When campaign management solutions made their debut in the mid-1990s, it was difficult not to take notice of what they had to offer-support for and automation of marketing campaigns for almost any organization. Harried bankers everywhere had found their panacea for herding enormous collections of customer data for marketing purposes, and cutting a profit to boot. Looking past the hoopla, these automated solutions are almost all they're cracked up to be.

Typically, campaign management software is used for outbound marketing programs by assisting companies in planning, designing, and executing multi-channel marketing campaigns via direct mail, telemarketing, and other techniques. Its ultimate goal, according to Kathleen Khirallah, senior analyst at Needham, MA-based TowerGroup, is to use data mining to determine how to interact with a particular customer. "One customer may respond to quick mail postcards and a follow-up call. Another may not," she says. Such software helps to ascertain this.

The financial services industry has high hopes for campaign management systems. TowerGroup estimates spending by retail banks and consumer lenders on campaign management software in 1999 to total $220 million and $155 million, respectively. For email prospecting campaigns, expect an explosion from financial services institutions this year, according to Newton, MA-based Meridien Research Inc. It estimates a compound annual growth rate in spending in this area of 1,000%, followed by a 400% to 500% CAGR in 2001.

On the inside

Not surprisingly, vendors give the impression that campaign automation products are an essential part of doing business. But this is not just self-promotion. When one understands the full scope of executing a marketing campaign the traditional way, it starts to dawn that perhaps this software isn't just another way for software manufacturers to make money.

Brad Braddock, vice president of marketing at Prime Response Inc., a Cambridge, MA-based player in the campaign management arena, says these solutions were long needed. "The average campaign involves so many touch points," he says. "It requires someone to do the analysis, then you have to deal with the actual marketing organization to generate ideas that will bring in revenue, for example. When you have to communicate with all these groups, it's a mess."

Things only get worse as companies (banks included) start to use more channels in their marketing, says Michael Emerson, senior vice president of marketing with solutions provider Recognition Systems Inc., Chicago. "Campaign management solutions are a good way to streamline the marketing process. Customers hate to get bombarded by mailings. These solutions can help control that so people are mailed to a specific number of times," he says.

Software in action

Experts contend that to benefit fully from automated campaign management, an organization has to be fairly large. "Campaign management software is good for a big, aggressive marketing organization," Khirallah comments, adding that it might be too complex for more modest needs.

Bank of America Corp. is one large organization that relies upon campaign management for its massive marketing needs. Albert Demery, vice president and manager of consumer database marketing at the San Francisco-based financial institution, says that its West Coast operations have used an outbound sales automation solution since early 1999. "Before then, we either outsourced or relied upon our in-house programmers to do much of the automation work for marketing campaigns," he says. "But with a campaign management tool, the end-user can do prospecting of the customer base himself with simple queries into their demographic information."

BofA used Valex, the campaign management software from Boston-based Exchange Applications Inc., for its customer retention efforts. "We were able to retain customers that would otherwise have left us," Demery says.

For example, the bank looked at profitable checking customers with over 18 months of account activity. It developed a model showing the probability of these customers leaving the bank and found that the top 30% of the highest value customers made up 70% of all attrition and 90% of revenue. "These were customers we wanted to keep," Demery says. "We were able to contact 900,000 customers in California, and as a result we garnered $10 million in profits."

Another project involved the bank determining the best potential cross-sell-that is, who would buy a particular product next. Using Valex, BofA examined the higher scoring group out of those in the project.

"Comparing the mixed logical product group with a random group, we found that the MLP group was three times as likely to purchase something. We brought in $22 million [in revenue] with them compared to $12.5 million with the random group," he explains.

Although Demery admits there's always room for more user-friendliness, like Braddock, he thinks things are a lot less confusing than they used to be. "Before, marketing projects involved your business partners, vendors, a host of other people. You have to act quickly and correctly in today's marketplace."

Where he sees the greatest advantage of campaign management solutions is in turnaround time, generating responsiveness, and finding households most likely to purchase something. Though the benefits are manifest, of course, it takes time. "There's definitely a learning curve involved," Demery says. "People have to understand data even though the data is made as customized as possible. You have to be non-data-averse." As with other applications, companies will probably be in the red during the initial months of implementation of a campaign management solution. But Demery says this gap generally decreases as things go forward.

"A campaign management solution is definitely worthwhile for BofA," he declares, "especially as we develop a centralized data warehouse for the entire bank, including our East Coast branches, which do not use Valex yet. It will allow us to execute campaigns on a national basis."

Expanding markets

Although advocates tout campaign management solutions for their role in increasing revenue via increased responsiveness, Steve Frank, a vice president with Sacramento, CA-based lender The Money Store, a subsidiary of First Union Corp., says it's the open access the software provides to the people who need it, the marketers-that makes the difference.

"The real benefit of campaign management solutions is that they open access to data to a wider variety of users who do not know programming languages," he says. "Anyone who understands marketing and has basic Windows skills can look at and analyze data without bothering IT staff."

The lending company has been using this type of software since 1996 and has implemented the solution offered by Unica Inc., Lincoln, MA. For Frank, where such tools really shine is by increasing the accuracy of marketing campaigns. Not only can marketers access and design campaigns themselves, but there will be fewer mistakes from data entry because the software is mostly point and click, he says.

"We send out 40 million pieces of mail a year using just two people in our database marketing group. We couldn't do this without a campaign management solution," Frank says.

Though he thinks campaign management solutions have come a long way, he sees a clear dichotomy when examining this software. "There are two ends of the spectrum-the really expensive systems for big corporations that have a lot of features, and the inexpensive systems that are more or less stripped down in terms of what they can do." The campaign management world needs a happy medium.

Yet Frank is still excited about the impact these tools have made on marketing. "It's a logical process for developing a campaign that takes you through it step by step. Increasing response or gaining new customers are not results of campaign management tools," he contends. "That's more for predictive modeling. What this software will do is help marketers look at, count, and target the customers they want and pull them off the database to actually contact them." Simply put, it's just smarter marketing.

Continuous improvement

Riggs Bank, a $6 billion-asset financial institution based in Washington has been using a campaign management package from Harte-Hanks Inc. for about a year. Mark Hendrix, chief marketing officer at Riggs, says there have been marked improvements in the bank's marketing operations since implementing campaign management software.

"We have absolutely seen increases in revenue from the software," he says. "Determining the return on a promotion is vital. A tool like this allows you to examine response behavior and the profits associated with the program." Hendrix views campaign management as a process of continuous improvement, so one can even use the tool to eliminate things from campaigns that do not work.

Although he declines to cite specific data, Hendrix says Riggs has definitely seen increased revenue from enhanced targeting and a reduction in acquisition costs. "We've gotten good ROI [with this software]."

Great expectations

Perhaps the main pitfall with campaign management is that banks have been expecting far too much, too soon. They want immediate return on investment and lose faith when revenue gains are slow to materialize. Much of this lag in results, however, can be attributed to the fact the technology is still fairly new.

"The potential of this software in terms of return on investment is tremendous," TowerGroup's Khirallah comments. "But today only a small number of banks have been using the technology for a while and they're just learning how to maximize their ROI." She says expectations need to be set so companies do not think they'll be swimming in riches tomorrow. "There's no magic bullet."

As far as Prime Response's Braddock is concerned, "We are still in the first iteration [of this technology]. It's a gradual process and it takes a long time to come to fruition. You won't find a ton of people who will raise their hands and say they love [campaign management software], but there are many who believe in this vision."

According to Riggs' Hendrix, "Using a campaign management solution is not work for the timid soul. Many people try to shoot for the rafters with this software, but they come up short. There are some complicated aspects to it."

Rowing ducks

Why all the difficulty? Sam Clark, an analyst with Stamford, CT-based Meta Group, says it's all in the way companies line up their data. "The challenge is getting all their ducks in a row as far as data goes," he says. "This can be difficult for some banks, and that is why only a minority do well." But those who have managed to coordinate multiple databases are happy. The technology works well, shortening the time it takes to get a campaign to market, he notes.

Khirallah thinks eventually campaign management should evolve into interactive management software. However, banks are being held back by the challenge of channel and vendor integration. They use different vendors for their legacy systems, ATMs, call center technology, and other systems.

"The likelihood of one bank using one vendor's technology for all this is very rare," she says. "There's a best of breed mentality in the industry-banks want the best solutions for each technology."

"Being able to effectively manage a campaign for larger institutions is very complex," says Bill Bradway, research director for customer relationship management at Meridien Research Inc. "The path to campaign management Nirvana is a continuous pursuit."

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