Customer Relationship Management

This section of our technical library presents information and documentation relating to CRM Solutions and customer relationship management software and products. Providing timely customer service information is vital to maintaining a successful business. Accurate information provided in an organized and thoughtful manner is key to business success.

TELEMATION, our CRM and contact center software, was originally built on this foundation. The ability to modify Customer Relationship Management software is important in this ever changing business environment.

Telemation Customer Relationship Management solution and contact center software is ideally suited for call centers throughout the world.

From: CMO Consulting International

After one to one marketing and personalization, Customer Relationship Management (CRM) is the next buzzword for E-commerce. However, very few people can give a clear and workable definition of CRM. We start this series study of CRM by discussing what is not CRM.

What should be the customer relationship with a company? How to define such relationship? How to construct the strong customer relationship? How to use marketing research techniques and database applications to enhance the customer relationship? These are some of the topics in this series.

First time to know CRM

Although I have been doing marketing research for years, I haven’t paid attention to the buzzword CRM until last year. (I usually don’t pay much attention to the fancy marketing terms because I know most of them are just sizzles rather than steaks. As a marketing researcher and strategist, I cannot live on these sizzles.) Less than a year ago when I had published the article Behind the success stories of one to one marketing -- a value driven marketing strategy , a CRM related email newsletter got my permission to republish the article to its readers. Then a CRM related web site approached me asking me to write something about CRM for its CRM column. So I took sometime to study this new buzzword -- CRM.

To my surprise, I did not find anything new. All the CRM articles simply discuss some basic marketing research methodologies (such as segmentations and customer attrition predictions) and the database applications. There was nowhere they discussed the customer relationship-- the core of CRM.

Without a clear definition of customer relationship, one can hardly develop CRM tools to build and enhance the customer relationship.

Here I try to give CRM a definition by clarifying what is not CRM.

CRM is not one to one marketing

In the last issue of JWMR, I have discussed the relationship between CRM and one to one marketing: "Sizzles and steaks" (http://www.webcmo.com/ebook/1to1/topic19.htm) So far, there is no marketing theory being able to guide the movement of customer relationship management. Therefore the CRM application developers have to find some theory to promote their products. One to one marketing is their only choice. At the same time, one to one marketing also wants to find more marketing applications to prove itself. To both sides, this is a perfect marriage.

This marriage makes people think CRM is one to one marketing.

But this marriage is very dangerous to the future development of CRM: even we admit that one to one marketing is about customer relationship, it is only about one possible relationship -- one to one customer relationship. More importantly, this one to one relationship with customers is incorrect.

As we have discussed in many articles, one to one marketing is a misleading marketing theory. First, it is harmful as a business philosophy. Perhaps the most important difference between men and other animals is that we (as human beings) can think aggregately: when we see a tree, we see it as a tree in a forest. When we see a customer, we see him/her as one of the customers. When we know the needs of a customer, we are able to aggregate such information to conclude if other customers have the same needs and if we should meet such needs (if such needs are not individual). We have also developed many statistical techniques to help aggregate such information. However, one to one marketing tries to treat each customer separately. It forces people to think and treat customers individually even they are from the same segment. So in a one to one enterprise, managers are trained to isolate customers individually and treat each customer differently. I have used a simple example to illustrate how such philosophy doesn’t work. (Please read "The harms of one to one marketing as a business philosophy" at http://www.webcmo.com/ebook/1to1)

Second, one can hardly develop any marketing applications (including CRM) based on one to one marketing theory. Most seemingly one to one applications are actually developed based on aggregate marketing methodologies. (Please read Market segmentation -- a case of one to one marketing) If one tries to develop CRM based on one to one marketing, he certainly gets on the wrong journey.

CRM is not personalization

From the technical point of view, the current CRM is no different from personalization. The difference only comes from their applications -- personalization is online application while most CRM is offline. (That’s why some people tried to create a new buzz -- eCRM. It is really unnecessary. What is the difference between personalization and eCRM?)

Strictly speaking, personalization is not one to one marketing although people use these two concepts interchangeably. I started to discuss personalization by asking "Is personalization really personal?" (Please read Personalization ) I have used the Amazon book recommendation example to illustrate that such (and most other) personalization applications are actually segment targeting: if you buy the book, you belong to one segment and all others belong to the other segment.

Personalization is hot because it is about "personal". However, this "personal" construct means great potential risk to personalization movement. To develop your business plans based on personalization is like to take a hay-ride: you are sitting on the dry hays and you know that someone (include yourself) will soon set fire on the hay and destroy your business.

The recent Double-Click’s trouble is an excellent example.

That’s why "Permission Marketing" is so popular on the Internet. Do we need to get customers’ permission to sell them anything offline? I believe so. If a customer dose not want to buy a product, you are unlikely to get paid. However, why hadn't we promoted "permission marketing" until we got online? Because it is not illegal to send junk mails to millions of households. Because it is not illegal to make sales pitches through phone calls. But it is illegal to send emails without the permission of the receivers. It is illegal to collect personal information without the permission of that person.

To personalize or not to personalize? Before you make the decision, you need to know the danger in front of you.

A survey report about personalization

The Industry Standard once had a survey report titled "Personalisation Increasingly Popular". Based on a survey conducted by Cyber Dialogue, it reported that "29 percent of the total number of users, have personalised web pages and 88 percent of users believe that personalisation is the best way for companies to learn about consumers."

It also reported that "Twenty-seven percent ask for information on stocks and investments and 23 percent look for industry or business news. Twenty-one percent are interested in weather and 19 percent in sport. The figure is 17 percent for both entertainment and national news while only 15 percent request customised local news. The figures for shopping and health are eight percent and seven percent respectively."

More numbers are in the report: "Two-thirds of Internet users want guarantees that personal information will not be misused by companies while over one third are happy to give such information if they are entered in a lottery or prize draw. Just over thirty percent are happy to receive product or service updates in their email and the same number of people will divulge personal data if it means they can access better quality content."

According to the report, "Half of users believe submitting personal details leads to the receipt of junk mail but only 37 percent think that sites' requests for information invade surfers' privacy. Sixty percent of users believe that giving information on the Internet is riskier than giving the same information out over the telephone. Fifty-six percent of users think the personal information they submit to Internet sites will only ever be used for marketing purposes."

The above is a "half-glass-full" story. Now let’s look at the "half-glass-empty" story from the same survey.

According to the survey, "half of users believe submitting personal details leads to the receipt of junk mail" and 37% EVEN think that "sites' requests for information invade surfers' privacy" (Only request for info rather than use info!). So far, only less than 1/3 of the Internet users has personalized web pages (with or without providing personal information). "Two-thirds of Internet users want guarantees that personal information will not be misused by companies" (Can you guarantee this for your and other web sites?).Only "over one third are happy to give such information if they are entered in a lottery or prize draw" (guess what segment these people belong to). "Sixty percent of users believe that giving information on the Internet is riskier than giving the same information out over the telephone." What percentage provided the fake personal information because of this distrust?

Also according to the survey, if your web site is not about finance or news, only less than 10% users are likely (an intention rather than an action!) to request personalized information. Are you in finance or news industry? How prosperous is personalization to your business according to this survey report?

More importantly, what is the trend of this distrust from the Internet users? With more personalization implementations, we will certainly see more abuses of personal information. Consequently, more distrusts are built up between Internet users and web businesses (as a whole).

CRM is not statistical models

So far, I have met two kinds of people online. The first kind is some people who strongly dislike statistics and think that statistics is a fancy but useless tool in marketing. However I find that the fundamental reason for them to do so is that they have little knowledge about statistics. These people don’t know how marketing theories were developed based on statistical models. They don’t understand how statistics can help understand market movements and develop effective marketing strategies.

For example, had the advocates of one to one marketing had basic knowledge of statistics, they would have had known that it is impossible to develop any marketing strategies based on individual customer information. Some one to one marketing experts have criticized market segmentation for years even without understanding what market segmentation is and how it is conducted. So they ironically used the market segmentation case as an example to illustrate their one to one marketing theory and to criticize market segmentation! . Do you feel comfortable if such marketing experts tell you how you should conduct your marketing,?

Another example is if you want to build a strong brand, can you determine where your current and the future brand positions are in competition and how to reposition your brand to increase competitive strength without using proper statistical analyzes?

Statistical marketing models are certainly strong tools for developing marketing strategies. In the current CRM applications, people use many sophisticated statistical models. However, CRM is not statistical models.

There is another kind of people who think statistics IS marketing. Usually they have a prestigious degree and some knowledge about statistics. I was once questioned by a Ph.D. about my qualification for discussing marketing issues. He told me he knew about half a dozen statistical models from Sociology (?) and he thought if you don’t have a Ph.D. degree you are not qualified to discuss marketing issues. I first recommended him to read several marketing research journals to subtly tell him his statistical knowledge is quite limited and statistics is not equal to marketing research. But I had to tell him directly when he repeatedly demonstrated his statistical background and questioned my "qualification".

This kind of people thinks once you know several statistical models, you are a marketing expert.

There is a statistical technique called Survival Analysis which can be used to predict the defection of a customer. Guess who else also use this statistical technique? The researchers in medical schools. The same technique could be used to determine what contribute to the death of cancer cells. One can also call such research as CRM -- Cancer Research Measurement. If someone thinks CRM is statistical models, he/she is suggesting that we can treat customers as cancer cells!

CRM is not database applications

Well, this might be harder to understand because what we have seen about CRM are database applications. However, did we have customer relationship before we knew something called database? Did we manage to manage customer relationship before we had the computer?

The database applications are only the tool to help us manage customer relationship more effectively. But they are not CRM itself.

More importantly, Customer Relationship Management shall be conducted under certain business and marketing philosophy. One shall develop solid relationship models based on his business philosophy and marketing modeling skills and then use database technique to implement such models. However currently almost all CRM (and personalization or one to one) applications are developed by database developers. They think as long as they make some "business rules" based on some correlation, they can help you manage your customer relationship.

That’s why the current CRM (and personalization) applications have only achieved very limited goal in both managing customer relationship and marketing.

CRM is not CRM

Logically, it is an absolutely incorrect statement. But in the reality, it is true.

If I am asking you what you worry about most when you decide to implement CRM or personalization applications on your web site, what is your answer?

Most people (and the whole industry) worry about the detriment of our customer relationship after we implement such customer relationship management tools! People worry about the infringement of customer privacy by such Customer Relationship Management tools.

How could it be possible that a Customer Relationship Management application will being damaging customer relationship???

If CRM is potentially risky to your customer relationship, can we still call it CRM?

On the other hand, what is the most important relationship between a customer and a company? To a customer it is the brand perceptions. It is his/her brand choices. Have we seen any CRM application dealing with such relationship?