Keep marketing away from IT strategy or lose customers

Marketers fixated with short-term hype must not be trusted with product or enterprise technology strategies if companies want to maintain customers, according to former Telstra group managing director for technology, innovation and products, Ted Pretty.

Speaking at a customer intelligence panel discussion in Sydney last week, Pretty warned companies with high fixed costs not to allow the marketing department to dictate technology strategy.

He said they should be kept from dictating strategy to the board, because little regard is often shown for the long-term impact on customer-facing technologies, especially billing systems.

Candidly talking of his experiences while not mentioning Telstra specifically, Pretty said the type of customers marketers found desirable must be balanced against long-term cash flow and customer turnover, known as churn.

"The theory that churn is OK is one I have never subscribed to. The biggest problem is when you have different marketing departments that can't agree on something like a single, customer identifier, or a single, logical, data warehouse," Pretty said.

He added that IT vendors also commanded disproportionate sway on how IT decisions were made in many enterprises, with many tenders drafted "to actually select a particular vendor" before they've even left the organization.

"Those people do not deserve to keep their jobs," Pretty said.

Pretty said marketing created an expensive plethora of fractured product lines and hundreds of billing systems that were compounded by an inability to offer bundled customers a single bill.

The billing situation at Telstra is such that, according to Telstra CEO Sol Trujillo's revelation at the telco's 2005 annual general meeting last week, it will drastically overhaul and consolidate products and billing in a clean up and overhaul likely to exceed $1 billion.

"The hype keeps the brand fresh, but the reality is the bill," Pretty said.

In terms of when CEOs and IT managers should hear alarm bells, Pretty said his experience in telecommunications had taught him the reign of marketing can sacrifice even the most basic customer service values, and revenue with it.

"A warning sign is when you hear [from marketing] you are losing the 'right sort' of customers. There were retired customers, who never called the call centre, sitting on rack rate. The big thing was high-spending customers, but you have to factor in the cost of servicing those customers," he said.

"You have all these [performance] metrics and you fill them, but there is a disconnect at the coal face and how people are dealt with [when they make] a billing enquiry."

While declining to comment on specifics, a spokesman for Telstra said substantial changes were under way within the company's marketing operations and that more would be revealed after Telstra's mid-November restructure announcement.

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