BtoB: How well do you think CRM is working today for marketers?
Arthur Hughes: The big problem is that when database marketing first started it was done by marketing people; then salespeople looked at this and said, “We can do that”; and they got in touch with IT [professionals who then] said, “Why can’t we make something that will make the right offer to the right person at the right time? And that’ll do the job.” They thought of it as a piece of software. So I think there’s where it got off the track. IT created this quite expensive software—these huge warehouses that would hold all the information—and [as a result] they expected the money to just roll in. Well, of course, marketing requires a lot of imagination and tweaking, which doesn’t go with standard software. You really need to have a person thinking about how to sell and how the marketing changes and what should happen next.
BtoB: Why do so many companies struggle with implementing CRM?
Hughes: Marketing departments were outsourcing a lot of marketing databases to outside companies instead of using [in-house] IT. [In-house] IT resented that and said, “Why is the money going outside? We can do that.” And of course they couldn’t because one of the things we discovered about handling customer-marketing databases is that you do a lot of things that are never done in standard IT. [For example], you don’t get rid of records in IT. You can modify them, but you don’t wipe them out. In a marketing database, if the information isn’t correct you just get rid of it. The whole idea is not to balance for the IRS, it’s to make sales. The whole approach is quite different.
BtoB: Are marketers getting anything right with CRM?
Hughes: I don’t think CRM can work for business to consumer at all. CRM can work well for business to business. One way is in [determining] the “next best product.” You can take a bunch of different business customers and assign codes to them. [Since] you know their annual sales and number of employees, you can then create segments of business based on that. You can look at the people in each one of these segments and say in this segment you see that people are buying ABC. Then you see a company within the segment that is buying A and C. They need B! They must be getting B from someone else. What you can do is make them an offer to buy and give them a price break.