If your ear has been even marginally tuned to the latest e-business buzzwords, you've probably heard three letters repeated with increasing frequency. Those three letters are CRM and they stand for Customer Relationship Management.
CRM marketing came back in a strong way with many large corporations in the mid 80's. Stan Rapp and Tom Collins book 'The Great Marketing Turnaround" showed how it was possible to market to individuals. Slowly, marketing started to reverse a 80 year trend and moved away from preaching to the masses and back to developing one on one relationships. Accessibility to databases and refinement of data mining techniques allowed marketers to get to know their customers better than ever. Needs and hot buttons were identified. Suddenly, we weren't selling to a great faceless mob. We were selling to one customer at a time, and, more importantly, we were listening to them.

Back to the Future

CRM was a revolution in marketing. The ironic thing was it was a return to a form of marketing that has been around for thousands of years. Prior to mass media, we had to market to one person at a time. We had no choice. Mr Jones, the proprietor of the general store, knew his customers intimately. He knew their lifestyles, their motivation, their buying history, their tastes and their needs. He didn't gather this information through scientific studies or research surveys. He communicated with them. He talked, they listened. They talked, he listened. It was the oldest communication model in the book. One to one, intimate, personal, direct and effective.

When mass media came around, Mr. Jones realized he didn't have to sell to one person at a time. Advertising allowed him to talk to hundreds, thousands or even millions of customers at once. He could broadcast the benefits of his product through newspaper, radio or television. It changed the way we did business. We reduced our knowledge of our customers to the lowest common denominator and tried to get our message out to the biggest slice of the available market possible. While the efficiencies of this communication model offered great potential to the marketer, there was one fundamental flaw. Mass marketing, by it's very nature, is one way communication. We can talk to our customers, we just can't listen to them. The relationship with our customer was sacrificed on the altar of broadcast advertising.

In the mid 80's, advances in computer and database technology gave marketers the tools needed to maintain vast amounts of information on thousands or millions of clients. Suddenly, those details that Mr. Jones kept in his head and allowed him to build strong one to one relationships with his customers could be stored on computer. It made relationship marketing practical again. The Golden Rule of Customer Relationship Marketing is: The more you know about your customer, the stronger the relationship can be.

One to One on the Web

Now, with websites being identified as a prime marketing tool and sales channel, customer relationship marketing is being integrated into many company's e-marketing plans. The fit is perfect. This is a marketing match made in heaven!

Imagine a store where the minute a customer enters, you assign a employee to discretely follow them. The employee would record every movement the customer makes. You'd track which departments and aisles they went to, which products they looked at, how long they looked at each product, even if they picked a box off the shelf and read the package labeling. Of course, every purchase would also be recorded. The next time that customer visited you, you could rearrange the entire store so that the products they're most interested in would be right at the front of the store when they entered. You could put an item on sale instantly. If the customer picked up one product, you could instantly suggest another complementary product. It's a merchandisers dream, and it's very possible on the web.

Websites are built to track every path that a visitor takes through the site. The customer leaves a trail that indicates every product they look at and how long they looked at it. This is where CRM becomes especially powerful. When you collect this data and overlay it with the customer profile you've built, which indicates the customer's demographics, lifestyle, likes and dislikes, needs and desires, you have an incredibly valuable marketing tool. Suddenly, you can identify trends, forecast sales, purchase specifically for a select group of customers, arrange your store to meet the customer's needs and proactively sell to them.

The third component of this potent e-marketing triad is e-mail. Through data mining and customer relationship marketing, you have a clear picture of what your customer's needs are. You know you have the product or service to meet those needs. Now, all you require is an efficient communication channel to make the customer aware that you have just what they're looking for to meet their needs. Presto…e-mail! It's instant, it's cost effective and it's easy. A word of advice here, however. Don't bulk e-mail if you can help it. Take the time to impress your customer with a personalized message. Relationships aren't built with impersonal bulk produced messages. They're built by showing the customer you've taken the time to get to know them. Treat your customers as you would a friend and you'll never go wrong.

Get Pro-Active!

Customer Relationship Marketing gives you the opportunity to be pro-active in your marketing. Once you identify your customers' needs, you can take the initiative in meeting those needs. Let me offer a few examples. With our business, we often fly between Vancouver or Seattle and Los Angeles. Being frugal (read cheap) business people, we often visit the airline's websites to see what web specials they have between these destinations. These airlines have the ability to track these visits. They have also gathered information about us when we signed up for their frequent flyer programs. Now, they can e-mail me with specials between the airports we usually use, giving me the opportunity to quickly book online and save.

Another example. We purchased a number of books from Amazon on the Disney Corporation's management style (very good reading, by the way). It's apparent that Amazon has begun to build a customer profile for me, because now when I visit their site they present me with suggested titles based on my previous purchases. They could go one step further and send me an e-mail offering me a significant discount on one of these titles, as an incentive to get me back to their site. By the way, despite some of the flack that's been thrown Amazon's way as the most visible of the dot com start ups, they do have a very impressive CRM infrastructure in place. Take a look, you may pick up some ideas.

To be honest, I haven't seen many examples of this pro-active approach to marketing out there. I suspect it's because many e-marketers are reluctant to offer the discounts that would make this a truly effective marketing tactic. I have my thoughts on this too, but I believe that will have to wait until next week's NetProfit.

Until then, think "Relationships"! And here's a great place to start:

http://www.destinationcrm.com/