CRM

By The Drum, Administrator

February 14, 2003 | 8 min read

You’re 14. It’s Valentines Day. The mail clatters to the floor and, with butterflies in your stomach, you dash to the door to see if you have any admirers (especially that Emily who sits at the back of the class, you never talk to her, but she’s beautiful).

There is a large pile of post – things are looking up.

You rummage quickly: mum (discount vouchers); dad (his whisky club); dad (air miles); dad (music club); mum (book club); mum (store card). You continue flicking, still hopeful. Dad (a reminder to re-join the golf club); mum (free make-up sample); me – fantastic!

You rip open the card. You vaguely recognise the writing. Your mum walks past and picks up her mail. “Any Valentines cards, love?” she asks with a knowing grin. Damn.

Not unless one from your mum counts ... if only your relationship management was better. If only your relationship management was as successful as your parents’ suitors.

If only Emily would talk to you. If only you would talk to her. If only, if only, if only...

Businesses often struggle with the same problem. They refuse to court their customers and then they wonder why their customers, in turn, refuse to court them. In the business playground it takes more than just an occasional punch on the arm to profess your undying love.

Customers count, information about customers counts, and managing that information counts too. Relationships matter. And yet Customer Relationship Management (CRM) remains an elusive field for many companies.

CRM does not always mesh well with conventional corporate culture. It requires investment spending, and increased profits will not be visible until some time in the future. But at present, anything beyond the next quarter is often too far out even to contemplate.

Alan Moultrie, a director at Capital Communications, says: “Consumers are changing – changed by the markets – and as they change companies have to evolve with them to meet their needs, so CRM has to be part of a long-term strategy.

“Really, Customer Relationship Management should be the cornerstone of all professional marketing. How can you sell your product if you don’t know who you are selling to?

“The more that you know, the better the returns can be. If you know a customer well, you are far more likely to make a proposition to them that they will warm to. Hence, the response will be greater. Furthermore, you are taking away the hard sell, making the proposition all the more personal.”

Yet Customer Relationship Management is laden with so much jargon and so many acronyms – even CRM itself – that company chiefs quietly pray for death as a series of unintelligible terms are flung their way by marketeers unwilling to speak plain English.

Data Warehousing, ROI, ERP, P-CRM, data mining, drilling down, ADRI, OLAP, on and on until the eyes glaze over and you crave anything that sounds like normal people talking to normal people.

A great deal of the time, CRM is over-complicated when in fact it is quite a simple process. You do what you need to do to keep your loyal customers happy (and loyal) whilst trying to find new, similar customers. Says Trevor Jones, managing director of Marketing Databasics: “CRM is simply a marketing process. It is not about relationships, but about identifying what customers make you the most money and keeping them happy.

“You do not want to have the same relationship with your bank as you do with your wife. You want your bank to be efficient, competitive and responsive. You don’t want to go to the bank to have a chat. You want to be in and quickly out.

“A lot of people say that CRM is about making the big company experience like visiting your local friendly corner shop. Nonsense.

“Customers want to have different relationships with different companies, and also different customers want different relationships with the same company. When I go to get my hair cut I want the girl to cut my hair and get me out of there. I don’t want to talk about my holidays, the weather or anything else. Other people are happy to sit and chat for hours. But, in saying that, I’m sure that even these people would not want to replicate that sort of relationship with the bank.

“So, really, the ‘relationship’ part of CRM is open to debate and misinterpretation. There is nothing clear. However, understanding customers through their data is at the heart of the whole process.

“For example, loyalty cards are fine as a concept, but unless you make very good use of the data that they allow you to capture, then really you are missing a trick.”

Richard Dixon, knowledge management director at Black Sun, whose clients include British Airways, Cable & Wireless, O2 and HBOS, agrees: “Some current loyalty programmes are little more than thinly disguised discount programmes. The crux of a good loyalty programme is one that is value-based, not volume-based. This is achieved by identifying the value – and potential value – of customers and rewarding them according to this worth.

“The current value-destroying programmes are driven by the current corporate focus on short-term, quick results.”

Michael Murdoch of Mail Marketing Scotland says communication and a little give (as well as take) go a long way to keep any relationship healthy, especially in the evermore marketing-savvy world: “Due to perhaps a marketing overload it is vital that you can utilise as much information as possible when speaking to the customer.

“If you can tailor to meet the needs of an individual, they will notice the value of your offering to them.

“Yes, the consumer is more marketing-savvy. However, in some cases it can be easier to solicit the information that you need as more people and more companies are storing the information.

“However, due to the opt-in nature that marketing has taken, this information is also becoming harder to build on. Customers have a certain suspicion. They know that companies can make a lot of money out of their information and – especially with the introduction of the internet – when people want something they will go out and look for it. They don’t want to be bombarded by communications.

But the problem now for the marketer is not perhaps just the knowledge-base of the consumer, but the fragmentation. “The year of the mass-brand has passed.” Says Mike Barrat, head of data planning at KLP Euro RSCG: “People demand recognition for what they are, not what you’d want them to be. There are solutions to this, though. For example, most mothers in the UK will have had their Bounty pack (a parcel containing all the essentials for child rearing). The point of this is to gather information on mothers and families at their most life changing stage. And, after your own birth and death, there is no other point that is so significant. After a child is born its parents often look towards security and finance. They no longer have such a disposable income, although they do want to invest their money sensibly. They might want a bigger car, perhaps even a bigger house. But from this point on it is no longer appropriate to look at that customer in the same way.”

So, in today’s climate CRM often plays an even more important role.”

Software, in turn, has played a big role in the development of Customer Relationship Management – last year it is estimated that around $12bn was spent worldwide on new technology.

The market has been built on the premise that if you spend millions in an all-dancing system to automate the interface with the customer, then the profits will follow.

Not always so. However, Barrat, says: “Marketing is a very impatient discipline. When you get data, you want to act on it quickly, so, obviously it is important to be able to analyise graphically and quickly any data that you have. This is where CRM software is so valuable – it helps you analyse millions of records very quickly and very graphically, mapping the results with extreme clarity. Yet still, the disciplines of traditional direct marketing is retained. You act, you get a response, you track the responses, you tweak the action, act again and hopefully get a better response. Despite millions of pounds of software development, the sub-structure and discipline of CRM, remains the same.”

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