IA: Let's start with a brief background of your career.

MM: I’m the co-founder and CEO of GISTICS. We started in 1987 as a research firm, studying the economic payback from new technology deployments. In 1991 we pioneered executive white papers and a bit later activity-based payback and return-on-investment benchmarks for the deployment of new technology.

From the beginning we have worked primarily in IT markets.

However, since 1991 we have focused almost exclusively on digital media and marketing automation, working with very large technology vendors such as IBM, Apple and Nokia or technology-using organizations ranging from GM, Disney, McGraw-Hill, Gap, Amway and even the Church of the Latter Day Saints.

Thus, we work both the selling side and the buying side in technology markets. This gives us an uncanny insight into how the buyer/seller relationship works.

In 1994 our work took us to Aldus – the pioneering software firm that gave the world PageMaker, Premiere and FreeHand – just before their merger into Adobe.

We worked with several of their teams in developing a multimedia strategy and portfolio of products. This included the team responsible for developing product requirements for their next-generation multimedia database, then called Fetch.

In the course of that engagement with the Fetch team, we discovered the astonishing economic value of reusing and re-expressing pre-existing media and related digital files.

Fetch really needed a market category to define its value proposition; so we gave it the name media asset management.

Later in 1996, we began a series of engagements with Apple Computer in which we changed the name of the category to digital asset management.

Thus, Apple really helped us to create this category, which continues to thrive today.

We defined digital asset management essentially as a strategy for accelerating core business processes – initially in media, entertainment and publishing, as well as advertising, ecommerce and general marketing.

Now, the capability of reusing and re-expressing pre-existing digital files entails many changes within a media-using firm. These changes can include developing metadata and data policies, as well as automated workflows and publishing systems for the transformation of these digital files into more useful forms.

In the course of this, we began to study the use of digital media, and, in particular, digital media and related technologies that had become central to a growing number of brands. And in 1997 we wrote a series of white papers for Apple and their Masters of Media Program, including the white paper Strategies for Building Digital Brands – which I later rewrote as a book, Firebrands: Building Brand Loyalty in the Internet Age.

Thus began our 12-year deep-dive investigation into marketing operations and specifically how marketing departments outside of the media entertainment and publishing industries, how consumer, business and industrial organizations use media in finding, serving and keeping customers for life.

And in the course of that, we began to really understand the economics of large distributed marketing groups.

From 2001 to today, we have worked with some very large firms, Philips, General Motors, Amway, in documenting the key workflows and processes of a global marketing operation.

Over the past 9 or so years, we developed a framework for the supply chain management (SCM) of marketing content and related services. This includes a comprehensive set of benchmarks and operational frameworks for how to think about marketing, not just as an operation, but also as an entity within a supply chain with upstream contributors and downstream partners.

In the past 3 years, we’ve really invested ourselves in understanding customer engagement systems – the systems and processes for how to attract, serve and keep customers for life.

We also position customer engagement systems as part of a larger innovation wave – what we call the information communication technology (ICT) transformation of marketing into a center of excellence for customer engagement.

So, that covers a broad set of functions and areas and interests and activities starting initially with digital media, and then marketing operations, supply chains and now customer engagement systems.

IA: Would you define the elements and functions of a marketing supply chain?

MM: Sure. First, let's go back to the first principles of supply chains and SCM.

The term supply chain really first came into the fore around how to keep armies fed, clothed and supported as a function of logistics. And following World War II and in particular the 1950s, an area of applied mathematics called Operations Research began developing powerful mathematical models and frameworks for how to understand the most efficient movement of goods and services across an industrial supply base, ultimately with the idea of provisioning material to standing armies, which, as you recall from history, was a pretty big deal in the Cold War, during the 1950s and later.

And then, with overall industrial practices following along, SCM is really about understanding a concept called theory of constraint, which is when we look at a whole bunch of activities, there are hand-offs and there are certain areas of hand-offs that become the weakest link, but areas where you have delays, mistakes, reworks and so on.

So, one of the first principles of SCM is to have an end-to-end visual depiction of the movement of goods and services to the ultimate terminus, identifying the chokepoints and constraints and then addressing those weak links in the overall flow of materiel, goods or services.

SCM typically emphasizes one goal: the continuous, ongoing reduction of cycle times, cost and defects. SCM reemphasizes a programmatic mindset: continuous, ongoing improvement of cycle times, costs and quality.

In the 1990s and the first part of the new millennium, management drove principles of enterprise resource planning (ERP) and SCM into the direct spend of an organization. The direct spend describes the raw materials that go into a finished or manufactured product.

So, in the case of a car in the automobile industry, direct spend would include steel, glass, plastics and electronics.

With the second wave of the Internet revolution – right around 2003 – many organizations started saying, ‘Wow, we’ve got a lot of economic benefit from driving supply chain management into our direct spend’.

And, the largest category of indirect spend for many firms relates to marketing.

Today, executive management now view SCM for marketing as the next big drive: ‘How do we drive continuous ongoing reduction of cycle time, cost and defects in the material that we create and use to find and keep customers?’

IA: To what degree do you think that firms have integrated their marketing resources across the organization?

MM: Well, while it's a great question, it has many assumptions in it that we probably should first address.

First, marketing in many firms represents little more than practice or an art. I still see lots of firms that have not yet moved beyond the spreadsheet and word processive (WP) docs as planning mechanisms.

As opposed to using a set of systematized processes and data-producing daily accountabilities.

So, right there, you have one very big organizational challenge: how to think about marketing operations as an integrated set of systems, processes and accountabilities.

Until you adopt that mindset of marketing operations as an integrated process, you really cannot get much efficiency from one-off automation solutions – point solutions.

Most companies do not have the operation support of integrated marketing. Rather, they’ll have their web teams or their trade promotions or their field marketing groups. They’ll have their corporate marketing groups and of late you’ll have all of the kind of their social marketing groups.

And in many cases these groups are kind of doing their own thing and may communicate with each other, but rarely orchestrate their activities.

It's the counterexample of firms that really do this. So, that's one thing.

The second assumption we must address about integrated marketing emphasizes timing.

In the spirit of William Gibson, the cyberpunk author, ‘The future arrives unevenly distributed!’

The pace of basic innovation and, more specifically, service innovation on the web and mobile fronts, and process innovation within marketing organizations, tends to gallop or trudge along at different rates.

When we look at overall process innovation within marketing organization, we see a big mess.

We find the digital groups and the web groups innovating many times faster than the traditional advertising or database marketing and catalog operation.

Sales enablement or field marketing groups remain on their own – orphans.

So, the challenge that Chief Marketing Officers (CMOs) have is how to begin to orchestrate, not just the technology, but the innovation process within their marketing organization.

Quite frankly, many of them are deeply confused about where to start and, specifically, how to prioritize their capital investments in new technologies, processes, accountabilities and partnerships.

CMOs need a better, faster way to understand which new capabilities will deliver the greatest return on investment.

There's a third dimension to your question: external pressures from the market and from the CEO for higher accountability on the marketing side.

In many cases, these external elements now force CMOs to invest time and resources in those areas with the most transparent or most accountable returns – though these are more accountable elements, they may not necessarily represent the most strategic investments, that is the things most directly driving top-line revenue.

This makes it really difficult for anyone to say with a straight face that they really have a marketing operation at all. What they have is these fiefdoms.

IA: I’d like to mention outsourcing. How well do you see companies handling issues surrounding outsourcing? Are you seeing more people outsource their marketing consumables or keeping it local?

MM: Well, outsourcing encompasses a bunch of different issues including things like localization, partnering with centers of excellence and, if you will, the ICT transformation of marketing into a center of excellence for customer engagement. So, if we take that apart, outsourcing has become a way of life for most companies.

And we can draw a distinction between outsourcing processes, workflows and activities. Increasingly, many executives now recognize that tremendous efficiencies and process agility derives from having a robust digital infrastructure by which to quickly provision wanted and needed services.

Increasingly, the ecosystem for supporting that infrastructure exists outside the firewall in what I call a global business ecosystem. So, the smart CMOs understand that there are really only a few things that they can afford to invest in and transform into a world-class center of excellence. And so, I’ll come back to what centers of excellence I think, ultimately, most CMOs will conclude that they must invest in or own.

That said, they are looking around and wondering how to localize material. We are beginning to see an emergence in the business ecosystems of centers of excellence. Those are highly automated, highly effective, very low-cost, very quick ways to localize content for say, your Middle Eastern, African or Asia Pacific customers.

We’re seeing the same sort of thing in terms of analytics. Many companies now have routinely outsourced most of the heavy lifting with respect to database analytics now being integrated with web analytics and the newer social analytics.

Where are the unique consumption cohorts within our installed base and what criteria will engage them? Ultimately, what satisfactions are defined by experiences, not features and benefits?

So, to answer your question about outsourcing. Outsourcing is not just a thing, but it's a mindset. The CMO basically says, okay, what can I outsource freeing me up to really focus on the two or three things that really create substantial and sustainable differentiation for our organization.

IA: I suppose a lot of people would find some challenges linked to outsourcing the production of marketing consumables. Is that something you can speak too?

MM: We see that in a number of areas. We first saw this in the financial industries. Say it's come time to refresh all of the capital equipment in a marketing communications creative operations, and quite frankly most of these people are on Macintoshes. And every time we try to get them to move over to a Dell or an HP platform, they quit.

So, what you see is the outsourcing of all of that creative content production to companies that do just that. We’re also seeing that with websites and with the social media space.

IA: So, in terms of other obstacles and in terms of effectively managing a marketing supply chain, what comes to mind?

MM: First and foremost, most companies do not have an effective change management process innovation practice. That means that as a new technology or a new outsourcing option shows up many companies find themselves hamstrung, all caught up in knots about how to move quickly to exploit that new technology or to incorporate a new capability.

So it really comes down to an underlying root cause of why most companies don’t innovate, why service companies almost never innovate. They always go out and buy an innovative start-up as a way of driving their innovation process. And here's the root cause, as best as I am able to determine. Most companies have strategic plans.

And they have everybody in the organizations acting against plan with quarterly or monthly deliverables. So, everyone is basically going full out to meet or exceed their quarterly objectives, which of late has gotten more and more challenging. Secondly, these objectives now have become much more quantified, so as far as having transparency in terms of who is getting the job done and who isn’t, the bar has risen.

That means that very few people have any kind of extra bandwidth to do anything outside their little box. Thinking outside the box gets you fired, gets you laid off, causes you to miss your quarterly objectives, which were already monstrously difficult to start.

So as a function of that, when you introduce a new technology, or a new way of doing things in innovation, the first thing that everyone asks is, well, who's going to do that? So when we introduce a new technology or new capability to an organization inevitably it comes down to having no accountability for who does what, or who owes what to whom.

There's no accountability for what I call the future stake capability and that basically is because everyone is so drilled down that they have very little time or mental bandwidth to consider anything besides just getting their existing job done. Now, this creates a tremendous opportunity for external change agents to come in and facilitate the change, right? And the consulting firms have made a very good business facilitating these kinds of changes, but they tend to be expensive, highly disruptive and fraught with a lot of problems and failed projects because they don’t ever really address these consulting practices and systems integrators.

They very rarely, if ever, address the cultural issue of no accountability in the context of change. So, first and foremost, CMOs have a whole big whiteboard full of stuff that they want to do, but they’ve got no ability to get it done as a function of the cultural norms of their organization and the lack of accountability for innovating new processes.

IA: Absolutely, that's an interesting way of looking at it. Have you seen many companies go through an audit and analysis?

MM: Sure.

IA: And if that's an important thing for them to do, what sorts of results have you seen when these audits have taken place?

MM: For the most part, audits presage or telegraph that someone's going to get fired.

So, generally, most organizations remain hostile and passively aggressive with the whole audit process because the history of audits has never really turned out well for most companies or most people. And I say that because over the course of 20 years, we have conducted a number of audits.

And I know firsthand the emotional terror that audits produce. That said, the best audits that we’ve seen are those that are tribal and collaborative and almost like a game. And that really entails having a bunch of people visually depict on a whiteboard exactly what their processes are. Just to visually depict a big messy process and have everyone that contributes to that process contribute to the visual depiction of that process.

And in the course of that, something really stunning happens. Everyone begins to go, ‘Wow, this is really dumb. I had no idea that my lack of trust produced such downstream consequence. I had no idea that we were entering and reentering the same data for 50 000 skews five or six times. I had no idea that our website, the data on our website, was so out of sync with what's in print. I had no idea that we had three people full-time for three weeks creating an index for our catalogue’.

IA: So those are some of the steps that you’ve seen companies take to counteract excessive costs and inefficiencies.

MM: Everyone has to see their contribution, their added value to the current state. Everyone has to see the totality of the process and all of its warts. This is indefensible. I surrender my reluctance, my fear, my uncertainty, my doubt, I surrender resistance to change.

Now, the question then is, then what? So then you have to get those same actors to then contribute to the creation of the future state, one brick at a time.

So the best solutions are always collaboratively defined and co-created as first an emotional experience and then later as physical expressions of systems and processes.

IA: So in your experience, have you witnessed any changes to marketing SCM with the introduction of personalized technology?

MM: Yes, I have seen many integrated marketing supply chains. And while I would like to mention the name of the firm, I’ll just say a really large global industrial consumer electronics firm with whom I worked on and off for 3 or 4 years. A few years ago, I got invited back and they said, ‘Michael, would you like to see the fruits of what we’ve been talking about in terms of marketing supply chain?’ So, he pops up his laptop. Logs on and says, and I see a dashboard. Now the dashboard has this little kind of yellow flag on it and it says, okay, we’re over budget in our print channel, click.

Portugal is the number one over budget, click, click. These 11 projects are 20 per cent over budget, or 22 per cent over budget for color workflow. Click. This particular project is 600 euros over budget as the function of color retouch. Click, click. This project is over budget 710 euros for color retouch. And then my client looks up at me and says, ‘Now I’ve got data by which to sit down with my country manager for Portugal and say, “Look, Paulo, we’ve got three, you’ve got one of three problems. The data says you have one of three problems.

One, you’ve got a design execution problem. You are trying to execute a design that your supply chain cannot keep up with. The tolerances are too high causing you to do color retouch. Two, you’ve got a vendor quality assurance (QA) problem. You’ve got a vendor who's doing substandard work that's causing this thing to get reworked. Or three, you’ve got a training problem. You’ve got a marketing manager who is doing color retouch work that at the end of the day doesn’t make any difference. Those are your three options.

Now, as a function of your not being on top of this, as function of me having to come back to you four months later with all of this cost, you have taken 23 000 euros out of my Portugal budget. I want you to fix this next week. And I want you to report to me how you fixed it.”’

So that's the business end of marketing SCM.

I have a number of clients in Europe; there's another one in one of the Nordic countries. And initially, this person with whom I have now been working for 10 years is currently with a large telecommunications firm in Finland.

She initially got brought in as the chief procurement officer for marketing operations to solve one problem. This particular firm does direct mail across the Eurasian market, from Uzbekistan to Ireland.

She tells them that in Germany the production of a certain brochure costs us US$1.10. This exact same procedure in England costs us $1.25. This exact same brochure in France costs us $0.85. She then came back to her management and told them that the reason there is such a difference in costs came down to dumb buyers and smart salesmen. So then she set out to put in place an operational capability for the strategic sourcing of marketing content and services for their entire Eurasian market. This system, first of all, required when a marketing manager wants to spend money they have to fill out a uniform project description form.

This form is similar to a marketing brief, but also contains marketing objectives that this particular spend should achieve, the number of brand impression, number of downloads. And an estimation in terms of revenue to which this marketing piece would directly contribute.

The system then would route it dynamically to a buyer who would review it, and make sure that the project had been accurately defined. So, in the course of this, she had to consolidate her vendor base from about 600 down to about 80 vendors. Those vendors were given an request for information (RFI) and told essentially how much they wanted to spend. Increasingly these RFIs reflected historical projects of similar dimension and parameter. Okay? And so instead of just making it up we’re saying okay, we’ve bought this kind of thing for the last two or three years and here is more or less how much things cost and how long things took and what were the kind of supply issues, so there was a bunch of institutional learnings and historical insights about how to buy this particular piece of collateral.

So then they send us out to 15 or so vendors. Eight or nine of them come back and say, yep, I’m interested. Then, they would get an email with an embedded link that would then have the vendors come back to her procurement system where they had an interactive request for proposal (RFP). So as a function of this, she had all of her eight now-qualified vendors submitting proposals with uniform line item data that specifically stated how much money that particular vendor was charging for ink, paper, press makeready, project management, right?

Because when we go into most accounting systems, all we’ve got is we spent x, y, z with Quad Graphic, but we have no descriptive detail as far as what we got. None.

IA: Yes.

MM: And when you compare the invoice you get from Quad Graphic from what you get from say Donnelly, there is no correlation at all in terms of line item detail – none, zero, zip. So, what she did with her now requalified vendor base was create a uniform data model for individual line item pricing of a complex bid. Fabulous. Her same system would generate her own invoice and push that data into the vendor's accounting system. So, there was no reconciliation or very little reconciliation of accounts because we are dealing from one version of the transaction truth. And as a function of that, the vendor got paid consistently every 22 days upon receiving transaction data from her system.

That was the carrot that incented the vendor to get down with this new way of doing business.

IA: That's perfect.

MM: Now, the net result is that she has a database with some business intelligence tools built into it. And her CMO knows how much money has been spent as of 13:00 hours this afternoon, by market, by channel, by media, by partner.

And oftentimes, a CMO gets called into the CFO's office and says, ‘Our numbers don’t look good for the Q3 here, we got to pull back. How much money have you not spent?’ So the CMO will say, ‘Well, we haven’t spent this $17, 435 000.’ ‘Great, well, I want to take half of that’.

So then the system would say, as a function of not spending that $8 million in change, here is the number of leads that will not go to the channel. Here is the number of people that will not come into showrooms. Here is the number of transactions that will not happen.

So you know, at the end of the day, we have a business to run, we have shareholders to keep happy, but I want you to know, there's a real economic consequence in not spending these dollars.

IA: Yes.

MM: So, in this case, the CMO was able to tell their board that you can take $8 million out of my budget this quarter, but we’ll pay for it with $42 million of lost sales over the next two quarters.

So, that made his business case fairly unassailable. Now the third element of a marketing dashboard in this case is business impact simulation. So, in this case, they say, well, look, we are going to drop 100 000 direct mail pieces into the German-speaking markets.

Great. We expect to get a 5 per cent response rate, 5000 people. Do we have enough people in the call center to handle 5000 calls over this 2-week period? Yes? Great. Now, if we convert 20 per cent of those, that's 1000; do we have enough feet on the street and trucks to actually effect 1000 B2B hookups? No, great. So how many fewer mailers do we then mail so as to produce demand that we can fulfill?

That's business impact simulation. That is, SCM for marketing. Continuous, ongoing reduction of cycle time, cost and defects with the idea that what I’m doing now is I’m having analysis-driven communications with closed-loop feedback in terms of exactly what am I getting for every dollar or for every euro that I’m spending?

And everything else is just a bunch of arm-waving and a bunch of buzzwords and quite frankly a bunch of bullshit.

IA: Yeah. So, another area that also, obviously, is a big focus for us is obsolescence. And speaking with a number of businesses they’ve put their obsolescence at right around 20 per cent, which is of course, you know, huge. What is your experience with ….

MM: What do you mean by obsolescence?

IA: By obsolescence, we refer to when certain marketing consumables become completely obsolete and I suppose that's the benefit a lot of companies have; we’re working with so many online elements that there are no, for example, old branded collaterals sitting in a warehouse somewhere that can’t be used.

MM: I understand; so you’re talking about essentially, waste.

IA: Is that something that you’ve come across?

MM: Absolutely. And I first ran across it with a large financial service firm then headquartered in Manhattan that since kind of redistributed their collateral center. And I sat down with the executive vice president in charge of this area and I said, ‘Kevin, how much of your print collateral do you waste? Now, I know you buy these in lots of 5, 10, 15 000.

But, at the end of the day, because you are selling financial products that tend to have fairly short lifecycles, about how many of the three million color page impressions that you bought last year, how many of those page impressions do you simply throw away and/or recycle?’

IA: Yeah.

MM: Well, he happened to have done the homework and he said, ‘62.8 per cent’.

And I said, okay. And he said, ‘Now, the reason we tend to over-buy is that if we have out-of-stock material, we tend to miss a sale. So, the opportunity cost almost always outweighs the material cost of too much print’. So I say, ‘Okay, so your critical business driver is to have something to fulfill to seal the deal?’ And he says, ‘Absolutely’.

So, given that you’re wasting 62 per cent of your color print pages, you could say that instead of having a million-dollar print bill, you’ve actually got a $2.2 million print bill. So you could spend up to $2.2 million in doing digital print runs, that is build a suit just in time, on demand.

So, you could essentially double your page cost and still come out ahead because how many square feet of your Manhattan office space have you set aside for literature? And his eyes just roll. And the people associate, so when you go through the activity-based accounting of what it takes to have a piece of literature on a shelf, and then he says, ‘Oh, clearly, now, I could spend close to three million dollars to get the same job done’.

Now, those weren’t the numbers, but I’m just using them in relative proportions. So, this basically says that print runs are getting shorter and shorter with the idea of driving them into on-demand, print-on-demand, high-resolution color print. Now, as a function of making the investment in that on-demand print infrastructure, you get two other things for free.

IA: Yes.

MM: One, you get to lower your real estate costs. Two, you have the ability then to do personalization, with variable data printing. And this gets into that larger issue that's driving, that will continue to drive, a whole bunch of innovation and change in the marketing supply chain, which is, how do we increase our level of customer engagement as a function of speaking more directly to individual customers or at least consumption cohorts, using unique configurations of brand, value proposition, culture iconography, image, text, metaphor and, ultimately, applying the principles of localization to micro-targets within an otherwise unified market.

IA: Hmm.

MM: So personalization ultimately starts to drive a customer engagement strategy, which is, how do we marshal our resources to more effectively attract, serve and keep customers for life?

IA: Another area to look at is, of course sustainability gains; that, and looking at the carbon footprint of companies and the way that they produce, store and distribute marketing consumables. Are there parts of the marketing supply chain that you think could benefit from a focus on that?

MM: Well, the entire supply chain really.

And this gets to, well, sustainability is for a number of companies a branding issue. And a, you know, we’re green too, you know, don’t punish us for not being green. And there's a whole bunch of other like brand-related reputation management issues.

We advise our clients to pursue green as a SCM opportunity to drive cost and waste out of the marketing operations. Now, it turns out that I’m gonna, so that means if you produce less waste, then you have less waste to manage. Then you can just worry about server virtualization and make sure that you got more efficient IT operations, right?

IA: Yes.

MM: I’m writing a paper right now on another dimension of the supply chain that frankly is off the radar of virtually everyone that I talk to, and I call it the digital mailroom. Think about a large bank, Bank of America. Or a company like Kraft foods or a General Mills, General Motors. Think about the amount of mail that you receive. Millions of pieces of mail.

What most people don’t really talk about is that some amount of that mail, specifically customer communications, invoices, forms, business records and compound documents, the company must audit as a function of regulatory compliance.

IA: Yes.

MM: So digital mailrooms basically say, we’re going to eliminate to the highest extent possible internal paper mail. So, as soon as it hits the mailroom, we are going to digitize it. We are going to do auto-capture of key facts like account number of product numbers or unique identifiers and turn it instantly into a PDF or an equivalent digital object and put it into a workflow management, business-process management, technical infrastructure so that we can recycle the paper now.

Now, at the function of having digital mail processing, guess what you get aside from a greener operation? You pick up an average of 2.9 days’ cycle time gain on core business processes normally touched by physical mail. So you can shave 2.9 days off of the time it takes to process a new loan, to set up a new account, to make a change on a service.

Now, if you’re a billion-dollar firm, that means that you operate about 220 days a year.

IA: Yeah.

MM: Or another way of saying that is, if you simply divide 220 into a billion, it's about $4.5 million of revenue a day.

If I pick up a cycle time gain of 2.9 days, round it up to 3, and each day is producing $4.5 million in revenue, it's easy to conclude that there's somewhere between $10 and 14 million of incremental revenue. I simply moved next year's sales into this year, as a function of being green.

First, let's get started on the right footing: green does not constitute a strategy. Rather, you become green as a by-product of executing a strategy.

SCM may constitute a strategy and green as the good output of that strategy – an interesting and good side effect.

IA: Effective SCM that delivers a greener process definitely represents an area of focus for many businesses. What advice would you give to marketers in that context, looking to achieve greater levels of efficiency within their marketing supply chain?

MM: Most us find ourselves in the shocking new Era of Accountability that demands, among other things, that senior marketing executives build a full process transparency and more real-time governance for their marketing operations.

That means that before you start monkeying around with a lot of new tools and technologies, before you start making significant changes, you really need to have a business process analytics function in place.

In practical terms, process transparency of marketing becomes a dashboard and set of regularly updated benchmarks that measure the efficiency and effectiveness of the marketing spend as well as another set of benchmarks that measure organizational progress towards greater levels of process maturity and integration.

Let's take a concrete example of benchmarking process maturity of how an organization manages its physical mail and distribution workflow.

It surprises me that large firms take an average of 3–8 calendar days to get an order or customer communication into the hands of the appropriate staffer.

If you deployed a digital mail processing system, digitizing your entire inbound customer and accounting mail, speeding a core business process by 2.9 days, what's the value of those 2.9 days?

Well, if you sell $1 billion dollars of product per year – 220 working days – you sell about $4.5 million per working day. If you move everything up 3 days, you create nearly $14 million in new revenues. Mind you, that's a one-time gain. But, heck, it's $14 million.

As we start thinking about business processes and, in particular, customer analytics, I recommend that every firm develop a center of excellence.

So, let's just get a good factual baseline in terms of how long things take in the core process of attracting and keeping customers for life!

Long term, process analytics applied to customer engagement will apply many of the same principles of Lean and Six Sigma for services to a marketing operation. Now, that's a bridge too far for most companies.

Most CMOs simply do not have the engineering mindset and quantitative rigor to drive process analytics. And that's okay. Eventually, we all retire out!

Nonetheless, we’re headed that way, so the question is, ‘What small meaningful steps can we take towards making processes more transparent and accountable?’

And how much do things actually cost?

So, if I follow in the footsteps of Finnish innovation leader Hanna-Maija Nyberg, we’d start with marketing procurement. And making sure that we buy creative marketing content against declared performance objectives.

IA: That's very sound advice. Any last comments?

MM: I have one last topic that probably might make a good place to conclude – a coda for a future conversation. It's the notion of mastering the customer engagement cycle – way beyond direct or Internet marketing.

Mastering the customer engagement cycle starts with the assumption or business fact that most of the core of marketing practices have now hit the point of diminishing returns.

So, you’re not going to get a significant sales increase by increasing your ad budget 5, 10, 20 per cent. You’re not double the amount of direct mail pieces you send out there, and double sales. In fact, you’ll get a marginal sales bump at best.

So, while operational excellence for marketing is a good and noble thing, if we don’t fix the underlying root problem of marketing: it no longer produces significant increases in revenue as when compared historically.

That's the problem that we have to fix first. Now, it's ideal if you can fix that problem and make your overall operations more efficient.

That really defines Innovation Leadership. Do it well, you can realize a productivity dividend: freed-up money within existing budgets and better, more efficient ways to direct resources against those new-money re-investments. That gives you a strategic twofer. Now, it's my opinion and again,

While I’m still developing the unassailable case for this, I have the opinion that most marketing still operates on what I call the marketing procedural.

And the marketing procedural is a fairly established, well-known practice that starts with a customer insight. Here's need that's not being served in the market. This customer insight then kicks off a strategic planning process which is, well, what price point, what should be the configuration of products and services, channel alliance, all that kind of stuff, right?

And then once you’ve concluded that there's sufficient market to justify the effort to go after that new segment, or execute on that insight, then we go into kind of a marketing brief where we start to create an overall marketing brief, which is essentially thinking through an integrated marketing program.

You know, what should we do online, what should our direct be, which should be our newsletter outreach program?

What should be our search engine optimization (SEO). What should be our broadcast and print ad campaign, in-store or outdoors, that kind of stuff, right?

What should be our trade promotions, publicity, special events sponsoring and so on?

What should be our social strategy all that stuff, right? So then as we develop a cohesive integrated plan with budgets and timeline as a calendar, then it spits out a set of creative briefs: each specialist team.

There's even a creative brief for the guerilla marketing and street teams, right?

At this point, they go into a content-creation process, where the stickiest process becomes review and approval.

The content-creation processes across the entire campaign may take weeks or months. Then 10, 16 or 20 weeks into the process, all the content's been created, approved, locked and loaded, and ready to paint the town red.

Boom, outdoor, direct mail, ad words and broadcast – it all hits on 15 November right?

Hopefully it goes off as if it was a concussion grenade, creating this echo effect in the market. Ideally it creates a synergy: so no matter where you turn there you experience the brand, the value proposition and the impulse to take some next-action step.

However, that process – the marketing procedural – has begun to implode. Today's consumer, especially those 35 years old or younger, have developed a psycho-immune system response to corporate brand marketing. Most consumers have become impervious to most promotional messages.

Secondly, as a function of their social networking and their instantaneous communication with friends around the world, they’ll want to start engaging you – just as you are kind of still in your strategic planning process.

The question then becomes, ‘How do you create a meaningful relationship with customers for products that you won’t have on the market two, four, five, six months from now?’

You have to engage these consumers early on, or you run the risk of disaffiliating them.

And then, once you’ve got products to sell, you discover that social media, rating systems, you know whether it's at CNET or Yelp or Zagat or Consumer Reports or whatever, right? Angie's List and so on, you find that all this media that's outside your ability to control or manipulate is now driving demand, shaping criteria and, ultimately, effecting your sales.

Companies must learn how to execute on insights within days or maybe a week. They have to go beyond the marketing procedural.

Remember, the network consumers or Netizens have impervious bullshit detectors.

So, even if you had a beautiful campaign with great creative and high production values and a compelling value proposition, it won’t make it through the vetting process that happens at Facebook or other social networks.

So, this operation excellence, marketing SCM, its all a good thing, but you know, the house is on fire. We’ve got a more fundamental problem to solve.

So the coda for this interview is, ‘How can we put out the house fire and get beyond the marketing procedural?’

How, I think that means that marketers must use operation excellence AND marketing SCM to improve our level of customer engagement.

SCM for marketing puts in place the very things that I need to get more efficient, greener, faster – how I can lower the cost structure of marketing content and services and free up funds to invest in process innovation and customer engagement systems.

I laid out my basic argument for this in my white paper entitled Orchestrating the Technologies and Processes of the Customer Engagement Cycle

I make the case for how CMOs can, should and must solve their customer engagement problems and in the process also bring forward a SCM that oh, by the way, produces productivity dividends that will fund investment in these capital projects.

So, cost savings are great. Strategic cost savings are better.

But the best cost savings happen within a fiscal year without the CFO seeing them so I can redeploy those savings into more strategic investments, such as investments in multichannel analytics, agile content development, multimodal content management with aggressive semantic tagging and content optimization, and personalized messaging and email systems – closed-loop, analysis-driven processes of the customer engagement cycle.

So, SCM is best done supporting freeing up resources and money to reinvest this year in more effective customer engagement – how to attract, serveand satisfy customers for life.