Snapshot : We break CRM – “Customer”, “Relationship”. “Management” – into its three component parts. Why does CRM works in some categories and not others? Read about good and bad CRM examples. We cover the challenges of working with IT when you are in marketing. And we close with 3 key questions to decide if CRM can be a competitive advantage for your business.
Customer. Relationship. Management.
It’s a common creative technique to take seemingly unrelated words or topics and mash them up to create something new.
Customer Relationship Management or CRM fits this “Frankenstein” model in the world of marketing. Just try breaking down CRM into its component parts – “Customer”, “Relationship” and “Management”.
Don’t each of those words on their own somehow feel different to what you think of when they all come together to create CRM?
Customer - surely everyone gets that?
Customer would seem to be clear. And yet there can often be disagreement over the definition of what makes a customer.
Is a customer the same thing as a consumer, for example? Because marketing people tend to use “consumer” rather than “customer”.
The consumer is who consumes the end product.
The customer is who buys the product.
Bu these often won’t be the same person.
Sales teams also talk about “customers”.
But, they usually mean the trade buyers or store managers. Not the people who consume the product, the ones who buy it to then sell it on to their customers and consumers.
Depending on what type of business you are in, these may or may not be the target for your CRM activity.
But, to avoid a petty semantic argument, let’s just assume that consumer / customers is pretty much the same thing. Because it’s about to get more complicated.
Customer relationship - OK, more of a challenge
Add the word “relationship” in to “customer” , and hello, complications.
Marketing and brand people love to talk about “customer relationships”. Because a relationship implies a valuable connection between a brand and its loyal customers.
But hold on a second. Doesn’t that word “relationship” come with a lot of semantic baggage?
Relationship implies a shared history of interactions. Individual one to one connections based on shared understanding and shared purpose.
Sounds a bit much doesn’t it?
We just read Laughing @ advertising* by Ad Contrarian blogger Bob Hoffman. He gets several blogs of content out of the ridiculous relationship (!), marketing and advertising people have with the word “relationship”.
For example, he moans about the capture of data into CRM systems taking over the actual use and effectiveness of said data. He likens the creation of relationship marketing as a joke from some stoner student party.
Pretty funny stuff.
But not universally correct.
Because in our experience, there are examples of brands where people do want to build a relationship. Where customers stay loyal to specific brands.
But here’s the thing, they’d never say that’s what they want. A relationship with a brand? Who does that?
What they do have is a relationship with the people behind the brand. And that’s a big thing that many people get wrong with CRM. They forget that people have relationships with people, not brands.
Customer relationship done well
A couple of examples.
Most Scotch whisky distilleries market themselves as little havens of Highland and Islands history, culture and heritage. This creates fanatical followers.
Even if most of the distilleries are owned by huge business conglomerates headquartered in London, Paris and other far flung cities.
These fanatical followers are willing to pay $70+ (and often more) for something made with with only three ingredients – water, barley and yeast.
And despite excise charges and storage costs, those distilleries still make healthy profits. We’ve have no issue with that. Because those distilleries create value in the minds of their consumers. Value that justifies the prices they set. Nobody is forced to buy a single malt.
Take Laphroaig’s plot of land promotion for example. This has been running for over 20 years. Laphroaig is on the isle of Islay and transportation links to get to the island and distillery are challenging to say the least.
So they offer an ‘honorary” plot on the island for you to ‘own’. They ask you to sign up to be a member to hear news of life on the island and at the distillery. They create a sense of relationship between their consumers and the ‘brand’ as personified by the distillery and the team who run it.
Glenmorangie are another company who have done this successfully for a long time with their 16 Men of Tain origins behind the making of the whisky. They’ve been running a successful newsletter subscription service from the distillery for over 25 years.
(Check out our article on online alcohol selling for more on the world of booze by the way).
Social media used positively
These two examples have been around a while and used printed snail mail back when we worked with them. But it’s even easier to do relationship marketing these days. Social media gets a lot of bad press but isn’t relationship marketing what it’s for from a brand point of view?
Brands can and should use social media to build relationships with their consumers through targeted relevant content and exclusive offers.
Great examples of brands using social media to build strong relationships with consumers.
Why these types of brands use CRM is that it creates high levels of involvement. Consumers care about them. So they can legitimately have a ‘relationship’.
They are businesses where the people behind the brand really matter.
And if that is your type of business, then that’s where ‘customer relationship’ building can add much value.
Hoffman’s blogs do joke about people having relationships with their toilet paper, or their mayonnaise or their clock radio (who even has one of those anymore?). And he’s right that some categories are low involvement categories. It’s difficult to perceive the people behind these categories and brands. They are so not well suited to relationship building.
It’s worth checking out the difference between low involvement and high involvement categories. Look for the work by Rossiter and Percy carried out back in the 1980s. The actual paper seems to sit behind firewalls, if you search online. But this scanned article gives you the gist of what the paper states.
Customer relationship management - now you’re really talking!
Oh yeah, mentioning online reminds us to come back to the third leg of the CRM Frankenstein model. Management.
And here’s where CRM becomes something entirely different again.
Because everything we’ve talked about so far makes sense from a pure marketing point of view.
But in order to turn your “CR” into “CRM” and do that in a scaleable and profitable way, you have to develop a Customer Relationship Management system.
And that word ‘system’ is actually what attaches itself to most content written about CRM. It’s a process, a technology, a piece of software that automates and process large scale interactions between a brand and its consumers.
Marketing and IT - now there's a relationship challenge
And this requires marketers to do something they rarely cover when studying marketing. Or are trained for as they earn their spurs in their marketing careers.
Working with IT people.
Oh, the horror.
The tasks involved in actually setting up a CRM system are usually a stretch from the competencies of most classically trained marketing people.
How to you set up forms for data capture?
What sort of information architecture will you use to organise the data?
Are you clear on the rules and processes to manage the data and the usage of the data?
What about the regulations around privacy and security of holding data?
Do you have the statistical analysis skills to be able to extract meaningful insights from the data to feed your future marketing plans?
IT and CRM seem to churn up these and many other martech challenges.
And yes, those challenges are hard work. They involve stretching yourself to understand other parts of the business. And still being able to make sure that your core marketing strategy works in this new channel and new environment.
CRM key integration questions for marketing
So here’s some things to consider if CRM is part of your marketing plan.
- Is your CRM plan built on the insights from your market research?
- Does it use segmentation, targeting and positioning to identify meaningful groups to talk to?
- Are you able to deliver your brand identity and communications in a consistent and meaningful way to individual consumers?
- Do you understand how to set up marketing technology systems to support your CRM plan?
Too often, we see brands not answering these questions well with their CRM plans.
Click on the link and what do you get?
“Just fill in your email address, and we’ll send you the document. Promise we won’t spam you. You can always unsubscribe”.
What kind of way is that to start a relationship?
It’s like meeting a girl / boy in a bar and saying “I’ll show you a picture of my boobs / dick (whichever your preference is) if you give me your number. And I’ll keep texting you every day to tell you how great I am until you tell me to stop”.
Our view is show your assets for free or don’t. (We’re back to talking about marketing, not what you get up to at the bar).
But don’t try this sneaky way to build up an CRM email list. Everyone can see through that particular tactic.
How to know if CRM will work for your business
When CRM is done well, it can deliver valuable and loyal customers. Customers who will spread the word about your brand and require a relatively low level of investment to keep interested.
It’s well known that the cost of retention for consumers can be around a fifth of the cost of acquisition for new customers.
However, when it’s done badly, it’s cringe-worthy. We believe it’s one of those marketing skills you either master completely or just don’t bother.
Doing it in a half hearted or amateurish way can be a serious drain on the reputation of your brand.
If you are already using CRM within your business, or considering beefing up your skills in this area, we encourage you to build your plan around these three related skills.
- Market research – Do I have the deep understanding of my target audience that shows they will be willing to connect with my brand on a regular basis?
- Brand identity – Do the values or personality of the brand indicate consumers would want to have an ongoing connection?
- Digital marketing – Do I have the will and the skill in marketing technology and / or digital media to activate a CRM plan in an efficient and effective way?
None of these are unsurmountable challenges. But if you can answer those three questions well, you stand a higher chance of your CRM relationship working. Of actually actually creating a “meaningful” customer relationship.
And not the marketing equivalent of a drink thrown in your face at the bar.
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