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Relationship managing

By The Drum | Administrator

February 24, 2005 | 8 min read

Ardbeg work by Story

It’s true that whatever type of business you might be in, whether it’s lending money, attracting visitors or selling products, the most important thing is the bottom-line profit margin. Enter advertising, the most popular way to drum-up new business. And so potential customers, from businesses to housewives, find themselves constantly bombarded with brand messages from companies ever on the lookout for that new wave of business.

In recent years, however, many companies have started to realise that bringing on the custom in the first place, while clearly important, is not enough by itself. For many companies and organisations the real trick has become how to keep customers from leaving again.

Customer relationship management has become somewhat of a buzz term within the marketing industry, with many companies claiming to employ a CRM programme which usually amounts to nothing more than alerting previous customers to new offers. Real CRM, to those in the know, is about much more than firing out indiscriminate mailers detailing the latest price changes.

“What is CRM – a loyalty programme or a customer relationship programme?” said Sue Mullen, managing director at Story. “I don’t think clients are investing in loyalty. It’s about getting the customers to buy into the lifestyle, brand and benefits. It’s not just about loyalty – it’s about the customer becoming an advocate.”

Rather than inundating customers with a rush of information, much of which they may be uninterested in, a successful CRM programme should involve the cultivation of a relationship through relevant and well-targeted communication. Traditionally this type of activity is thought of mainly in connection with the financial services industry, but it’s applicable throughout several sectors, as Daniel Clare, managing director at Only U, explains. The agency has CRM experience working with clients such as Sterling, Buildstore and Historic Scotland. Clare comments: “CRM is still associated with call centres and the financial services market. But it’s increasingly involved in consumer and business-to-business. We’re about to start a project with Scottish & Newcastle Worldwide to do a trade CRM programme. It’s a very precise target audience.

“If you said CRM most people would not think of a booze company. But I think the recognition has developed that it’s getting harder and harder to get new business from new customers. If you can’t get good customers it makes sense to keep good customers.

“With all the people we’re talking to it’s about building relationships. However, in Scotland there are a lot of companies who haven’t really got to grips with the possibilities of CRM. They’re still caught up in chasing new business.”

However, with CRM becoming an increasingly popular term in recent years, there are also companies who are prepared to spend money on activity without a clear knowledge of what they’re getting into or what exactly it is they hope to achieve. “If somebody came to us and said ‘we want a CRM programme’ there’re two key questions we would ask,” said Yvonne Balfour, managing director at Navigator Responsive Advertising. “Number one is ‘why?’ and number two is ‘and what objectives have you got for us?’ That would really be the starting point because that starts to define if we are just talking about a communications programme, or if we are actually talking about a more fundamental at-the-heart of the business approach to customer management.”

Navigator put this into practice when the agency was hired by the Dumfries & Galloway Tourist Board in the wake of the foot and mouth epidemic. Navigator’s task was to make use of data collected by the Tourist Board detailing past visitors to the area and find a way to keep them interested in future visits. After an in-depth study of the information, the agency team broke down the list into different categories depending on how frequently the included people visited the area, and how much money they spent on their visits. Different communications literature was then sent out to people in these separate groups, keeping them interested in the region as well as providing relevant information for their next planned visit. The campaign has proved a great success, with increased visitor levels helping to bolster the local economy.

“I think there is sometimes a view that CRM is really just about ramping up your database and the technological side, but it’s actually a bit more fundamental than that,” comments Gill McLellan, senior planner at Navigator. “It’s really about sorting out your strategy, being a bit more objective about things. You’ve got customers that actually lose you money as well as the customers that make you money. A big problem for a lot of businesses is identifying which of their customers are profitable or not, and then thinking about the correct strategies for maximising what you’re getting from your most valuable customers. So that’s really the basics behind most customer management.”

This knowledge of the customer, or visitor, base is clearly displayed by Story in its ongoing customer relationship programme for Ardbeg malt whisky. After several years of inactivity, the Ardbeg distillery re-opened and had to set about building on its existing customer base. Story formed the Ardbeg Committee, a group which Ardbeg drinkers could join to celebrate their love for the drink. Members were each given a rulebook, and are sent regular information about the product and events tied into it. Additionally, a dedicated website was set up which can only be accessed by committee members, and members throughout the world are encouraged to communicate with each other through forums and e-mail. A few years after its launch and the Ardbeg Committee now counts 32,000 members (of which one is Fidel Castro), in 110 different countries.

The programme, which repeatedly wins awards for its effectiveness, has succeeded not only in retaining existing Ardbeg drinkers but, as these drinkers feel that they are part of a select group, has led to an increase in business as committee members meet and recommend like-minded people for membership.

Dave Mullen, Story‘s creative director, remarks: “It’s a combination of Islay, the place, and the whisky. Throughout the year people make a pilgrimage to the island and you couldn’t ask for better ambassadors for the brand than the staff at the distillery. People who want a CRM programme to work have to realise that it has to be translated throughout the company.”

Mark Robinson, managing director at Marketing Databasics, agrees that a vital part of a CRM strategy is making sure it is rolled-out throughout your company. He comments: “CRM programs have two main elements: technology and culture.

“For organisations to gain significant advantages from CRM it is commonly the culture that provides the biggest barriers. Individuals have to challenge their daily practices, whether they be customer facing staff, marketing or sales, and use the customer information available to them to deliver appropriate services and recognise potential.

“One simple example is to stop running high volume mailing campaigns and make DM more multi-channel, better targeted and quicker to execute.

“Technology will allow you to achieve all of this but without the buy-in of staff, and the appropriate skill-sets, the business case for CRM fails.”

Marketing Databasics has ensured that this strategy has been applied to clients, which include Scottish Friendly.

However, whatever the strategy is, perhaps the most important thing about any CRM strategy is that it is carried out over the long-term, as Sue Mullen, at Story, points out.

“That’s the thing that is so important – that clients recognise that this is long-term,” said Mullen. “We have sent out communications that didn’t sell. If you can’t afford to do that then you don’t do CRM.”

McLellan, at Navigator, agrees. She remarks: “The system alone is not enough, you’ve got to use it in the right way and have the strategy which follows it up.

“Which is where the people like Tesco have made it work, because they’ve made very good use of the data that they’ve got. Whereas perhaps some of the other people that put in the big investments and didn’t follow it up with a strategy have sunk without a trace. They’ve not made the most of it.”

Clare comments: “Over time is where you can see the real benefit. Otherwise it’s not really a relationship, it’s just a tactical campaign. It does need to be thought out. It’s having a clear strategy and then executing it over time.”

So CRM isn’t the quick fix that some companies think it is. Nor is it applicable to every product, or every company. But for those companies that are willing to invest their time and money in cultivating relationships with their customers, it can really pay off. Having customers not only stay loyal to your brand or product, but actually encouraging others to feel the same way, is just about the best sort of marketing out there. It doesn’t hurt the bottom-line, either. Which, of course, is the whole point.


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