The U.K. financial services organization, First Direct, is a failure by conventional measures. It has only a 3 percent share of the checking account market. However, it has attracted the particular 3 percent that it wants and is steadily building its share of those customers’ spending on financial services.
It’s one example of how CRM has changed the face of marketing forever. “Old- skool” marketers simply wouldn’t recognize modern marketing.
Not so many years ago, marketing managers would run a single annual media advertising campaign, two or three consumer sales promotions and leave trade marketing to salespeople and logistics experts. Consider the different ways that CRM has altered conventional marketing.
| Table 1: Paradigm shifts for CRM-enabled marketing | ||
|---|---|---|
| Then | Now | |
| Marketing focus | Product | Experience |
| Goals | Share of market | Share of customer |
| Accountability | Low | High |
| Framework | Product life-cycle | Customer life-cycle |
| Tool-kit | 4Ps | Interactive marketing |
| Customer insight | Give ’em choice | Know their wants |
| Competitive advantage | Brand | Network |
| Role | Product manager | Customer manager |
| Technology | Insignificant | Critical |
“Buy my product” has shifted to “enjoy doing business with me.” We now understand that customers don’t just buy and use products. Rather, they experience our people, processes, products and technology. CRM implementations have clearly changed customer experience. The CRM hype machine would have you believe that this is always for the better, but it just isn’t so. Not every customer wants to do business over a portal, or talk to a Bombay-based customer service rep.
Traditional marketing goals are built on sales targets such as market share. CRM-style marketing objectives often differ. Market share might still be important, but companies that use CRM to underpin their marketing strategies have a much clearer idea of which customers they want to serve and what share of customer spending they want to secure.
First Direct and visionaries like it are using cross-sell and up-sell campaigns to build a customer base with multiple-product ownership that is more resistant to the switching strategies of competitors.
Marketers have long been censured—justifiably—for their lack of accountability. It’s the creative idea that counts, they’d say. These days, CRM-enabled marketing employs customer data intelligently in a plan-do-measure-learn cycle. Campaigns can be run across subsets of customers, and marketers can learn quickly about what works and what doesn’t. They can measure the ROI from a single campaign in next to no time and test different approaches to event-based (trigger) marketing.
For example, when a customer contacts a call-center to inquire about the current rate of interest on an account, it may mean that the customer is considering switching to a new provider. The bank could experiment with different responses to this event: diverting the call to a specialist “saves” team in the call center or following up with a mailed offer of an interest-free “holiday” from payment.
Customer focus
Marketers have doted on the product lifecycle, managing their brands through introduction, growth, maturity and decline phases. CRM makes contemporary marketers think more deeply about the customer lifecycle, asking which customers we want to acquire, which we want to retain and which we want to develop.
Most conventional marketing plans are technique-based, built around tools such as advertising and sales promotion and don’t address these three questions. CRM-enabled marketing allows companies to measure—sometimes very accurately—which customers or segments are profitable or valued in other ways. Thus you can develop specific budgeted and resourced plans for acquisition, retention and development. Instead of just one undifferentiated marketing plan, there might now be three customer management plans integrating sales, marketing and service!
The 4Ps—product, price, promotion and place—much beloved by traditional marketers is an irrelevancy in many markets. Business-to-business and service organizations have dumped the 4P architecture. Even in contexts where it is still relevant, these marketing variables are no longer mixed at arm’s length.
CRM’s interactive technologies allow for customization and, in some cases, personalization, of all elements of the value proposition—product, service, logistics and communications—in collaboration with customers. Dell, Nike, Levi Strauss, Amazon.com and the Financial Times all enable customers to design products and services that satisfy their individual requirements. Some financial service providers are even able to offer credit at a price that is unique to each customer, based on that customer’s risk profile, propensity to buy and potential life-time value. The days of a one-size-suits-all approach to marketing are coming to an end.
Customers want choice, don’t they? No, they don’t. Choice is the default option when customer insight is inadequate. Customers want their problems solved. CRM technologies enable companies to accumulate knowledge, develop insight and customize experiences. Problem solved!
Traditionally, marketing has focused on brand attributes as a source of competitive advantage. CRM, because it enables collaborative interaction between organizations, has signaled the importance of networks to business success. Networks include suppliers, investors, channel and alliance partners and employees.
One benchmark organization that excels at network management is Tesco, the U.K.-based retailer. Driven partly by declining margins on food, the company developed a non-food retailing strategy. Having no competencies in this area, the company developed partnerships with a number of specialist organizations, including Royal Bank of Scotland, for banking, and Direct Line for insurance. Partnering has enabled Tesco to build its share of customer wallet.
Marketing has had two roles in companies, influencing customer demand and taking a leadership role in helping companies develop a stronger focus on customers. CRM advances marketing’s mission on both fronts. It brings a results-oriented discipline to the management of customer demand.
Experimentation, learning and change are the hallmarks of this form of CRM-enabled demand management. CRM enables companies to create and share deep customer insight within and beyond the company. Properly implemented, this new intimacy will ensure that the right experiences are created and the right customers are recruited, retained and developed.
