We’ve discussed the factors you should consider when deciding to outsource your database, as well as some of the benefits you can reap from an outsourced marketing database. We’ve even covered what a good marketing database will cost (in house or outsourced).
If you’ve decided to outsource your marketing database, the next step is to decide between essentially four choices along the spectrum of outsourcing—and then get started. Your selection should depend on your business needs, organizational structure and capabilities.
1. Business Process Outsourcing (BPO)
This refers to outsourcing entire enterprise operations. In the context of customer relationships, this would mean the entire customer-facing operation, perhaps even the marketing team or call center. Generally, most companies do not choose this route if they have infrastructure already in place or if they prefer to integrate key data-based skills, talents and learning within their organization as a competitive advantage. BPO may make sense for startup companies that do not yet have a marketing infrastructure and are looking for the fastest path to productivity.
2. Selective Outsourcing
A greater number of enterprises outsource selectively to gain rapid access to database marketing expertise, technology and support services, while keeping some aspects of the database solution in house. The portion outsourced typically includes building the customer database and the services that surround it. For example, companies outsource the delivery of customer analytics and insight initiatives such as data modeling, customer segmentation and communication planning, which produce insight that can inform marketing programs. Some companies also choose to outsource actual customer contact programs, such as campaign management, and tactical programs, such as direct mail and email.
3. Transitional Outsourcing
A third option is to outsource the building and startup of the customer database, with the intention of bringing the operation in house once it is developed and proven. This may be an option for companies that need or want full control of their customer data and operations—but also want the fastest and least disruptive implementation.
Using this approach, the organization hires a third party to design, build and deploy a database marketing solution, yet houses the entire operation in house and ultimately transitions the work to an internal team. This approach focuses on augmentation of internal skill sets and program control, while recognizing the need for external help to deliver the required expertise and staffing up front. It is a blend of the transitional and in-house strategies.
Tips for Ensuring Success with Outsourcing
Every company is unique—and so is every outsource project. However, the success of an outsourced database marketing solution nearly always depends on how well an organization considers and addresses certain issues. The three most important of these are:
Be clear on the goals
If the decision is to outsource, define the criteria for success and expected return on investment. Create a detailed list of requirements with clearly defined objectives, schedules and benchmarks. Many companies now begin new database marketing solution initiatives with an initial consulting engagement or discovery process, to minimize risk and to seek expert help at the beginning stages of planning, including help with goal setting. A consultant can also help a company select the right database partner.
Gartner identifies three different types of objectives that can be predefined, each with its own set of success measurement criteria:
- 1. Efficiency — Focusing on cost improvement, this objective should be measured by cost metrics and service-level agreements tied to cost savings.
- 2. Enhancement — Emphasizing improvements in operation, this objective is measured by how well new services improve “operational effectiveness or the customer’s experience.”
- 3. Transformation — Improving business performance is the goal here, and success is measured by “increasing margins, opening access to new customers or helping manage growth”1
Your company may focus on any or all of these objectives. In any case, the provider will perform more effectively—and your company will be able to measure that performance—with clearly defined, communicated and agreed-upon goals.
Be realistic about resources
IT and marketing departments may have the technology and strategic skills to build a customer database, but do they have the time? Do they understand data quality and customer analytics? Are they ready to take on the responsibilities of security and compliance? These are critical issues when dealing with customer information. In addition, you should consider whether the database project will divert your resources from core competencies. Also consider who will train the marketing staff on effective use of the technology.
By addressing these issues honestly, and seeking outside expertise where needed, you will increase your chances of success.
1 - Goldman, "Consider Your Customers' Needs When Outsourcing CRM," Gartner (6 July 2006)