Why read this? : We explore why you need Customer Relationship Management (CRM) and how it works. Read our examples to learn why it works in some categories and not others. We also cover the IT challenges you face in setting it up. Read this to learn how to make Customer Relationship Marketing a competitive advantage for your business.
Customer. Relationship. Management.
It’s a common brainstorming technique to take seemingly unrelated words or topics 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 when you bring all 3 together, 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? And yet there’s often disagreements over what you mean by the word customer.
Is a customer the same thing as a consumer, for example? Because marketing people like to use “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 petty semantic argument, let’s just assume consumer / customer is near enough 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” 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 we know some brands which people do want to build a relationship. Where customers stay loyal to them.
But here’s the thing. They’d never say they want a relationship with the brand. Nobody apart from marketers even thinks about that.
What they actually have though is a relationship with the people behind the brand. And that’s a big thing 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 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 3 ingredients – water, barley and yeast.
And despite excise charges and storage costs, those distilleries still make healthy profits. No issue with that. Because those distilleries create value in the minds of their customers. 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 customers and the ‘brand’. It’s personified by the distillery team who run it.
Glenmorangie have also done this successfully for a long time with their 16 Men of Tain – the original team behind the making of the whisky. They’ve been running a successful newsletter 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 2 examples have been around a while. In fact, they were still using printed snail mail back when we first came across them.
But it’s even easier to do relationship marketing these days. Social media can get a bad press. But for brands, it’s a great way to do relationship marketing.
Brands can and should use social media to build relationships with their customers via targeted relevant content and exclusive offers.
Great examples of brands using social media to build strong relationships with customers.
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 are businesses where the people behind the brand really matter.
And if that’s your type of business, then that’s where ‘customer relationship’ building can add much value.
Hoffman’s blogs 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 don’t suit a relationship building approach.
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.
Customer relationship management - now you’re really talking!
Oh yeah, mentioning online 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 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. Building IT skills.
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.
For example :-
- 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 store and use 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?
- If your CRM offers a subscription service, does your website make it easy for customers to manage orders?
IT and CRM seem to churn out 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 your 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 segments to talk to?
- Can you deliver your brand identity and communications in a consistent and meaningful way to individual customers?
- Do you understand how to set up marketing technology systems to support your CRM plan?
Too often, we see half-hearted CRM activities that don’t really answer these questions.
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.
Conclusion - will CRM work for your business?
When CRM is done well, it can deliver valuable and loyal customers. Customers who’ll spread the word about your brand and only need a low level of investment to keep interested.
It’s well known that the cost of retention 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 your brand.
If you’re already using CRM within your business, or considering beefing up your skills in this area, build your plan around these 3 related skills :-
- Market research – Do I have deep understanding of my target audience that shows they’ll be willing to interact regularly with my brand?
- Brand identity – Do the values or personality of the brand indicate customers would want to have an ongoing connection with it?
- Digital marketing – Do I have the will and the skill in marketing technology and digital media to activate a CRM plan in an efficient and effective way?
None of these are easy. But nor are they impossible. Answer those 3 questions well and there’s a better chance of your CRM relationship working. Of creating a “meaningful” customer relationship.
And not the marketing equivalent of a drink thrown in your face at the bar.
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