While many things, from customer call centers to pricing-elasticity studies and sales force deployment models, can be outsourced, some aspects of marketing can’t: those that directly drive marketing strategy. And IT-intensive database management now lets companies precisely target just the right messages to just the right customers in just the right terms. Dynamic pricing models allow airlines to change ticket prices in real time based on the number of seats sold on a given flight. Marketing managers tend to be right-brain creatives with a fondness for mass-marketing campaigns when what’s needed are left-brain number crunchers who zero in on the “market of one.” Today, computer models optimize the allocation of pharmaceutical sales representatives’ time, determining which customers to address and which products to promote to achieve the greatest return. A discipline that was once principally creative has become increasingly analytic, as the old workhorses-print and television advertising, and direct mail-become less and less effective. The need for left-brain marketing expertise, we think, will only grow. And Best Buy, the electronics retailer, is outsourcing not just database management but also marketing analyses and the complete execution of the marketing programs for two of its six segments-business and high-end customers.

Ericsson has outsourced the management of its extranet, which provides the sales force with up-to-date customer information and allows direct communication with selected customers.Īmerican Express now outsources its data mining to specialist third-party firms that can process millions of transactions a day to reveal purchasing patterns and other aspects of consumer behavior. Allstate has outsourced lead management, which has doubled the leads each agent gets. When Sony, a legendary marketer, wanted to build a customer database, sell services, and market new, high-end products through its online store, Sony Style, it outsourced the program, recognizing that it didn’t have the required skills in-house. Second, outsourcing can provide increasingly critical left-brain marketing expertise that many companies lack, such as customer database management and analysis. American Express’s consolidation of customer service call center operations in India, for example, cut service costs per customer by 20% to 30% while improving response time and boosting the percentage of satisfied customers by 20 points.

We believe there are two key reasons for this trend: First, outsourcing can save money and improve quality.

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