CRM Relationship Marketing is fast gaining ground

Relationship marketing is not about having a buddy-buddy relationship with your customers. Customers do not want that.

Relationship Marketing uses the event-driven tactics of customer retention marketing, but treats marketing as a process over time rather than single unconnected events. By molding the marketing message and tactics to the LifeCycle of the customer, the Relationship Marketing approach achieves very high customer satisfaction and is highly profitable.

The relationship marketing process is usually defined as a series of stages, and there are many different names given to these stages, depending on the marketing perspective and the type of business. For example, working from the relationship beginning to the end:

Interaction > Communication > Valuation > Termination

Awareness > Comparison > Transaction > Reinforcement > Advocacy

Suspect > Prospect > Customer > Partner > Advocate > Former Customer

Using the relationship marketing approach, you customize programs for individual consumer groups and the stage of the process they are going through as opposed to some forms of database marketing where everybody would get virtually the same promotions, with perhaps a change in offer. The stage in the customer LifeCycle determines the marketing approach used with the customer.

A simple example of this would be sending new customers a Welcome Kit, which might have an incentive to make a second purchase. If 60 days pass and the customer has not made a second purchase, you would follow up with an e-mailed discount. You are using customer behavior over time (the customer LifeCycle) to trigger the marketing approach.

Let's say a customer visits your site every day and then just stops. Something has happened. They are unhappy with the content, or they have found an alternative source. Or perhaps they're just plain not interested in the subject anymore. This inaction on their part is a trigger telling you something has happened to change the way this customer thinks about your site and perhaps your service.

You should react to this and then look for feedback from the customer. If you improve the content, e-mail them a notice, and if the customer starts visiting again, the feedback has been given. The cycle is complete until the next time the data indicates a change in behavior, and you need to react to the change with communication.

Let's say this same customer then makes a first purchase. This is an enormously important piece of data, because it indicates a very significant change in behavior. You have a new relationship now, a deeper one. You should react and look for feedback.

You send a welcome message, thank the customer for the trust they have displayed in your site, and provide a second purchase discount. Then you await feedback from the customer, in the form of a second purchase, or increased visits. Perhaps you get negative feedback, a return of the first purchase. React to this new feedback and repeat the process.

All of the marketing decisions in the examples above were triggered by customer behavior, the actions of the customer as tracked by their activity (or lack of activity). This activity tracked over time is the customer LifeCycle.

If you can track customer LifeCycles, you can begin to predict them, and if you can predict them, you can target your marketing efforts at the most critical trigger points in the customer LifeCycle. This approach eliminates a lot of wasted marketing spending, and creates very high ROI marketing campaigns. You spend less money overall, and the money you spend is much more effective.

All of the above is accomplished by using the data customers create through their interactions with you to build simple LifeCycle models or rules to follow. The relationship marketing approach then uses this LifeCycle model as a timing blueprint to follow, targeting the right customers at the right time, with the most profitable offer.

September of last year, Marketplace featured an overview of Customer Relationship Management in which we told you about the benefits of CRM and local companies who were using it. Because the technology portion of CRM is developing at a rapid pace, it's unsure what the end future may hold. One thing is sure. Maintaining the right level of balance between customer and business relations is key.

The term Customer Relationship Management is complex, but it is basically the establishment, development, maintenance and optimism of long-term mutually valuable relationships between customers and organizations. The technology side is an enterprise-wide software application that allows companies to manage all of the elements of their customer relationships. Technology applications are designed to computerize sales and service functions, combine customer data and manage interaction with customers on all different points, such as marketing and sales.

Clifton Gunderson, LLP, notes in their Spring 2002 magazine that one of the main areas CRM is generally used for is to allow for timely marketing information. CRM is the perfect tool to assist with cross-selling. By tracking which services your customer is using at a certain time, you will be able to schedule marketing efforts to match the appropriate client needs at jus the right time. This will make you marketing efforts more successful, while your client doesn't become irritated by sales pitches that don't pertain to their needs.

The article goes on to suggest that you should be picky about selecting CRM software and that you will need to find internal employees who will take ownership in the CRM project and manage it to make it worthwhile. CRM, the article notes, is not a timesaving process, but it is a worthwhile process if used correctly.

The Database Marketing Institute's Customer Relationship Marketing on the Web by Arthur Middleton Highes says, CRM is active. The Web is passive. How can you combine the two? In CRM, we compile a database of prospects or customers. We append data to the file, and do testing and modeling. We discover who likes what, who responds to what, and who buys what. We develop targeted lists. The results are usually profitable because:

We save money by not marketing to those who have learned are less likely to respond
We make money by making relevant offers to those who need, or want, or can afford our products
We build relationships with our best customers, resulting in higher loyalty, retention, referral, spending rates and profits.

In the Web, most of these things don't work. We can't really use our CRM methods here. They don't seem to work. Or do they?

What we learn from studying the Web, is that the standard rules no longer apply. The one CRM technique that is transferable, however, is the relationship building. We no only can build relationships on the Web, we can do a better job of it, and a lower cost, than we have been doing with old-fashioned CRM.

An Innovative Application

Relationship marketing is about having an indirect conversation with the customer through analyzing their behavior over time. Relationship marketing uses the event-driven tactics of customer retention marketing, but treats marketing as a process over time rather than single unconnected events. The relationship marketing process is usually defined as a series of stages, and there are many different names given to these stages, depending on the marketing perspective and the type of business.

Using the relationship marketing approach, you customize programs for individual consumer groups and the stage of the process they are going through as opposed to some forms of database marketing where everybody would get virtually the same promotions, with perhaps a change in offer.

Tammy Miller of Virtualtech of Appleton, has been helping businesses in the valley with Web sites and customer relationship marketing since 1999. Tom Stilp of Arcways came to her company because he wanted to provide high resolution pictures on his Web site so customers could print them and have a high quality print of the staircases the company offers. This evolved into putting information on a CD for Arcways' Web site visitors - a 25-minute segment from This Old House television show. But Stilp wanted a more targeted approach and had the CD password-protected with the help of Virtualtech. This allowed Stilp to know how many people ordered the video, how many actually opened it, and how often it was passed around. Often the CD was given to architects to look at, but the architects had no password. With the password in place, Stilp could follow up with these architects to help market his staircases.

Much of Stilp's software begins for customers with search engines on the Web. A person looks up curved stairways, then goes to Arcways Web site, requests the CD, which then is recorded into a database. They are then given a password so they can view the CD. The Website also contains password-protected CAD drawings, so the person has to again register into the site.

Miller says, The marketing aspect of this software is great because customers can track who's asking for more information on the CD, who's actually looking at it and follow up with a sales call. It's the future, she adds. Miller's Virtualtech Web Site Design & Promotion Inc. serves many local clients including Park Plaza Valley Inn, Fox Industrial, Coldwell Banker and Schwab Realty to name a few.

One of the real pioneers in Customer Relationship Marketing is Arcway's Tom Stilp He says, It's a wonderful thing, especially when you have a specialty niche market, such as we do. Stilp says he used to rely on printed brochures for his product line which costs hundreds of thousands of dollars. So, a few years ago, he sat down and created a CD which was menu-driven and password-protected. The CD's contain streamlined videos, high resolution photos of his product line and hundreds of Auto CAD files. He says his customers spend hours on it educating themselves on his product line. With a brochure, they spend five to seven minutes, says Stilp.

We have a full-time person, Jenny Feldman, who just works on handling this project. We get hundreds of CD requests per week. We like to have instant turnaround, says Stilp. We like to fill requests the same day. It's that 'just-in-time' stuff.

Stilp says he is constantly updating the CDs with six to eight new job sites a month. It's a captive audience. We get 35 percent of the people who register every day. We then e-mail these names to our representatives for a really fast transfer of information, adds Stilp.

From these queries, we send a form letter to those who don't register with us. The majority register and the rest of the names we can dispose of.

The big key to all this is that we can chase down inquiries, says Stilp. Our business grew 28 percent last year in a slow market, so I know it's working. I think it's because we're willing to embrace technology, he says.

Arcways does only about 5 percent of its business in Wisconsin, and is a global player in the highend stairway market.

Stilp says he gives out thousands of CDs at the International Builder's Show in Atlanta. People always ask how much it costs, says Stilp. I tell them, put down all the literature you just picked up and it's free, Stilp says.

Arcways next project is to cross-market with Kinko's stores, where a customer can click a button on Arcways Web site and connect to print the photography. In minutes Kinko's picks up the order and will even E-mail the nearest Kinko's location to the customer. The nice part is that Kinko's is open 24/7, says Stilp. This is just the beginning, he says. Six other companies are thinking of forming an alliance with him.

It is virtual reality, says Stilp. Customers can have 3-dimensional rendering of the staircases and foyers in streamline video to choose the style best suited to them, he adds. The possibilities are endless. With the registration and protected password, we can learn what kind of house the person has, who that person is, etc. We can really profile the individual, he says.

In the very beginning, people told me, 'you're crazy - this password protection is no good.' But it's proved to be an incredible resource of information, because customers had to call us back before they could see the goodies, says Stilp. And, the CD aspect was good for us because it created a lot more educated people through our videos and photography. Homeowners are more than willing to buy direct.

Stilp says the CDs go through multiple hands. Arcways' full-time person on this job, Jenny Feldman calls up an architect or builder, for instance, and asks where he got the CD. That gives us the name of the architect and the builder, and it works out wonderfully, says Stilp.

Some people say it won't work because not everyone has a home computer. But we have high-end customers who buy our staircases so we're pretty sure they do have a computer, says Stilp. I don't think I'll ever go back to printed literature as a sales tool.

If you can track customer's, you can begin to predict them, and if you can predict them, you can target your marketing efforts at the most critical trigger points in the customer. This approach eliminates a lot of wasted marketing spending, and creates very high ROI marketing campaigns. You spend less money overall, and the money you spend is much more effective.

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CRM Relationship Marketing is fast gaining ground

An Innovative Application

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