Business | Retail

Shared services model works well when budgets are tight

Early adopters see gains of 15-20%

  • By Karl Nader, Special to Gulf News
  • Published: 14:09 September 24, 2012
  • Gulf News

Today, most marketing executives in the Middle East, and elsewhere, are faced with increasing pressure to keep their spending to a minimum, while having to justify return on investment from their expenditures.

At the same time, the marketing ecosystem is changing at an astonishing pace, leaving executives to grapple with how to effectively spend their limited marketing budgets.

Unfortunately, the marketing function’s lack of consolidation and collaboration does not help, and can even thwart marketers from developing these newer, key areas, such as social media, as well as the generation of richer customer segmentation.

The best way to avoid these pitfalls is through a shared-services model. This approach has traditionally been employed to slash expenses by consolidating work that had been outsourced to advertising agencies. Today, however, this model can be applied to managing the myriad marketing tasks needed to promote companies and brands successfully.

In essence, this model consolidates standard tasks such as research, media buying, and creative development as well as direct marketing execution, performance measurement, customer data processing, and lead management. Leading marketers are now taking this model a step further to build and share more advanced capabilities.

Better yet, if companies properly employ a shared-services model, they can be rewarded with the ability to bridge a significant capability gap in marketing. Specifically, marketing shared-services helps companies maximizes efficiency.

Indeed, early adopters of this model have achieved efficiency gains of 15 to 20 per cent.

Implementing a shared-services model may be challenging for some marketing leaders. There will likely be concerns about losing “local” knowledge, as well as questions about what services should be shared and how they should be structured.

To overcome these obstacles, marketing leaders should follow four key steps: Develop a baseline understanding of the company’s existing marketing services; define a menu of services; design the future model and make the economic case for its adoption; and devise a holistic but practical transition plan.

First, marketing leaders must know how much they are spending and where. It may be difficult to gain insight into this because marketing budgets are often controlled by business units. To get a holistic view, companies should establish an enterprise-wide marketing taxonomy that captures activities across the marketing value chain.

The second step involves determining what the marketing shared-services organization will provide to its internal customers. Two broad kinds of services should be considered: Transactional services, like media buying and creative development, are repetitive in nature and can be consolidated into centers of scale and potentially outsourced or delivered internally. Expertise-based services like social media marketing, customer insights, and campaign management, require business knowledge and are usually kept in-house.

Laying the groundwork and designing the future model is the third step. This will require the definition of clear roles for corporate headquarters, business units, and marketing shared-services.

Fourth, marketing executives will need to devise a transition plan. This can take form as a road map that has an end state and clear steps to reaching it.

Implementing a shared-services model following these four steps enables companies to concentrate on strategic marketing, instead of just tactical execution. Ultimately, it will prove to be a key advantage as the number of customer segments, brands, product lines, and geographies that marketing executives must serve continues to expand.

— The writer is a principal with Booz & Company

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