CRM's role in the new consumer climate

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With traditional advertising struggling to adapt to a damaged economy and new consumer sensibilities after the Sept. 11 tragedy and the events since, Advertising Age asked some marketing pros whether customer relationship management will become an even more useful tool:

Patrick LaPointe, senior VP at Frequency Marketing, Milford, Ohio:

"Obviously, economic reins are being pulled in by every company. But it won't be long before companies begin realizing that now there's a real opportunity to rechannel marketing expenditures and invest in the infrastructure and business operations that you need in order to achieve efficiencies that are inherent in one-to-one marketing.

"One-to-one marketing has always been about economic leverage-taking the resources of an organization, its marketing expenditures, and making them much more efficient. ...

"We expect to see a period of time of tight purse strings putting a real damper on investment in infrastructure. But we expect that to loosen up in first quarter and see a fairly significant increase in the level of interest among marketers wanting to exploit the efficiencies inherent in one-to-one marketing.

"Now that more industries are beginning to see the worth of this type of marketing, they are starting to invest in two areas: analytical modeling to ascertain incremental customer potential and loyalty marketing-type programs to create value for the customer. Companies need to find out what type of customer they're dealing with. We're trying to map two dimensions for customers: present value and potential value."

Richard Hochhauser, president-chief operating officer at Harte-Hanks, San Antonio:

"We are bullish about CRM, but not because of Sept. 11 but rather because of the evolution of customer databases, the ability of the Internet information and real-time processing ... to form dialogue with customers. In a slow economy ... we know how much more valuable it is to retain a customer. ...

"I think [CRM] strategies are probably more effective [in a down economy] than they would have been [but] ... I think it will probably shrink faster than the other [marketing disciplines] because it might have been growing faster. ...

"[I]f I were to have to focus on some [CRM] specifics [in the current economy] I would probably choose data quality because [if] data quality is weak, then everything that follows it is contaminated by that weakness. The second thing I would probably choose is triggered marketing ... The ability to react to a significant customer behavior such as a [purchase] transaction or a deposit in a prompt and informed and relevant manner [by such means as e-mail or direct mail while the purchase is fresh in their mind] is critical in every environment but I think more easily understood in a soft environment."

Claudio Marcus, research director of Gartner Group's CRM practice:

"There's a real move to be supportive of customers and consumers in general. ... But even so, many marketers are looking to cut back on ad spending in general.

"In implementing CRM you have advantages that others don't. Rather than make cuts across the board, you can defend and nurture your most valuable customers. Shift resources from mass marketing to more CRM-driven initiatives. Leverage more of your existing interaction channel-sales force, call center, Web site-to deliver more of your marketing message to your most valuable customers. ...

"A down economic cycle is a good opportunity to invest in your marketing because not all your competitors will be able to afford to do so. If you've deployed CRM, you can defend your most valuable customers by giving them a high level of service. ...

"The most obvious industries that could benefit from [CRM] now are travel and hospitality. "

Jim Schultenover, VP-sales and marketing at Ritz-Carlton:

"In the luxury category, CRM is essential and always has been essential, so to say we are placing greater emphasis on CRM wouldn't be quite right. But with the extra pressures on hotels with staffing and costs, the commitment to CRM has absolutely got to remain. It's a one-customer-at-a-time situation, and to do that, you need human interaction. Despite hard times in the industry, we're not going to compromise our efforts to reach our customers. One-to-one marketing has always been important to our industry. ...

"We have staffs dedicated to monitoring new and repeat guests. It's not one computer program or one direct mailing. It's an ongoing live process. It's a combination of flagging people we want to meet on registration and have specific staffers dedicated to and responsible for guest recognition."

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