Customer relationship management is promising to change the infrastructure of major corporations and transform the marketing world.
The idea is time-worn: Focus on a customers' needs and preferences. Yet its optimal use remains a vision.
No one can even agree on its definition. Variations are manifold, ranging from the next step in database marketing to an entire philosophy for doing business -- a holistic approach that seeks to interact at every touchpoint with the customer.
By any descriptive -- relationship marketing, enterprise customer management, customer relationship marketing, customer value enhancement -- the process has picked up steam because of the fragmentation of media, increased channels of communication and consumer choice availability.
For many of those reasons, consumers now have more control over what they want from companies, how a product or service is to be delivered and how they wish to communicate with the marketer.
Conversely, many companies are seeking to establish as direct a dialogue as possible with customers.
"We're seeing CEOs mandate the plan to get closer to the customer," says John R. Bingle, chairman-CEO, Wunderman Cato Johnson, a unit of Young & Rubicam, New York.
An example is Day-Timers' debut of "Personal Pages," a digital printing technology that allows the marketer to preprint each customer's personal specific dates, such as loved ones' anniversaries and birthdays in an appointment book before it is shipped. Customers submit information via Web site, mail or phone.
"Mass marketing is out, and mass customization is very much in," says Dave Clark, senior VP-sales and marketing for the Allentown, Pa., company.
Database integration is often the first step in the customer relationship management process. Tessera Enterprise Systems merged Eddie Bauer's separate retail and catalog databases to help the marketer become more customer-centric. Tessera says relationship marketing at its purest not only involves a technological infrastructure but an information infrastructure, a business process infrastructure and the adaptation of an entire organization around these infrastructures.
Customer relationship management is the process a company goes through to manage its entire relationship with a customer, says Rob Smith, president of Focalpoint Marketing, Herndon, Va., a relationship marketing agency. Marketers -- including some of his customers, Coca-Cola Co., Compaq Computer Corp. and McDonald's Corp. -- are beginning to shift from maximizing share of market to maximizing share of customer.
He adds that although many marketers might describe the customer relationship management shift as involving increased customer loyalty, greater frequency of purchase, more cross-selling and up-selling, this view is limited. It speaks to customer transaction and not to the exchange of value over time between marketer and customer which deepens loyalty.
COMPAQ PLAN UNDER WAY
Scott Berg, manager of marketing intelligence and communications for Compaq, says Compaq is in the process of implementing customer relationship management.
"We want to create one giant warehouse where all our information resides, and then have analytics, sales force automation, data mining, and predictive modeling toolsets that feed off of it," he says. "Each one of them basically 'talks' to one another."
Most agree no one is actually practicing customer relationship marketing just yet. Mr. Bingle says some companies are doing parts of it but there is no one offering the end-to-end solution." He notes it requires substantial integration into a company's operating and financial systems, as well as having a profound impact on the way companies distribute product.
VISION OF POSSIBILITIES
"It's a vision of what we can do with all of this modern technology to change the nature of how we serve the customer," says Rick Barlow, president of Frequency Marketing, Cincinnati. "It'll take at least five years before we have enough examples of the practical applications of that theory to create a genuine trend in that direction."
Melinda Nykamp, president of Nykamp Consulting Group, a consultancy that specializes in customer relationship and database marketing, says the buzzword will change many times long before companies are in full customer relationship management mode. She favors "contact optimization" over customer relationship management to describe the discipline.
"You're not managing customers," says Ms. Nykamp. "It's maximizing your contact