The fine art of courting customers

By DITA DE BONI

For someone who is not a marketer, today's most trendy acronym - CRM - seems thoroughly overused and highly confusing.

Does it mean Cold, Rational Marketing? unCommonly Respectable Marketing? Even for those in the know, CRM has multiple meanings, the second most common being Cause Related Marketing - or "hitching your company to a worthy cause and benefiting both of you," in layman's parlance.

But by far the most common meaning is Customer Relationship Management. The phrase, used ad nauseam by marketers and companies, tries to encapsulate much more than just the act of marketing a product to a consumer.

It is about relationship building. And it has spawned a $US33 billion ($80 billion) industry worldwide in consultants, software and other "relationship aids" as companies flock to deepen the bonds with their customers.

That figure is estimated to rise to almost $US88 billion by the year 2003, predicts the United States-based International Data Corporation.

CRM tools are used to "handle" the relationship between client and company.

Call centres are an example of a channel through which a relationship can be fostered, while the software used to sort the calls or record data is a CRM tool.

Relationships can be fleeting, like an e-mail every 12 months to remind customers that the next year's calendar is available, or more intimate, like Australian "feminine hygiene" company Libra, which reminds more than 250,000 women each month through their WAP phones that their periods are due.

The popularity of CRM and its applications can be traced back to the business maxim that 80 per cent of a company's business comes from 20 per cent of its client base.

Another theory from the holy writ of ad/marketing: new clients can be up to five times as expensive to attract as a repeat purchase by an established client.

CRM has also gathered steam with the increased popularity of the internet.

Not only have internet shopping and communicating - where your competition is a click away - made it necessary to develop longer-lasting relationships; software allows corporations to manage with ease vast amounts of information about clients and devise sales strategies using the new, potent tools.

But some have doubts about the army of consultants and other expensive CRM tools that has sprung up. Critics say these are being used cynically by companies to reduce the cost of selling in the short term or inappropriately to seduce customers into relationships they do not want. Other firms are adopting CRM in a misguided attempt to jump on the latest marketing bandwagon.

Michael Kiely, editor of Australia's Marketing and Ebusiness magazine, says that the "sound you hear in the distance is the lemming rush of companies hurtling themselves into CRM because they believe it is the Yellow Brick Road to riches - simply identify those customers who contribute the most to your bottom line, then entice them into a relationship by making offers to them - cross-selling and upselling - selling, selling, selling."

He quotes a survey of British consumers by the Chartered Institute of Marketing in which only 8 per cent believed they benefited from contact with companies through customer relationship marketing, while 50 per cent were more interested in relationships that saved them money.

But supporters say CRM is nothing more than the age-old practice of using the tools at your disposal to entice consumers to buy.

CRM is all in the doing, say proponents. There are companies that have all the technology to be fully informed about their customers but still manage to misuse their data, giving the whole CRM concept a bad name.

There is a correlation here with direct marketing, where a properly maintained and respectful relationship with consumers can yield sales, while an untargeted, heavy-handed barrage of mail to solicit business runs the risk of making your potential consumer your enemy for life.

ACP Marketing's Geoff Shaw says today's CRM programmes give companies the opportunity to integrate their marketing programmes and track processes from ordering to buying, to repeat purchase, and beyond. "Most companies have these great internet offerings, but don't know what to do with information they gather.

"In other cases, they have a 'Rolls-Royce' CRM and a Warehouse product - or the other way round - meaning they haven't matched the quality of their approach with the quality of their product, which can be when it doesn't work."

Auckland University's Professor Rod Brodie, who heads a worldwide research project called Contemporary Marketing Practice, says one of the main movements which will not die away in marketing is what he calls "value management, financial accountability and loyalty."

CRM is an interpretation of those values, and will not disappear because "value creation is fundamental to marketing and business strategy."

"What is different now is that we have the information technologies to manage this in a far more sophisticated way.

'It is beyond data management, because it is in its truest sense a two-way interaction: inter-activity is key.

"When I look at some of the procedures called CRM, they tend to be more straight database management. "They haven't developed a full understanding of relationships and how relationships create value."

Professor Brodie says CRM in New Zealand is still in its infancy in terms of understanding the philosophy in its fullest sense.

"Organisations need to embrace what we could call market-driven management - the style of management which is driven by the market and the value that is created in the market - and so there has to be leadership at the top."

E-Loan marketing manager Kath Dewar is one who agrees CRM is fundamental to the entire way of doing business.

"By listening and capturing what customers tell us, we actually make big leaps forward in terms of our business."

E-Loan's stock-in-trade is presenting potential consumers with a choice of loans. Ms Dewar says a customer-centred focus is the aim of the operation and cannot be derived from "just one tool."

An example was the installation of a chat function on the website, so site users would not have to log off to be able to ring and ask the company questions.

She says that in more than 10 years of marketing she has seen concepts come and go.

"Unfortunately, great concepts - like focusing on meeting the customers' needs the best way - get lost.

"And there's not a particular piece of software you can buy for that - it's much more about a philosophy which the whole organisation has to have."