Why read this? : We explore the ins and outs of Customer Relationship Management. Read our examples to learn why CRM works better in some categories than others. We also cover its various IT challenges. Read this to learn how to use Customer Relationship Marketing to grow your business.
Customer. Relationship. Management.
It’s a common brainstorming technique to take unrelated words and mash them up to create something new.
We often wonder if that’s how the idea of Customer Relationship Management (CRM) came about.
Because each of those 3 words is loaded with its own meaning. But bring all 3 together, and it creates something quite different.
What do we mean by that? Well, as always in marketing, let’s start with the customer.
Customer - surely everyone gets that?
The meaning of customer should be clear, right? It’s the person who buys your brand. But, it’s not as simple as that.
For example, is a customer the same thing as a consumer? Because marketers often prefer saying “consumer” rather than “customer”.
For us, they’re similar but not the same :-
- The consumer consumes the end product.
- The customer buys the product.
It can be the same person. But sometimes, it’s 2 different people. It depends on what you’re selling.
Sales teams also talk about “customers”.
But, they usually mean retail trade buyers and store managers. Not the people who consume the product, but the ones who buy it to sell it to their customers.
Depending on the type of business, these may or may not be the target for your CRM activity. (If they are, that’s B2B CRM).
But, to avoid a semantic argument, let’s go with consumer / customer being near enough the same thing. Because it’s about to get more complicated.
Customer relationship - OK, more of a challenge
Add the word “relationship” to “customer”, and say hello to more 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” have a bit of baggage?
Relationship implies a history together. One-to-one interactions with shared understanding and a common purpose.
Sounds a bit much, doesn’t it?
We just read Laughing @ advertising* by Ad Contrarian blogger Bob Hoffman. He gets a lot of mileage out of the ridiculous relationship (!), marketing and advertising people have with the word “relationship”. For example, he moans about how the capture of data into CRM systems actually reduces its effectiveness. He also portrays the creation of relationship marketing as like a bad joke from a stoner student party.
Pretty funny stuff.
But not universally correct.
Because there are some brands customers build a relationship with. Where customers stay loyal to them. We know because we’ve worked on brands like that.
But here’s the thing. They’d never say they want a relationship with the brand. That’s marketing speak, not customer speak.
And what they do have though, is a relationship with the people behind the brand. And that’s what many people get wrong with CRM. They forget 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 heritage and culture. Fanatical followers love this.
Even if most of the distilleries are owned by big business conglomerates headquartered in London, Paris and elsewhere.
These fans are willing to pay $70+ for something with only 3 ingredients – water, barley and yeast.
That’s because they feel a connection to that brand. And that often comes from the way those distilleries run the Customer Relationship Management programs.
Take Laphroaig’s plot of land CRM program, for example. This has been running for 20+ years. Laphroaig’s on Islay, and it’s a hard place to get to. So they offer an ‘honorary’ plot near the distillery for you to ‘own’. You sign up to be a member to hear news of life on the island around your plot. They create a sense of relationship between their customers and the brand, by sharing news from the team at the distillery.
Glenmorangie has also done this successfully for a long time with their 16 Men of Tain program, based on the original team who made the whisky. They’ve been running a successful newsletter service from the distillery for 25+ years. (Check out our online alcohol selling article for more on the world of booze by the way).
Social media used positively
These 2 examples have been around for a while. In fact, they were still using printed letters back when we first came across them.
But it’s even easier to do relationship marketing these days, by using social media. It sometimes gets a bad press, but, it’s a great way for brands to do relationship marketing. Brands can use social to build relationships via targeted relevant content and exclusive offers.
Great examples of brands using social to build strong customer relationships.
Why these types of brands use CRM is that it creates high levels of involvement. Customers care about them. So they can legitimately have a ‘relationship’.
They’re businesses where the people behind the brand really matter.
And if your business is one of those, that’s where ‘customer relationship’ building adds value.
Hoffman’s blogs joke about people having relationships with their toilet paper, their mayonnaise or their clock radio (who even has one of those anymore?). And he’s right that categories like these are low involvement. There’s no engagement with the people behind them. So, yes, they don’t suit a relationship-building approach.
Customer relationship management - now you’re talking!
Oh yeah, that reminds us to come back to the third leg of CRM. 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 to turn your “CR” into “CRM” in a scaleable and profitable way, you have to develop a Customer Relationship Management system.
And that word ‘system’ is what attaches itself to most content you read about CRM. It’s a process. A technology. A piece of software which automates and processes large-scale interactions between brands and customers.
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 build their marketing careers.
Working with IT people. Building IT skills.
Oh, the horror.
The jobs to be done in setting up a CRM system are usually a stretch for most marketers.
For example :-
- How do 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 store and use the data?
- What about the regulations around privacy and security of holding data?
- Do you have the statistical analysis skills to extract meaningful insights from the data to feed your future marketing plans?
- If your CRM offers a subscription service, does your website make it easy for customers to manage orders?
CRM raises many of these martech challenges. And yes, they’re hard work to resolve. It means stretching yourself to understand other parts of the business. And still being able to make sure your marketing strategy works in this new channel and new environment.
CRM key integration questions for marketing
So, here’s some questions to check if CRM should be part of your plan :-
- Are there clear insights from your market research to support doing CRM?
- Has your segmentation, targeting and positioning work identified meaningful segments?
- Can you deliver your brand identity and communications via CRM in a consistent and relevant way to specific customers?
- Do you have the know-how to set up the right marketing technology systems to support CRM?
Too often, we see half-hearted CRM activities which don’t answer these questions.
For example, look at the marketing agencies and start-up “stalker” consultants who advertise ‘free guides’ and ‘free advice’ on their social and blog posts. They call them ‘lead magnets’. 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 not at all. (We’re back to talking about marketing, not what you get up to at the bar). Don’t try this sneaky way to build up a CRM email list. Everyone can see through that particular tactic.
Conclusion - will CRM work for your business?
CRM done well delivers valuable and loyal customers. They happily spread the word about your brand, and you only need to spend a little to keep them interested.
In fact, it’s been suggested the cost of retention is only about 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 master completely. Or just don’t bother.
Doing it in a half-hearted or amateurish way can seriously drain your brand.
If you’re already using CRM within your business, or considering beefing up your skills in this area, build your plan around your :-
- Market research – Does your target audience understanding show they want to regularly interact?
- Brand identity – Do the brand values / personality encourage customers to want to connect regularly?
- Digital marketing – Do I have the will and the skill in marketing technology to activate a CRM plan in an efficient and effective way?
None of these are easy. But nor are they impossible. Answer these questions well and there’s a better chance of your CRM relationship working. Of creating a “meaningful” customer relationship.
* As Amazon affiliates, we earn from qualifying purchases.