross-channel marketing at significantly higher rates than nonsophisticated marketers: service provider (ESP), marketing resource management (MRM), content/marketing asset management tools, cross-channel campaign management platform, data management platform (DMP), predictive analytics tools, loyalty program data management tools, social listening tools, interaction management tools, web analytics platform, identity resolution/linkage tools, marketing performance measurement tools, marketing mix modeling tools, and marketing attribution tools. 9 Source: The Power Of Customer Context, Forrester Research, Inc., April 14, 2014.

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