These days there is so much ambient noise around the subject of CRM, so many extravagant claims being made, so many competing doctrines being spread, that its actual meaning is obscured by a veil of rhetoric. Is CRM a technology solution - or a business process? A marketing or a service strategy? A reform movement - or a short-lived fad?

This ambiguity was apparent at a couple of CRM workshops held last year: one a user conference for a retail marketing software tool called MarketWorks, developed by Montreal, Quebec-based STS Systems; the other a two-day event in Toronto, Ontario staged by Insight Information.

At the STS conference, the prevalent concern was how to manipulate data to improve segmentation. Retailers traded war stories about the use of their customer databases to drive out targeted promotions. One retailer showed how they were able to secure additional funding for direct marketing based on a "rain barrel analysis" of past spending activity; another described how it incorporates magazine bind-ins, bag stuffers, and Web site registrations to accumulate data; and STS weighed in on the use of RFM as a ranking method.

The emphasis was quite different at the Insight seminar. There the case studies spilled beyond the marketing perimeter into front-line service. For example, IOF credited its deployment of the Siebel CRM system for dramatically improving member satisfaction, due to one-call resolution of inquiries and problems. The North Shore Credit Union found that its Pivotal CRM system enabled it to gain insight into customer preferences by building detailed financial profiles of its top members. And Bell Mobility explained how it is building a dynamic recommendation engine using the E.piphany platform to make the best offer to customers out of its many possible rate plan combinations.

Despite these different perspectives - one focused on outbound activities, the other on inbound - a unifying theme ran through all of the presentations: the differential treatment of customers based on actual and potential value.

Business Week has called this trend of stratifying customers "the new consumer apartheid" (Oct.23, 2000), complaining that: "Increasingly, companies have made a deliberate decision to give some people skimpy service because that's all their business is worth. Call it the dark side of the technology boom, where marketers can amass a mountain of data that gives them an almost Orwellian view of each buyer."

While service differentiation may cause grumbling (and some degree of paranoia) in the general population, especially amongst nomadic consumers who choose not to have any strong allegiances, the truth is that it is an economic necessity. Without knowing which customers account for the bulk of profits, companies end up trying to satisfy everyone while pleasing no one. But once they have identified their core group of loyalists, they can give them more attention. More importantly, they can invite their collaboration early in the product development cycle, gaining their input into the features and benefits that matter to them most.

Consumers should welcome that approach according to the findings of a market survey conducted last year by London, Ontario-based Acumen Research. One of the main conclusions of the study, that reward programs rank dead last as a means of sustaining loyalty, won a lot of headlines in the trade press at the time. What got missed in the coverage was the main reason for abandonment: failure to treat the customer as an individual.

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ABOUT THE AUTHOR

Stephen Shaw is vice-president of strategic services with The Kenna Group, a full-service customer relationship management company. He can be reached at 905-361-4046 or via email: sshaw@thekennagroup.com.