The Rise and Rise of CRM in Marketing
Julian Thrussell
CRM is the marketing buzzword of the last few years, promising to revolutionise the way we work with customers. Every big bank, car company or utility now seems to have embraced the concept. Here is not the place to go into the full how and why of CRM (if you need a heavy lesson go to http://www.1to1.com/), so let's think about the difference it has made to marketing and how to make a start.
Once marketing was simple, some bright spark in product development comes up with a new widget, marketing tells as many people as possible about it and if we were lucky, someone would buy it.
Customer Relationship Management (CRM) turned marketing on its head. From a simple idea a huge industry has grown. The first evangelist was Don Peppers who started talking about 'One to One' remembering individual customers and offering customised services based on previous history and identified preferences (mass customisation). After being ignored for a few years, suddenly a few US companies took note. Later, the little backwater that is UK marketing, picked up the idea from US companies working here.
Treat all customers as equals, CRM says forget it. Take your average company, 20% of customers provide 80% of profits, the bottom 25% loose the company money. CRM says dump the bottom 25% and you'll make more profits. Less customers is good….that was a new concept. CRM says keep the top 20% happy, your business depends on them alone. CRM says try and make the other 55% better customers.
Every company needs to constantly find new customers, that's what we were always told. Build widget, look for people to buy widget, just like the other twenty widget companies, simple. In an instant that numbers game looked just plain stupid, like a cat chasing it's tail. The race for the best customer, that's the new game in town. Marketing now requires new skills, ones that that must be learned from scratch.
Once a marketing report read like this:
We sent out 10,000 identical 'new blue widget' sales letters, Sales got 10 leads.
A CRM marketing report read like this:
We sent our top 1000 customers a unique customised letter offering to improve how we deliver our widgets based on what the individual customer requested. We made life easier for each customer and all 1000 are still good customers, none have moved to our competitors.
The two marketing approaches rely on entirely different processes, one product driven, one customer driven. Both sell widgets, only one thinks about the customer. Building a picture of an individual customer is new to marketing, we have to reset our goals and our behaviour. Mailings and offers to the customer are not driven not by our products but by what we perceive the customer wants.
Marketing now has to try and understand customers. Software like SAS and Siebel is available to help the process, but Software is a tool not the solution, only able to do what it's told. Software relies on a set of rules based on our pri-defined requirements and it's our job to set the rules, to know our customers and our business. By building strategies developed uniquely for each business we can say who is a good customer, why they buy our products and how we can keep them.
Don't expect to be able to understand CRM all in one lump, break it down in to sections. CRM is as hard or as complicated as we want to make it, learning to identify your best customers is always a good start.
When we take on CRM, we become strategists, software experts and business analysts all rolled in to one. Sounds like a reason to ask for a pay rise to me.
