CRM is a highly evolved form of database marketing that takes advantage of software technology advances to use information accumulated about a consumer to create a more effective direct-marketing effort, according to Jeff Bickerstaff, new business director of SilverCube, an e-commerce consultancy.
Many carmakers are scrambling to unify customer information from different parts of their organizations into a single database. Although the term has been around roughly five years, the industry is "late to the game" compared with marketers such as banks, telecommunications and catalog retailers, says Mr. Bickerstaff.
The premise is simple: keep in touch with your owners and prospects; know their life stages and hobbies; and understand their vehicle needs. The marketer's reward is the brand loyalty of the consumer.
The upfront CRM investment is substantial, admit auto executives, who also decline to reveal their spending.
On the other hand, it is approximately five times more expensive to attract buyers to your brand than to keep the ones you have, says Mary Doris-Smith, exec VP-director of CRM business development at InterOne Marketing Group, Troy, Mich.
Mr. Bickerstaff says the CRM movement is a boon to software makers. A marketer "could easily spend $5 million to $7 million and get nothing," he says, claiming a bank spent $100 million, yet produced nothing, because it added software as its program moved forward, but ended up with insolvable software conflicts.
"Everyone in the industry is saying it makes sense, but there's no model yet to say it works," Mr. Bickerstaff says.
Toyota Motor Sales USA combined owner information with customer information from its car finance unit into one database. It started CRM a year ago by tracking lessees, although it calls the process one-to-one marketing, says Steve Sturm, VP-marketing.
The Internet provides Toyota instant communication with its customers, he says. "It's a lot more efficient and cost effective than mail."
Mercedes-Benz USA maintains it was a CRM pioneer. Auto experts agree the marketer was among the industry's early devotees.
In the early 1990s, a Mercedes staff study team realized owner data was "the braintrust of the company," says Ken Enders, VP-marketing. The database was moved in-house, providing the seed for a structure to manage customer details.
The first CRM-related effort at Mercedes was its Client Assistance Center, a toll-free customer service in operation 24 hours daily.
Last year, the marketer kicked off an Internet pilot. It offers owners individual Web sites to communicate with the marketer. The so-called Personal Information Centers, which will expand in the next year, enhances communication with owners, Mr. Enders says.
He knows his competitors are jumping on the CRM wagon.
"CRM is a buzz word and you see everyone using it, but I'm not sure everyone is living it."
Mr. Enders concedes CRM is easier for a smaller-volume player such as Mercedes, which now has about 1.5 million consumers who have expressed interest in the brand on its database.
Every car executive interviewed says all owner and prospect data is from consumers, not from outside sources, and is kept private inside the companies.
Ad agencies are leery of CRM since they could lose some direct-mail billings, says Mr. Bickerstaff. An agency will typically send 3 millionto-4 million direct-mail units to launch a particular vehicle. But with CRM's better customer data, the list can be pared down to 1 million to get the same number of respondents.
Ad agencies also might feel threatened by the Web aspect of CRM, says Geoff Smyth, CEO of Ford Motor Co.'s Ford/Teletech customer relationship management joint venture in Denver.
But ad agencies "can morph" to provide CRM services and execute strategies, resulting in closer relationships with clients, he predicts.
Agencies are morphing. Ross Roy Communications, Troy, Mich., BBDO Worldwide's marketing services' unit whose only client is DaimlerChrysler, changed its name Jan. 1 to InterOne to emphasize its main CRM thrust. In February, Y&R's direct marketing unit, Wunderman Cato Johnson, New York, whose clients include Ford's Lincoln and Mercury brands, switched to Impiric to reposition itself as a CRM shop.
After 18 months of setting up the infrastructure, InterOne launched a "hand-raiser management program" for the carmaker last June. Customized mailings are sent to consumers after they seek information about the marketer's products or services, says Ms. Doris-Smith.
Thanks to digital printing, the agency can produce 1,300 different product brochures across all DaimlerChrysler models. If a prospect expressed an interest in performance and handling of the Chrysler Concorde sedan, four spaces in the car's mailing can be customized with that data, she explains.
DaimlerChrysler believes CRM begins when a customer contacts the marketer, says Dave Rooney, director of CRM at DaimlerChrysler. Prospects contact the marketer via a toll-free phone number, business reply card from a print ad, auto show brochure or one of its Web sites.
The relationship doesn't end when you buy a car. Buyers get a thank-you mailing with a free oil change; an invitation to start a dialogue by phone, mail or the Web.
Good car salesmen at dealerships have been practicing CRM for many years, says Mr. Rooney.
"They knew your family and [they knew] when your kid turned 16 and was ready to drive. The concept isn't new. The technology is," he says.
InterOne produces a Dodge owners' magazine dealers can order. The publication, which includes product stories, is customized with dealership information and specials on service deals. It contains a business reply card to update owner data that goes to InterOne.
Owner relations' programs work best when both the manufacturer and the dealer are involved, says Susan Jacobs, president of auto consultancy Jacobs & Associates.
In many cases, she adds, the auto industry's move to CRM is a response to competitive market conditions with declining loyalty.
Ford is "in the early adaptive phase" of CRM and is heading to one database, says Don Sparkman, VP-marketing and sales.
The carmaker, whose brands encompass Ford, Jaguar, Lincoln, Mazda, Mercury and Volvo, started several tests across the corporation on specific brands in the last seven months.
"We want to make millions of customers feel special," he says.