This is the second in a series of four posts that focus on how marketing solutions can help marketing fulfill lits role in the organization. In the first post, I outlined the three specific functions for the solutions to fulfill, being to drive profitability, to increase productivity, and to be pervasive.  This and the following two posts will delve into these three areas, so the topic of this post is on profitability.

A great starting point when considering profitability in relation to software solutions is with this question: 

How do your solutions help my company generate profitable growth?

That question is most impactful when considering profitable growth throughout the organization, and not just in terms of the marketing department or any other single group or operating within the organization. The idea of course, is that profitable growth is a sound business strategy that has direct bottom-line impacts because its derived from revenue outpacing costs, and doing so over the long term. So it's worthwhile to consider how software solutions feed this profitable growth engine that must be in place and not just provide value through the accomplishment of some numerical objective (i.e. the marketing department sent out 2 million outbound offers last month). I would argue that software can feed this engine in three key ways:

Identifying sources of profitable growth.
This one continues to be difficult for some organizations. Being able to identify individuals or segments that are a source of profitable growth is crucial for a software solution to provide. However, a software solution alone cannot do this. Techniques such as segmentation, profiling, clustering, modeling and scoring must be put in place in front of a marketing software solution in order for it to provide value. At the same time, being able to identify and manage what limits profitable growth, such low value customer segments or irrelevant offers must be a part of a company’s customer intelligence strategy.

Identifying sources for growth and exploiting opportunities that your competition might miss – all on a continual basis - will feed the profitable growth engine as a company evolves. Great examples of how this is done well include how telecoms giant  Verizon is creating a 360 degree view of its customer, thus knowing which customer and segments are sources of profitable growth.  Additional lessons can be gleaned from how Australia's mega-retailer Coles found and extracted sources of profitable growth using SAS CI solutions.

Reinforcing competitive advantage.
What makes an organization viable? What competitive advantage message can you deliver to your customer through marketing offers that help to achieve a company’s strategy? I urge you to attempt to answer these questions – and think about how your Customer Intelligence (CI) or Integrated Marketing Management (IMM) solution can assist. If you aren’t using a CI or IMM solution to deliver valuable marketing offers that are anticipated, relevant, and personal – then you’re doing something wrong.

The CI or IMM solution of the future must make it simple for organizations to plan, design, execute, and optimize offers that reinforce the competitive advantage they provide as an organization to an end customer. Doing this flawlessly over the long term will not only reinforce the competitive advantage of the organization, but will encourage customers to become loyal, valuable consumers of your product or service- and profitable growth sources. Read the story of how Hua Nan Financial reinforced their competitive advantage and re-engaged 95% of inactive cardholders.

Planning your way to profitability.
Often this component of CI or IMM solutions is overlooked. To operate at the highest level, organizations must not only perform simple value calculations (such as ensuring profit outweighs cost) but must plan in advance in order to achieve sustained profitable growth. Solutions for marketing strategy and planning (such as SAS Marketing Operations Management) can help accomplish this, but other factors must be considered as well. Have forecasts been put in place to plan for demand and delivery? Have social network relationships been identified and social media influence scores been accounted for ahead of time? Have offer flights been optimized so that they may be used as a revenue lever? Are predefined offer workflows put in place ahead of time in order to direct a potential customer down the path to conversion across every customer touch point?

No matter the answer, one common theme exists – in order to do all of these things – you must plan ahead for marketing strategies set forth in CI or IMM solution to be effective. A great example of how simulation based forecasting helps optimize available inventory and become more profitable can be found in this story about Photobucket.

These are a few simple but important ways that software providers can demonstrate their value as a strategic partner - their future (and yours) depend on the degree to which they can help your organization become and remain profitable. In my next post, we will explore how CI and IMM solutions must foster productivity and in turn, improve the efficiency of your business. Thank you for following and please let me know what you think.