Another nail in the coffin for CRM
Violetta meets her consumptive end in La Traviata. Image courtesy of Steven Ford.
One of the great delights of advancing middle-age is that you can decide that some things are just not your cup of tea.
You can say categorically that you just can't be doing with them. You've tried them, often repeatedly and you just don't like them.
I feel that way about opera. I love virtually all performing arts, but I hate opera. In fact I genuinely believe that there are two types of people in the world, people that don't like opera and liars.
And I have come to the same conclusion about Customer Relationship Marketing or CRM as the acronym freaks like to call it.
Theoretically CRM makes bags of sense. You build a programme (whether paper based or online) that creates a direct and one to one dialogue with your customers customised around their lives, lifestyle, life-stage, behaviour or attitudes.
Loads of people think that CRM is the future of marketing, particularly eCRM, because anything with an 'e' in front sounds like it is probably the future of marketing.
Maybe it is but it bores me rigid, an opinion that I have wisely kept to my self until now.
And until I started reading the excellent 'Herd, how to change mass behaviour by harnessing our true nature' by Mark Earls and gained the confidence to come out of the closet
At one level it is just a question of personality.
A recent Vanity Fair article on the US pollster and political Svengali, Karl Rove, divided marketing people into lumpers and splitters. Quite clearly he is a splitter obsessed with the differences between people and ways to communicate ever more targeted messages to ever smaller audiences. As in many things I am the opposite of Rove, I am a lumper. I enjoy understanding the behaviours and attitudes that draw people together far more than those that divide them. So I was never going to be a CRMer by instinct.
But it is not just that I am temperamentally unsuited to the fiddly detail of CRM. I want to question whether it actually works either practically or philosophically.
I don't know about you but for all the grand talk by practitioners with their amazing case studies (there is the one for Tesco, the other one for Tesco and not forgetting the one for Tesco) I am not aware of having my customer relationship managed by any of brands whose services I enjoy. 'Aha' the CRM mongers would say, 'that just shows how seemless and well integrated into your life this stuff is, you are part of loads of CRM programmes you just don't know it'.
Well er, no.
I own a car, I am a member of the AA, I have a number of bank accounts with high street banks, a mortgage, donate to a few charities, have my groceries delivered by a supermarket and and none of them manage a relationship with me. Sure they send me loads of un-targeted direct mail, a few blanket emails desperately trying to up-sell me and the odd utterly pointless "magazine". But it is hardly what we had come to expect from the CRM evangelists. Is the truth that it is practically impossible to turn communications into a relationship and to personalise the interaction sufficiently for it to make any sense? And is the truth that creating something approximating a relationship depends on so much technology that the actual relationship is with an algorithm and not a brand at all.
Then there is the question of whether individualised communication programmes actually work, whether loyalty can be built and deepened at the level of the individual at all, or certainly to the extent that many people believe.
Mark Earls calls this into doubt in his introduction to 'Herd'.
"Far all its internal intellectual consistency, for all its rigour and measurability at an individual level and for all the common sense axioms behind the approach, CRM turns out not to be the roaring success that it has been claimed to be"
And he cites research by Forester that CRM consultants are vastly more enthusiastic about the benefits of CRM programmes than the businesses they were supposed to revolutionise.
Of course what Mark is suggesting (I think) is that we don't make decisions about the brands that we favour and show loyalty towards as a result of individual or atomised relationships, we do it en masse, or at least as a result of the collective behaviour of our 'herd'.
And this put me in mind of the awesome Douglas Holt and his book 'How Brands Become Icons'.
In it he advances a new model for understanding customer relationships and loyalty based on the identity value that the brand delivers to those customers - identity value being a critical component of brand success. He divides customers up into insiders, followers and feeders.
Insiders help co-create the brand myth and their relationship with the brand is based almost entirely on its utility to them. Athletes are insiders for Nike, the creative community are insiders for Apple. Others feed off that brand myth and their relationship is based on the exchange of patronage for identity value.
The followers identify strongly with the brand's myth, become devoted to its creator and form the nucleus of its customer base - they follow the brand come what may. Unlike the feeders who have a merely superficial relationship with the brand's myth and the identity value it confers on customers - for them it is little more than a short term status symbol, valuable because others value it.
You can see this all playing out with Apple and specifically for the Ipod. Insiders are busy co-creating Apple's brand myth through the music, art, movies and design they produce with Apple kit. Followers are Apple fanatics that treat it as a lifestyle brand consuming multiple products across the portfolio regardless of the number of Ipods they have had to replace. Feeders like having the white headphones and will buy Ipods until something else comes along. And in this we see an inherent tension, the more feeders there are the less the insiders respect the brand and if they leave the followers leave to.
The point is these groups act as groups and follow or divest themselves of a brand on the basis of its identity value and not personal experience or individualised relationships. I am convinced that this is what happened to UK retailer Marks and Spencer in the dark days. M&S's Middle-British followers rather scarily decided that the brand no longer conferred identity value on them and left over night. I remember doing research and having people apologise if they admitted to buying something at M&S. Suddenly shopping at Marks and Spencer became a source of shame that had nothing to do with their individual experiences of and relationships with the brand. These people were acting as a herd.
So my point is that CRM seems to promise more than it can ever deliver.
Practically its is impossible to pull off convincingly and philosophically it is working to a theory about customer loyalty that seems intuitively right but is actually moribund.
Which is a relief for us lumpers.
According to Harvard Business Review last month, CRM is to be replaced by CEM (that's Customer Experience Management but maybe it could be Customer Enthusiasm Management).
Posted by: John Dodds at March 6, 2007 05:52 PM
So that worked then
Posted by: Richard at March 6, 2007 06:12 PM
Richard, I respect you. Honestly, I really do. But enough is enough of this nonsense. Your posturing around opera is not only ridiculous but quite insulting. So I’m a liar eh? Well, yes I am, but when it comes to opera I’m not (and if anyone thinks this is going to turn into some kind of jokey Sacrumesque comment you are mistaken because I’m really bloody angry). I am passionate about opera. I love opera. Opera makes my soul sing, I feel the pain and I cry in all of the right places. I believe this is called emotion. Or magic. Or passion. Or love.
Which leads me onto the comparison you make in this post. Generally, I would agree with most of what you say about CRM, or eCRM. It’s mainly pants, and if I ever hear, read or see that bloody Tesco example again I will be violently sick. We tried do some CRM magic at Nintendo back in 2001 when we launched the European website (as far as I know they still run it – I got a Nintendo DS for Valentines Day and there was a registration card in it) and the agency we had in did some impressive business spin around the CRM part. But, alas, it was all pants.
Thinking about this now, with the rage of an apparent Opera liar, I think I know why this is and it ties in neatly with my reaction to your post. CRM programmes don’t generate emotion. Now, if a CRM programme was capable of creating a level of emotion that we both feel for Opera (you negative, me positive) they might end up working. When we were putting the Nintendo thing together we thought that all of our customers would go crazy for “free stuff” or “bonuses” or “stars” or what ever. They didn’t (maybe they do now, I don’t know) because, and wait for it because this is a biggy, they were to excited about the game/consol they had just purchased. Which is what would happen if an opera house started a CRM programme.
Posted by: Marcus Brown at March 6, 2007 06:48 PM
After Tesco, Karl Rove can lay claim to CRM's other great case study - The re-election of George W Bush.
Read Applebee's America for the full story. But, at a simple level, the great man's redefinition of the target audience for the campaign - NOT undecided voters but inert Republicans - was a work of DM genius.
You are right to complain about the level of fiddly detail in CRM, though. To my mind, my own chosen field of marketing only has two real virtues: it allows you freedom to define audiences in interesting and original ways, and - as a direct result of this - it allows you to communicate contextually. If the DM community had borrowed a few lumpers and simplified DM rather than over-complicating it, they would now have the CEO and CMO's ear, rather than the ear of people three ledges down.
I think great brands need lumpers *and* splitters - at one level, all great brands have a target audience of *everyone*. But Mark Earls would ackowledge the importance of differential treatment; his beef was always that CRM was only interested in people's transactional value, not their influence.
Just one point in my favour. Google, the apotheosis of a splitter's medium, targeting people by need-state rather than, say, demography, is worth more than all the world's ad agencies combined.
Therein lies another critique - that the web, by putting the consumer in control, rendered CRM obsolete, replacing it with CMR: Customer Managed Relationships. I think you can agree that the CMR which a good website affords is rather a good thing.
Posted by: Rory Sutherland at March 6, 2007 11:09 PM
Excellent stuff Rory,
I think you are right about Google - it has the potential to be the DM nirvana that has escaped us for 3 decades, because it offers up ads according to people's stated interests there and then rather than assumptions about what they may be into that other forms of targetting make. I.e. he lives in NW5 so he must like reading the Guaridan and all that arse.
On the Rove issue it has made me wonder whether extreme splitting makes brands schizophrenic and ultimately hypocritical. Apparantly just as the Bush administration was trying to get a constitutional ammendment to ban gay marriage to please one part of their potential voter base they were investing massively in TV adveritising in Will and Grace to please another.
Posted by: Richard at March 7, 2007 09:19 AM
Given Rove's strategy - to arouse the ire of indifferent Republicans enough to get them out to vote - the gay marriage debate was a gift.
Surprisingly, there is very little correlation between sexual orientation (of males) and voting behaviour in the US, with gays pitching only about 57:43 for the Democrats - hence the need for spots on Will and Grace.
Posted by: Rory Sutherland at March 7, 2007 10:07 PM
Yeah, Karl hasn't seemed like such a genius for a while. Matter of fact, where's he been?
LOL..."Karl Rove skewered by way of eminem."
Posted by: Dylan at March 8, 2007 04:54 AM
What Rory doesn't say is that the Rove strategy was a peer-to-peer one (wavering republicans encouraged to encourage others like them...)
Of course, if you see the world through media blinkers (as CRM folk tend to) then you'd see it as a DM campaign. One in which individuals (somewhere on the loyalty ladder...affinity, differential treatment etc etc etc)...
But you'd be wrong...
This 'channel-tunnel-mindedness' seems so unhelpful to me nowadays: what matters is the mechanic behind the behaviour we want to change/reinforce NOT the medium by which we might inititiate it.
And in my 'umble opinion, that mechanic is almost always other people...
Posted by: mark Earls at March 8, 2007 09:55 AM
I once threatened to fire a junior member of staff for asking about me about CRM...
What a load of tosh, just like every other media channel that has become a buzz word/acronym...
At the end of the day you have something to say, someone to influence and if you don't know when to say it, then no amount of channel obsession is going to help.
Reaching people is a piece of piss...getting them to listen is the biggest challenge marketers face.
The older I get, the more irritated I become with things like Direct Marketing et al. Frankly, the only time I have ever felt part of a direct marketing campaign is when my Bank Manager calls regarding an issue with my finances. Oh, and my postman who knows what football club I support, knows when it's my Birthday and more importantly, knows my name.
Perhaps I am way to cynical.
Posted by: mm at March 8, 2007 12:16 PM
I think Virgin Wines CRM is pretty good but then again I like wine. The London Review of Books free subscription to a friend is an excellent piece of CRM because you end up having a friend you can talk to about the 20 page long (and hopelessly out of date) review you just read. Point being, CRM is good when it is useful, when you have a genuine interest in the subject. Mostly it is a waste of time and money because you have no real interest.
Which leads nicely to your brand icons point. Are people really that interested in brands that we can split the world into insiders, followers and feeders? Aren't people more genuinely interested in going on holiday, having sex, what's for breakfast, lunch and dinner, how the kids are doing, getting out for a pint, finding 5 minutes for a wank in the shower or any number of other little pleasures that make each day a bit more bearable? Ask people what says most about them as a person and the majority will say their home, not their brand of car or mp3. If people do care about brands its a long, long way behind the real things they care about. These brand-centric views of the world suffer from juvenile-omnipotence - they think the world revolves around them.
Better still, such theories are simulacrum. (The big B died yesterday and its about time he got a message on the plannersphere)
And if they are simulacrum then fine - they are a game we play to help us do our job.
Posted by: Phil Teer at March 8, 2007 01:47 PM
ecrm - overtly or subtly changing what you present to someone across a variety of digital channels based on their previous behaviour and what is most relevant to them? yeah rubbish, it will never work! err amazon anyone?
my take on crm has always been or a more holistic view of the overall relationship that a customer has with a brand. understanding their different needs and wants at various stages of a purchase cycle that ranges from unaware to advocate and understanding how to reach, engage and elicit an action. yes direct mail & email forms a part of this but so does tv, pr, retail and wom, ideally all measured, optimised & *connected*.
for all the “velcro” marketing analogies out there, there is a need for a framework to help us organise and understand how this fragmented media world fits together and for want of any other usable model crm, in its broadest terms, can help do this.
Posted by: giles rhys jones at March 8, 2007 02:03 PM
Is CRM just a load of bull? It depends on how philosophically attuned the marketer is to the philosophy of relationship building.
The best executed CRM isn't about relationship management at all, it's about relationship mediation. It's about making an advance that says "I value you; I want to understand and target you better." And ultimately, it's about facilitating customization.
Southwest Airlines sends me a personalized birthday card every November, alongside a book of drink coupons for future flights. United Airlines recognizes my Elite Status and prereserves my preferred seats without asking.
Starwood Properties know to have my hotel room ready with down pillows, not "hypo-allergenic" polyester. In fact hotels provide an excellent source of CRM stories. One brand in particular comes to mind, the Ritz-Carlton Group:
There’s a famous story of a prominent fashion editor doing a layout by hand while staying at a Ritz-Carlton hotel. There was tape everywhere — on the lampshades, on the dining table, on the bathroom faucet...Upon opening the door to her room at her next stay at a Ritz-Carlton property, the editor was dumbfounded by the sight. The room was covered in...tape!
Her initial surprise gave way to giddy laughter— apparently the housekeeping staff had recorded her preference for tape everywhere. It’s this sort of CRM that keeps guests coming back to Ritz-Carlton properties. And it’s no wonder. Because when guests first experience it, they’re incredibly surprised that anyone cared enough to collect their preferences. It’s sensorially stimulating when you’re met, without even having asked, by a pillow concierge baring your cherished Sabakawa pillow when that Marriott you stayed in last week forced you to endure lumpy polyester. And it’s this sort of customization that continues to burnish the Ritz-Carlton marque, and encourages repeat stays.
I don't think CRM is about "eliciting an action," so much as it is about eliciting a re-action in the form of delight, surprise, engagement, or receptiveness. Which in turn has the power to drive identification with and loyalty to a brand.
The reason I'm challenged for further examples is because so few firms do CRM well. So many firms adopt the view that CRM is a way to increase the salience of and receptiveness to mass mailouts. But that's not CRM, that's just personalizing untargeted communication. What CRM is about is creating a pathway to mass-customization. That in turn will drive lumping, not splitting — fostering a true customer-brand relationship rather than a top-down messaging architecture.
Posted by: Eric Alper at March 8, 2007 06:10 PM
"re-action" assumes crm is post sale - my point is crm should be post *and* pre-sale.
i agree with everything else, well put.
Posted by: giles rhys jones at March 8, 2007 08:27 PM
Great examples Eric, but I'd argue that they are not what most of us think of as CRM. That is very much sales-oriented, whereas you're describing personalised customer service that impacts the customer at the time they "consume" what they've already bought.
Posted by: John Dodds at March 8, 2007 09:16 PM
Anyhow, I don't quite understand this debate. Disciplines are not good or bad any more than individual media are good or bad. Use them where they suit your ends; don't use them where they don't.
The real problem is surely that all our businesses are aligned along discipline lines, forcing all of us to maintain the wholly unreasonable pretence that our discipline and ours alone contains the solution to all client ills.
Mark is quite right to point out that the greater part of Rove's approach involved peer-to-peer influence. But, believe me, it isn't only DM people who wear blinkers. As Dr Johnson said, "Each man sees the world through the eyes of his own profession."
Posted by: Rory Sutherland at March 9, 2007 12:43 AM
Rory, that was exactly what I was trying to say but as usual you managed to state it far more succinctly and without any needless references to masturbation or namedropping any dead postmodernists. When it comes to the difference between planners and writers maybe that says it all.
Posted by: Phil Teer at March 9, 2007 02:12 PM
Baudrillard and Captain America died on the same day - can this be a coincidence?
Crm and that. I guess the expression can be misleading - it surely presupposes that those consuming types actually want a relationship with brands? They don't really, do they.
But they would if it were a real relationship - dynamic, supporting, mutually beneficial - rather than an excuse to cross and up sell. It makes sense especially when you buy say a complex technology item - in business this would come with a service level agreement - so we move from selling products into solutions.
If the relationship allowed me to express my views and desires and provided some value in return that would be very groovy.
I think Dell's Ideastorm is cool. Actually asking your customers what they want from you. In public.
Posted by: Faris at March 9, 2007 05:22 PM
I think what's so interesting about Herd (apart from its admirable respect for Welshness) is that it is an approach to How Brands are Built which has not sprung exclusively from any one particular discipline. If you wish to influence Herd behaviour, what do you do? Advertising? DM? PR? Other? Sampling? Possibly all of them, possibly none.
I do disagree with some of Mark's diagnoses, however. Being a bit of an anti-capitalist, Mark likes to lay blame at the feet of individualistic Thatcherite prosperity. I, however, solely attribute the increase in human unhappiness to the precipitous decline in smoking. This was the one failsafe way in which naturally depressive people formed social bonds and were allowed to feel suave, while effectively treating their condition.
Fucking doctors, eh? We did not evolve as human beings to be continually reminded of the possible long-term consequences of all our trivial actions.
Posted by: Rory Sutherland at March 9, 2007 07:31 PM
"...that individualism was somehow a Thatcherite thing"
Rory, dear boy and dear friend, you can do better than that!!!!
Lunch is well over due. Let's sort this out mano-a-mano ;->
Posted by: mark Earls at March 9, 2007 11:02 PM
I'm still right about the smoking, though. Surely The greatest creation of social value ever. And try naming a non-smoking poet.
Posted by: Rory Sutherland at March 10, 2007 12:53 PM
Phil's right to raise the Big B's Simulacrum idea at this point.
Only problem for us philosophical types is this kind of game isn't the reality we're trying to change. And the gap between the world as the game describes it and how it seems to be out there seems to be widening all the time. And as we get more data about the world out there it's becoming clear that the 'games' we've been playing have made us not very good at changing behaviour in the real world.
Put another way: "no amount of sharpening the drill or changing the bit will increase your chances of striking oil if you're digging in the wrong place" (JP Getty attr.)
Posted by: mark Earls at March 10, 2007 08:42 PM
Hilarious - getting a poke in about opera whilst debunking CRM Richard - now that is genius!
OK - 2p worth time. A comparison if you will: a successful CRM program and a unicorn. Both are mythical beasts with a basis in reality yet no-one has actually ever seen one.
Recent HBS stats reckon up to 75% fail. The failure rate is blamed mostly on the lengthy timescales needed to bring one to market - plus a lack of bottom up evangelism in most organisations. I suspect however that it’s to do with a CRM programs raison d’etre: reducing the AMC (allowable marketing cost) per customer actually driving customer dissatisfaction. Radical? Perhaps but here’s why I think that.
1) Lack of human interactions
2) Too much information and no insight
Taking each in turn:
A marketing intervention in a well known financial institution was reduced from $1 to $0.05 through technology replacing people - great for the short-term numbers – lousy for the shareholders long-term. Very quickly the CSAT scores plummeted – and no-one quite understood why. On refection it should have been obvious.
Replacing human beings with technology is never a good idea when you are a very large organisation. There seems to be a correlation between the amount of frustration/dissatisfaction with a company and its size – something to do with distance, trust and respect.
Human beings are inherently ‘analogue’ not ‘digital’. Tone is actually more important than the information itself in customer related interactions. Example - the term ‘dialogue’ is used in the context of engaging with customers at critical MOTs. What it means in reality is answering a written questionnaire or disappearing down the telephonic rabbit hole and ending up in talking to someone in Delhi – not exactly having a ‘conversation’.
By ‘conversation’ I mean the unmediated gestalt of human discourse with its ability to go seriously and gloriously off-piste. The issue is how to handle it on a mass scale. Personally I would employ more fabulous front line staff and encourage them to spend as much time on the phone as possible – but perhaps that’s being too over simplistic.
I know most of this has been said before but just because you can identify a customer 'moment of truth' doesn't mean you should treat it as an opportunity to amortise your allowable marketing cost by trying to sell something. It is this financial focus that may be responsible for more customer dissatisfaction than any of the other appalling deterministic devices created by those lovely boys and girls in management consultancies IMHO.
Secondly, no information generated from a CRM program ever revealed why human beings do what they do. Lots about when, where, how many and what – never ever why. Seeing as how the motivations that lie behind behaviour drive the numbers behind an organisations cashflow – it is amazing that no-one has bother to unlock this. Management consultancies have traditionally improved efficiencies – usually incremental (god I HATE incrementalism) - that’s how they sell their services and therefore how success is measured. Lumping people into segments that purport to be based on their alikeness and propensity to buy more stuff is largely unhelpful if you don’t understand why they are doing what they are doing.
Measurements that tell you people are ‘largely satisfied’ is not the same as asking them what each interaction ‘felt’ like. Attitudes can tell you more about how likely someone is to buy something than any purchase history.
So my recipe for success would be:
1) Replace technology with human beings at all MOT
2) Manage short term shareholder expectations about margin drop Vs long term sustainable cashflows
3) Replace dialogue with ‘conversations’
4) Invest heavily in frontline staff
5) Treat customers as human beings and ask them about stuff that’s important to them – not to the organisation and then act on it – quickly
6) Segment – if you must – on why people do what they do – not what, when, and how many.
Posted by: Holycow at March 10, 2007 11:20 PM
VRM = CMR = 1/CRM
Posted by: Lloyd Davis at March 11, 2007 11:30 AM
Now that makes a whole lot more sense.
Clearly I hate the language of vendor relationship marketing but I quite like the whole idea of Customer Managed Relationships. The business puts in place a whole load of stuff that makes it easy peasy for someone to manage their relationship with an organisation, face to face, by phone and online. But that interaction is customer initiated I presume.
Perhaps brands should only speak when they are spoken too.
Tough for us in advertising, a nightmare for Direct Marketers but arguably how most online experiences operate.
Posted by: Richard at March 11, 2007 08:06 PM
There is a company in Oxford called Harding & Yorke which discovered exactly what holycow suggests - that just getting staff to chat longer on the phone does have massively positive benefits.
If CRM people are occasionally mechanistic, the call centre side of things can be unbelievably so: the whole being driven by insane pursuit of various dubious metrics.
Posted by: Rory Sutherland at March 12, 2007 12:03 AM
Cheers Rory - I shall look up H&Y - sounds fascinating. As it happens I think I owe you a lunch too - a good Korean curry in fact from our days at Theobalds. Speak soon - cheers Mark
Posted by: Holycow at March 12, 2007 08:27 AM
Super idea. Has been too long since my last trip to New Seoul.
Posted by: Rory Sutherland at March 12, 2007 10:56 AM
Ah, do you all see how Rory has cunningly manipulated this debate to set up a whole series of lunches for himself? Is this Guerrila CRM?
Posted by: Phil Teer at March 12, 2007 11:03 AM
Just an important point of clarification here: CRM and DM should not be seen as channels or media or anything of the kind (though CRM people can easily make you think this, given their rather excessive obsession with addressable media - an obsession which becomes marginally less silly as more addressable media come along).
However CRM is, beneath the thick layer of bullshit, simply one way of looking at a market. Like all singular ways of looking at things - Marxism, Darwinism, Classical Economics, etc - they are not without a distorting effect, especially in the minds of the nutters who seem most eager to believe that the world needs a single way of looking at it (such as Satan's own Richard Dawkins, etc).
It's true CRM can wildly overstate the importance of individuals, just as the advertising-led approach probably overstated the value of mass demographics.
The virtue of CRM is that it can be quite openminded about how you define audiences. For instance if you believe - as I think Herd suggests - that you should target communities then CRM is quite a useful thing to have in your toolbox - so long as it's not the only one.
To a man with a hammer, and all that....
Posted by: Rory Sutherland at March 12, 2007 11:17 AM
I agree, Phil. Maybe the Herd should respond.
Was just pondering why nobody's having a real go at defending CRM/loyalty marketing?
Surely somebody must have a good argument for it?
Posted by: mark Earls at March 12, 2007 11:19 AM
Will Blog for Food. That's a new idea.
Posted by: Rory Sutherland at March 12, 2007 11:21 AM
No, I'll defend it plenty. It's a fine and noble thing. It is simply a form of advertising that appeals to slightly over-analytical people with proper PCs rather than Mac-using minceurs.
1) It's good to have lots of different ways of looking at the world. CRM is just a pointillist way of looking at the marketplace.
2) At its heart is the aspiration to increase the timeliness and relevance of communications and to reduce wastage and irrelevance. Even though it fails, this is a fine aim. Incidentally I think that targetting by "when" (google style) is more important than targetting by "who". Even if like me you really like Herd theory, no-one is surely claiming that Herds act simultaneously - the shops would be a frightening place if they did.
3) CRM is useful if you want to treat the community as the preferred form of target audience. (I do). If you look at, say, affinity credit cards, you see a crude but coherent way of developing products for communities, targeting by interest rather than demography.
4) Sometimes you need to know exactly what your customers are doing before you start theorising about why. Certainly asking them why they are doing something is a bloody non-starter - they don't really know and the dissembling bastards wouldn't tell you the truth if they did. If you learn - boring AA example - that people who sign up on the roadside are almost worthless as customers (unless you make them join by Direct Debit) this is a useful thing for a business to know.
5) In one area - the frequent flyer programme - I even have qualms about the power of CRM because I view it as excessively powerful. It is an obstacle to true competitiveness.
6) It is less of a distorting lens than mass demographics, say.
7) The simple question it asks - who are your customers and where can you best spend money against them - is not silly.
8) It worked for St Paul.
Posted by: Rory Sutherland at March 12, 2007 01:11 PM
There is an article in today's DAILY TELEGRAPH by Sam Leith where he comments on the simultaneous death of Baudrillard and Captain America.
Historians please note the first ever link to a newspaper other than the Guardian in a Planning blog. Bloody pinkos. "The voice of the metrosexual within the agency."
Posted by: Rory Sutherland at March 12, 2007 01:15 PM
A propos of nothing at all....
Posted by: Rory Sutherland at March 12, 2007 01:44 PM
I see Rory has now decided to oust Richard from his own blog. Is this the first example of blog eviction?
Posted by: Holycow at March 12, 2007 01:53 PM
Well it's not natural having an Anglo-Saxon planner. They should be Celts. Or Jewish or something. But not English. It's not right.
Posted by: Rory Sutherland at March 12, 2007 02:00 PM
CRM... you can't have a relationship with someone who doesn't want one.
Ask John Lowery.
Posted by: jemster at March 12, 2007 02:29 PM
I was going to sit back, learn, and just enjoy this discussion but Phil's splendid shower scene shuffle, and the Youtube *unt clip back slapped a couple of the heartiest laughs out of me today. I guess I'm engaged all of a sudden to share a few bytes of today's digital grazing if it's of any interest.
First off, Baudrillard gets a good hiding from today's Arts & letters daily, and I can't say I completely disagree with the writers summary, although not enough to get all opinionated about it.
March 12 for future adlit readers!
It's just way too spooky that he died on the day CA was killed off. Totally agree on that one Faris. Maybe both were not a minute too soon. I really enjoy examples of simulacrum, particularly when they're weaved into anything to do with Stateside politics as indeed this article from C Theory that I was tipped off some years ago does splendidly.
Max Kalehoff hits a few nails on the head today for D.M.
Other than that I think I'm starting to see Mark Earls 'channel' myopia thing although I still subscribe to McLuhan's media-specific-resonance. Put them together and maybe it's a bit of pointillist here, surreal their and so forth but not something I could elaborate on in an interesting way by keyboard.
All said and done I think the word relationship has been misused by the CRM gang. In most cases I see the efforts employed as somewhat monodirectional single minded 'customer value extraction marketing' Sometimes it's just good to get on with being interesting, helpful and maybe socialist if that's not too much of a stretch with all this new media.
Perhaps I'm only saying this as I've really been won over to evangelise, and pay more for computing power by Apple recently after a visit to a Genius bar to fix my nanopod. I had no receipt, it was purchased on a different continent in Changi Airport, problem diagnosed within minutes and a free replacement cable given, with the faulty one bagged and sealed and no questions asked. I can only describe the feeling as I walked out the store as a brand blow job. Yes, quite exhilarating. That to me is relationship marketing. I am a customer after all.
Posted by: Charles Edward Frith at March 12, 2007 04:51 PM
I suspect Charles has brilliantly brought this one to a close - excellent!
Posted by: Holycow at March 13, 2007 08:47 AM
I read your blog often but haven't posted any comments before so thought I'd start with a brief intro - I'm a budding Indian planner currently working with a passion-driven creative agency in Jakarta.
That done, I must say, a very interesting discussion on CRM, the godfather it was promised to be and the useless sidekick it turned out.
I was just going through everyone's comments here and realised that the insiders-followers-feeders thing works for your post too.
If you look, a majority are insiders who susbscribe to your line of thought, will add their bits to it and develop a strong argument against CRM here, on their own blogs, some other blogs, wherever.
Then there are the followers (at this stage considering the kind of respect I have for Russell Davies and whoever he respects, I would be a follower to him and to you, but am slowly turning into an insider).
And of course, the feeders - people who are supporting what you say simply because someone they knew was and it looked "cool" to do it on Richard Huntington's blog.
And having seen all this, I had a few questions: what do you call people who don't endorse to a brand's identity and instead, repel it at first glance? Or is it that everyone inadvertenty adheres to every brand out there?
Next, it happens with people but might never with brands (co-operating not competing in the same category, at least at the surface) but nevertheless, in case of brands that share similar identities or overlap identities due to cross-promos or tie-ups (Nike and Apple), what is the chance of a Nike insider becoming the same for Apple?
Dunno if any of this was just too much blabber but if it's worth pondering over, I'd be honoured if you could share your thoughts on it.
Posted by: Yousuf Rangoonwala at March 14, 2007 05:58 AM
Rory - you threw down a guantlet about a non-smoking poet.
I've picked up the guantlet and 'slapped you in the face' with Pam Ayres.
Also, any poets under the age of 16 aren't allowed to buy 'fags' in shops. It's the law.
Posted by: Mrs Belmot at March 16, 2007 10:20 AM
Hello Richard -
Been a long time and hope you've been well. I must admit since moving client side I haven't delved into the plethora of planning/marketing/advertising blogs that have been passionately built over the past couple of years, and I must say I'm really enjoying the debates and opinions, something I sorely miss from my Agency days (although many of the trad Agency/Digital arguments I feel have been well oiled in the past decade already) Up to now I've been lurking a bit, and haven't commented, but I thought I'd add my thoughts on your CRM piece.
The key point that you don't address, and many other blogs also miss in a lot of their posts is the business reality of why companies undertake CRM, or CMR, or loyalty, or segmentation, or customer data analysis, or preferential marketing or whatever we want to call it today (I forget how Agencies like to pigeon hole channels, disciplines or approaches)
Old Pareto was (crudely) right. 80/20 is the fact for most businesses, and if you delve further, it’s actually 2/20+ in that 2% of customers generate 20%+ of business revenues. We're even further biased at Virgin Games where 2% of our customers generate just under 50% of our revenues, but the 20% generating 80% of revenues is still true for us. And chatting to an MD of a top 10 FMCG brand the other day, they confirmed it was the same for them. I seem to remember from HHCL days that a Guinness project came up with the same results.
Anyway, recognising that the fine margins of any business rely on the few, not the many has led to all sorts of attempts which I suppose run under the moniker of CRM to establish some sort of relationship with these key individuals. Whether this is through outbound contact channels or inbound customer service or even product development one of the keys for a business is surely to attempt to stop the few (2%) from leaving, continue spending and maybe spend more. Or even to get the next 18% to become one of the 2%.
The simple fact is for a lot of businesses is that identifying and segmenting the customers is a hard enough job in itself (in talking to the FMCG MD they were aware they had a big issue in that they knew from research that Pareto was right in terms of purchase and consumption – it was just that they had no idea who these individuals were). So a lot of CRM is about identification.
What is then sent out to these individuals is a game of trying to understand what is going to help in the ongoing relationship. I’m not surprised that you don’t feel your relationships with brands are being managed; probably because you aren’t in the 2% for the majority of them and are part of the long tail. What counts for CRM across this long tail (customer magazines, loyalty programmes, free offers, promos etc) is pretty poor and I would posit ineffectual as it is purely mass in its output. But what may work for the 2% or 18% for a lot of companies isn’t. There are few case studies around because a lot of businesses don’t want to talk about what works and doesn’t because it is vital IP (and I’d also posit that Agencies aren’t often involved in this area). But I’ve seen more than a few examples that prove to me that there isn’t just a (mass long tail) Tescos case study out there.
I also think that the point about targeting “insiders” is a good one, but these insiders are almost definitely the 2% or at least the 18% - they co-create because they feel they can because they consume so much of the product (and the (forward thinking) companies have wised up to facilitate this of course). So I don’t see any difference in targeting insiders, or key tipping point individuals as any different to what most CRM is trying to do. It’s just a titular thing methinks.
Posted by: Ross Sleight at March 16, 2007 08:22 PM
Knew you were very important now at Virgin Games. We agency people tend to have a habit of following where influential people go.
I'm glad that CRM is working for you. And I hope it is working for your customers. It is clear that you use it to hold a dialogue with a select few that are critical to your business. And that you treat them with kid gloves in the communications stakes. I'm sure they probably do value the insider status you can offer them in terms of advance access to new releases etc.
I guess the criticism is based on using CRM techniques to get build a relationship with the mass of customers beyond milking them for as much cash as you can extract. And the idea that maybe brand relationship and purchase decisions are not based on a one to one relationship between consumer and brand but collective behaviours that have little to do with person and atomised experiences. That is the revolutionary and perhaps counter intuitive concept that we are starting to wrestle with.
Posted by: Richard at March 16, 2007 08:40 PM
Customer Management is purely a management philosophy predicated on the belief that customers are the most important asset of a business (that importance will include promoter metrics such as NPS). You create incentives for customers in a way that provides a mutually beneficial relationship.
"So inscrutable is the arrangement of causes and consequences in this world that a two-penny duty on tea, unjustly imposed in a sequestered part of it, changes the condition of its inhabitants." Thomas Jefferson comments on the the tiny incentive that led to the Boston Tea Party
Incentives are much more motivating than tone of voice (Look at the world of economics - its all about vested interest). And as for collective behaviours, these are driven by individual experience. Read Gladwell's The Tipping Point or the economist Steven Levitt's Freakonomics or maybe some data analysis followed up by research.
As for 75% of CM programs failing, it's not a surprising figure at all. After all, there are good ad agencies and bad, good CRM agencies and bad, good clients and bad. How many brand campaigns fail I wonder?
What is more surprising given the number of organisations claiming to operate CM programs is that 25% claim their campaigns have been a success.
100% of brands in a mature category can't succeed. Only 25% can achieve top quartile growth.
Tesco has embraced CRM from top to bottom. It's mission statement is "To create value for customers to earn their lifetime loyalty". It is a great client with great agencies.
Don't carp about Tesco, learn from it. Which other organisations have more than doubled their market share in a mature market in less than a decade. (Only 25% of the top 4 grocery retailers can claim that, 75% failed)
And what has CRM to do with a particular channel. One of the most successful CRM programs was MCI Worldcom's Friends & Family program in the US which was communicated primarily via TV advertising.
Oh and if you want to have a job in 5 years time learn to analyse data.
Posted by: Guy Culshaw, Planning Director, Tesco Clubcard, EHS Brann at March 20, 2007 04:41 PM
Posted by: jemster at April 5, 2007 03:27 PM
There's a very good APG Paper from 2003 for Barclays Bank which skewers why CRM is so inadequate. CRM is about differentiating by customer, not by brand. So a CRM strategy could manage individual customers but it could never distinguish the brand. So if you let CRM lead the branding or communications process, you end up with utterly indistinguishable brands. Arguably many financial service brands have already found themselves down this road. CRM is a smokescreen for micromanagers who don't have a macro strategy for their brand.
Posted by: Tom Morton at April 25, 2007 04:12 PM