Should I Use a Marketing Service Provider or a Marketing Cloud for My Customer Database?

May 06, 2015

businessman looking business concept and strategy on texture walHistorically many marketers have outsourced their customer database, and even the creation of customer segments and campaigns, to third party service providers called “Marketing Service Providers” or MSPs in short. Well known MSPs include Epsilon, Harte-Hanks and Merkle, but there are many others. In this blog we will compare marketing service providers to out-of- the-box campaign management and predictive marketing cloud solutions.

Outsourcing to Marketing Service Providers

Database marketing service providers (MSPs) provide a fully outsourced option for companies to outsource and analyze their customer database. Most MSPs evolved from providing data hygiene and processing for direct mail campaigns to offering full hosting and management of customer databases and  add-on services such as analytics and consulting. For the most part MSPs focus on servicing larger companies.

Most marketing service providers are essentially consulting organizations. While they have the capabilities to deliver direct mail and email campaigns, they usually  lack the product capabilities necessary to deliver real-time, personalized experiences, such as real-time web or mobile app recommendations or personalized advertising campaigns via social channels. Additionally, virtually no MSPs have significant SaaS based product offerings that provide the self-service and collaborative functionality that today’s tech-savvy marketers require to move at the pace of an increasingly mobile and social customer. The consulting approach extends to predictive analytics (advanced segmentation) as well. Most MSPs will have predictive analytics capabilities that are consulting engagements for custom models built on a per-customer basis.

By using an MSP you can reduce your reliance on internal IT. There are, however, inherent disadvantages about outsourcing your customer database (and alternatives to alleviating the load on your IT). MSP pricing models are typically structured around a retainer fee that is based on the number of campaigns and the number of analytics projects you foresee in a given month. If you want to run additional campaigns or analyses, you will have to renegotiate. In comparison, campaign management and predictive marketing cloud solutions pricing models that are based on the size of your customer database and you can execute an unlimited number of campaigns and reports.

If marketers keep customer analytics at arms’ length in this way, it is unlikely that they  will build a truly customer-centric organization. In  most situations, for those who are committed to build their company and strategy around the customer, it is  imperative to bring customer data in-house and to give all customer-facing personnel instant access to appropriate customer data.

Campaign Management and Marketing Cloud Options

By comparison, campaign management products are focused on designing and executing marketing campaigns across channels, including email , web, social, and mobile. Few campaign management tools execute all of these channels natively but will rely on third parties for some. Campaign management tools certainly can help you plan the right message to the right customer at the right time, via the right channel. Many of these tools started as email service providers and therefore have a strong focus around the email channel, rather than the customer. Customer profile capabilities are still very rudimentary in many of these systems, though all are certainly focused on improving these capabilities. AgilOne is unique in that it was built on a foundation of data management, data quality and predictive analytics - which later inspired campaign execution - rather than the other way around.

Most campaign management tools have a strong online focus and quite a few have not yet built out the data hygiene capabilities to track and correct the physical address information. Also, not all campaign management tools have robust fuzzy matching and deduping capabilities. Therefore, most campaign management tools cannot be used for direct mail or in-store campaigns. AgilOne has strong roots in customer data management and bridges the gap between online and offline identities. AgilOne provides householding, full address verification, deduplication and normalization, necessary for direct mail, as well as online capabilities.

Some campaign management vendors are starting to tout predictive analytics capabilities, but most are either limited to providing web or email recommendations, or  providing a predictive analytics workbench—requiring marketers to build their own predictive analytics models using internal resources or extensive professional services. Additionally, most campaign management tools are designed for the large enterprise. AgilOne was built from the ground up to target the needs of both large and mid-sized companies and the AgilOne solution comes with built-in turnkey predictive models, audiences, and campaigns that are ready to use out of the box. In addition, AgilOne provides open API access to raw and normalized data for use in custom applications.

Many campaign management solutions have started to refer to themselves as marketing clouds, sometimes including some data management platform or content management and collaboration capabilities as well. Note that many of the marketing cloud offerings are a compilation of multiple products under one brand umbrella. For many vendors their marketing cloud offering is a hodgepodge of products put together from different company acquisitions and the integration of the different parts is a work in progress. AgilOne was built from the ground up to address multichannel campaign management with the customer database at the center.

A Third Way-The Predictive Marketing Cloud

We agree with the MSPs that a marketer’s first focus should be customer data. However, most MSPs are not setup to provide real-time, triggered digital campaigns on the web, email social or mobile channels, which rapidly is becoming an absolute “must-have” for all marketers. Also, our beef with MSPs is that they don’t provide daily/nightly updates of all customer data, and don’t give all customer-facing personnel, including marketers, instant self-service access to the customer data and the customer insights. There typically are some portals with reports, but never are there API’s to access all customer data store programmatically and data is only refreshed sporadically. Many campaign management vendors, on the other hand, are too focused on campaigns and too little on complete and accurate customer profiles.

AgilOne’s Predictive Marketing Cloud allows marketers to manage customer data in-house, with our help, have instant self-service access to customer insights and to easily create online or offline campaigns, including triggered campaigns. However, marketers still don’t have to worry about the data integration, data cleansing, data preparation, advanced segmentation and predictive analytics that can be so hard to do in-house. Instead these capabilities are all standard features of your predictive marketing cloud. Plus, we give full, open API access to the raw and normalized (cleansed) data. It is your data after all!

Our Advice?

Retain Instant Access To Your Data

We strongly believe that it is not possible to become truly customer-centric without making customer data available to all customer-facing personnel in your organization, starting with you—the marketers. Therefore, we strongly recommend against outsourcing customer databases to a third-party provider such as a marketing service provider due to the  difficulty to access data when and how marketers want it and the customer insights will reside outside the organization. You really want customer data to be updated at least daily and to retain both GUI- and API-access to your own data at all times.

Outsource The Mechanics

Bringing customer data in-house does not mean that you have to start from scratch. There are affordable, easy to use solutions available, such as those provided by AgilOne, that can help you integrate, cleanse and analyze customer data. You no longer need to hire expensive data scientists or technology resources. Or you can complement your in-house data scientists and offload some of the heavy lifting, such as data preparation, to off-the-shelf SaaS software. Easy-to-use, online solutions, such as provided by AgilOne, are available to make customer data accessible in a self-service manner to all customer-facing personnel.

Leverage Existing Investments

If you have made an investment in a marketing service provider (MSP), you don’t necessarily have to get rid of that. If you rely on a model that was purpose-built by an MSP for your organization, you can continue to use that model. When you could bring your customer database in house, you can bring the outcomes of your custom models in as custom attributes if necessary.

If you want to learn more about AgilOne's Predictive Marketing Cloud, watch a video demo here.