Insourcing Versus Outsourcing: The Challenge of Today’s Multichannel Marketer
In general, marketers are good at managing their marketing systems in-house on a day-to-day basis. But the skill sets used to create day-to-day reports and analyses are different than those needed to assess the information in a database to make decisions about how to track customer behavior and attack the marketplace.
While corporate marketing departments have plenty of talented creative types, they may lack the left-brain analytics needed to better understand their customers in today’s information-rich, multichannel environment. Critical IT resources are often tasked with a company’s financial and operational systems, thus leaving marketing out in the cold.
Many companies already outsource a portion of their marketing function, such as advertising. What about other core marketing activities such as direct-mail management and customer analytics? Increasingly, expertise in these and other marketing areas lies outside of your own four walls.
Firms are increasingly asking questions about which marketing functions to bring inhouse, versus which they should outsource. To many firms, the answer lies in the corporate culture of the organization and the marketplace demands of their industry.
If a firm is in a market undergoing change or a significant increase in demand from customers, it seems prudent to outsource many marketing functions, including database hosting, campaign management, reporting and analytics. This supports the marketing organization during these changes, and lets the CMO and his team have laser focus on the key external factors impacting the business.
Changes like the consolidation of wireless, landline, cable and video industries, and the merging of the cell phone, PDA, computer and paging industries are just two examples of areas where the CMO and the entire marketing team need to focus. In these and many other cases, the CMO and the entire marketing team need to determine how the firm’s products and services can be tailored to the unique market segments that will ultimately come out of these changes and moreover, how the firm will compete in a dynamic marketplace.
On the other hand, if a company’s market is fairly well established with little ongoing change, companies still need to consider how their corporate culture—specifically the relationship between business and IT—impacts the value of bringing marketing functions in house.
Often, marketing departments are not the top priority for information systems staff and are kept “in queue” behind more pressing IT initiatives like customer care, billing, operations, finance, ERP and other core functions. If such conditions exist, then outsourcing is a consideration.
Many marketing and advertising functions can and have been outsourced with varying degrees of success. From the most strategic elements like marketing strategy and program planning to the more operational and tactical elements like customer database and customer analytics, all aspects can be outsourced.
Overall, however, while companies are comfortable getting help on the strategic elements, they are often not outsourced nearly as much as the tactical elements. CMOs and firms are comfortable getting strategic advice and even using strategy consultants on their teams when developing a marketing strategy. But in the end, the strategic elements are just too critical to the operation to outsource them. And a CMO’s best chance of leveraging outsourced resources is on the tactical side.
By far, one of the most outsourced functions is the creation and ongoing maintenance of analytical and marketing execution capabilities. It seems to follow that with the focus of IT staff on business operations versus marketing, CMOs would outsource their operational needs to a vendor. This has resulted in an increase in “software as a service” (SaaS) providers and lets the marketer focus on customer segmentation, customer management, and program/campaign execution and measurement, while the outsourcer takes care of all the technology and related support services necessary to compete in today’s demanding marketing environment. In these situations, companies have had success outsourcing customer database hosting/management, customer reporting, customer analytics including advance modeling and statistical services, and overall support for the marketing lifecycle.
The biggest issue with CMOs outsourcing any part of their business is a perceived sense of lack of control. While at one time things like data security and other factors might have discouraged companies from outsourcing part of their marketing process, off-the-shelf, inexpensive technologies can solve the problem today. But for many companies, the security and checks and balances of SaaS and marketing service providers are often much better than company processes and policies.
Prevalent is the thinking that if a person in another office or firm is doing the work, they won’t be as responsive, or will attempt to point a finger at another firm for problems. The “comfort” of having a person in the some company, though, is most often overrated.
Several CMOs and marketing executives have been very public about their increased sense of control, saying things like “if I call our marketing partner even off hours, the CEO or account manager will get back to me within hours, something that would not be possible with a fully in-sourced solution.”
Michael Caccavale is the CEO of Pluris. You can reach him at [email protected].
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