CRM: Shooting holes in the hype

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Ask Direct Marketing Association President H. Robert Wientzen about CRM, the concept embraced as the beacon of new millennium marketing, and he compares it to high school sex.

"Everybody talks about it. Everybody thinks everyone else is doing it, and those that are doing it are doing it poorly," he says.

CRM was born as the ad world's focus shifted away from mass advertising toward one-to-one marketing, and the ad community needed a trio of letters to label the trend. But now, marketers are realizing CRM is simply a new term for an old concept. Its founding principles-targeted communications, relevant messaging, contact at various touch points, loyalty-are the roots of direct marketing, and remain key marketing tenets.

These disciplines are also especially well positioned in a down economy where marketers are looking for the most efficient ways to communicate.

The problem lies not just in execution but definition. Some marketers say CRM stands for customer relationship management; others, customer relationship marketing. The industry has become careless, reckless-promiscuous even-about CRM, and overuse has clouded its meaning.

"If we can't define CRM," says Rick Barlow, chairman-CEO of Frequency Marketing, a Cincinnati company that designs and runs loyalty programs, "then how do we know what we need in order to implement it? How will we know what it's supposed to deliver?"

NEW NAME FOR OLD TRICKS

"The principles that are part of CRM are highly valid, highly valuable and reasonably well proven," says Malcolm Speed, CEO of Omnicom Group's Rapp Collins Worldwide, New York. "Unfortunately, CRM has become, for many people, just an advertising phrase."

Lester Wunderman, the chairman emeritus of WPP Group-owned Young & Rubicam's Impiric Worldwide, New York, who is esteemed as the father of direct marketing, considers CRM to be the current fad in a long list of predecessors. "As long as I've been in this business, there's been one vogue or another. We've always known that the art of making a profit is the art of what we now call customer relationships," he says. "I think it's the subject of hype. We all try to say we have the panacea, whatever it is. I think we tend to oversell both ourselves and others, but at least it points out the direction we're headed."

And the direction they're headed is away from mass marketing, toward the individual, with the coveted prize at the end of the road: one-to-one marketing. "It's kind of a hopeful idea, but it's not reality," Mr. Wunderman says. "One does not market to one. We market to groups."

To Mr. Barlow, who also believes CRM is an extension of a tried-and-true concept, the departure from mass began with old-fashioned loyalty programs. "The term CRM, which has come to stand for a large set of amorphous thinking that is currently rooted in the concept of customer-centricity, did not emerge until the early 90s, and it emerged out of loyalty programs," he says. "The first CRM program was the American Airlines Advantage program launched 20 years ago."

He adds, "Loyalty marketing is where this all began, and frankly, it's where it all will end."

CRM fanatics have over-extended an imprecise metaphor, says Mr. Wunderman. "We begin to humanize the idea of repurchase, and therefore we're using words like relationship, which have a connotation with something beyond what you have with a product or service," he says. "I'm not loyal to my toothbrush. I might be loyal to my country; I might be loyal to my faith. But I can't believe I'm involved in the same dimension with soap or soup or even automobiles," he adds. "What we're talking about is repurchase." And he-like other direct marketers-has been talking about that for decades.

"We tend to think of CRM as lots of old news, and a little bit of new news," explained the DMA's Mr. Wientzen. "The old news is, it is in fact one of the basic tenets of successful direct marketers."

But CRM became such a buzzword that even Mr. Wunderman's shop succumbed when a new CEO, former consultant Jay Bingle, changed its name to Impiric last year and repositioned the agency as a CRM specialist instead of a mere direct marketing agency. This year, CEO Daniel Morel replaced Mr. Bingle, as the agency tried to reconnect with its roots. "There was a notion a year ago or two years ago that in order for this company to be successful, we had to change our offering to the market and be more focused on this thing called CRM and consulting," said Impiric New York President David Sable in an earlier interview. "It's not like [CRM] is a new thing, but it became a buzz word. The truth is, it's a subset of what we do."

Although CRM's mission isn't new, "What is new are the new software and technology basket of tools that are available," Mr. Wientzen says.

In fact, many believe the CRM-obsession was set in motion by consultants and technology companies convincing marketers that data is the holy grail of customer loyalty. "Some of what has driven this has been the systems community looking for the next wave of investment and wanting to put in place the capabilities to help companies better manage their relationships with their customers," maintains Steve Silver, a partner at consultancy Helios Consulting Group, New York. "But at the same time, it's not like they made up these ideas. What's new is the continued advance in information technology and the ability to apply that to these tasks," he adds.

CRM "has gotten to be less of a marketing idea and more of a systems idea" agrees Michael Mesic, marketing director at Havas Advertising's Brann Worldwide, Deerfield, Ill. "While the consultants are very interested in selling these kinds of solutions because they involve a lot of systems integration and software ... they don't necessarily add a whole lot to what companies can do from a marketing standpoint," he says. "Having a lot of data about people doesn't necessarily help you unless you figure out what they need."

"CRM is dead as a viable concept," says Mr. Mesic. "What we believe is much more important is how people buy something and what their attitudes are about that kind of process."

Those that believe in CRM, like Schaumburg, Ill.-based Experian Marketing Solutions' Chief Marketing Officer Deborah Lowman-Zuccarini, think the hype over the term is positive. "Was it overblown? Frankly, no, it's a good thing," she says. "People are starting to focus on what the value of the relationships with customers really is."

In fact, marketers that successfully manage customer relationships-such as airlines, financial services companies and automakers-understand that their massive transactional databases are just the starting point.

"Most of what's coming out in the software, the hardware, the technology tools are just that-tools. They're not answers. How you use those tools is still the role of marketers," says Dave Rooney, director-global CRM at DaimlerChrysler, which has an agency-Omnicom Group's InterOne Marketing Group, Troy, Mich.-dedicated to relationship marketing. InterOne changed its name last year from Ross Roy Communications, a 76-year-old merchandising and marketing communications company, to reflect its five-year repositioning toward "a true customer-centric approach to marketing," says the agency's President-CEO Tim Copacia. "It wasn't just a name change; we had been spending years preparing for that moment."

Although InterOne utilizes external software packages to augment Chrysler's infrastructure, it realizes that "the technology and the processes are the enablers, they are not what CRM is to us," explains Mary Doris-Smith, exec VP-CRM business development at InterOne. "It's not plug and play. You don't just buy [software] off the shelf and get a customized application."

For Chrysler, customer relationships are born when prospects first contact the company. "The relationship begins the minute they become interested in our products," Mr. Rooney says. A year before it debuted its PT Cruiser, for example, Chrysler had already amassed a database of 450,000 interested prospects.

MORE THAN LOYALTY

American Express Co. is another marketer often cited for its successful CRM-although it doesn't use the term. Still, the philosophy of maintaining a relationship with consumers "is at the heart of almost everything we do," says Emily Chien, VP-rewards business development. She says relationship marketing is the combination of four components-quality products, branding, customer service, and recognition and reward. "We do our best to make sure that the service and the experience is based on who you are and what you need," using information garnered through constant contact and customer feedback, Ms. Chien says.

Carlson Marketing Group, Minneapolis, the No 1. marketing services shop in the country, thinks CRM is more than loyalty. Frustrated with its slippery definition, the agency created a label of its own, advising clients like Amtrak and British Airways to practice "relationship marketing in full," which is "more complicated than rolling out yet another points program," says Carlson's VP-Brand Management Mike Kust.

Carlson has worked with clients that implemented $40 million CRM platforms and discovered that "they aren't really any further along than they were 18 months ago when they initiated the effort. That's because they didn't have a commitment at the executive management level to do relationship marketing in full," he says.

In other words, marketers looking for a quick fix should look somewhere else. "It's a very different way you need to think in order to do this. You can't just wave your magic wand and declare that since you're a marketing person, you're now an expert in CRM," says David Diamond, president-emerging businesses and chief marketing officer at Catalina Marketing Corp., which provides targeted marketing for package-goods companies and retailers.

And that takes time. "Capturing and building the trust of your customers to give you the data takes some time," American Express' Ms. Chien says. "You're never done," says Mr. Rooney at Chrysler, which spent more than two years developing an infrastructure to provide the foundation for CRM. "It's a process that just goes on."

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