DIRECT AND e-MARKETING

Shifting CRM to CMR

Introduction

            With the changing business practices and consumer trends, businesses have continuously applied strategies that would help them adapt to these challenges. One of the known business alternatives is customer relationship management (CRM). Several literatures had already been published describing CRM’s purpose and advantage, particularly in the business field. Basically, this strategic option allows companies to gather important customer information, which they could use to improve their products and services. To achieve this goal, various business marketing activities had been introduced. These include direct and e-marketing. As customers become more and more diverse, the use of CRM for service enhancement has become more valuable as ever.

 

            Although several companies were able to achieve the benefit CRM can provide, the strategy has certain downsides just like other strategic options. Some then noted that perhaps, what is appropriate is to give the customers the liberty to have themselves segmented for the company; in this way, forced marketing will no longer be utilized. This then gave rise to what is now called as customer managed relations (CMR). In this paper, the function of CRM and its approaches will be described. The specific flaws of the CRM strategy will also be identified in the discussion. Finally, the reasons for shifting CRM to CMR strategy will be explained as well.

CRM: Direct and E-Marketing

            Customer Relationship Management (CRM) is a strategy that helps organizations to stay abreast with its customers’ needs and concerns (2000). In particular, CRM helps business organizations to respond in time and appropriately with the needs and concerns of the customers. At present, this strategy is more focused on the integration of information technology. The approach on CRM covers all processes that an organization employs so as to determine, select, obtain, enhance and retain its customers. Indeed, at present, CRM is regarded as the integration of business processes, technological solutions and advanced analysis, which enables companies to understand the clients from a multifaceted perspective.

 

            Despite the demands and requirements of applying this strategy, companies had been willing to integrate CRM into their operations due to its benefits. One of which is the establishment of committed customers. According to  (1994), committed customers are more than simple repeat purchasers as they have an emotional connection to the company. These emotions may come in the form of trust, liking and believing in the organization’s capability to respond instantly and effectively to a customer’s concern ( 1998). The company considers committed customers as valuable assets as they can possibly be a source of favorable word-of-mouth referrals. In addition, these customers are more resistant to competitors’ offers.

Aside from this effect, CRM provide a point of leverage to realize economies of scope. Committed customers are often amenable to line extensions ( 1998). Leveraging the customer base can facilitate cross-selling complementary products as well as selling up to higher quality substitutes. The ability of CRM to reduce costs has been explored as well. When CRM is applied along with other work processes, the strategy is capable of reducing churn or turnover in a company’s customer base.  Thus, better customer management can lead to higher sales and lower costs, higher buyer retention and lower customer replacement expenditures ( 1996).

 

Among the most important aspects of CRM application is direct marketing. This approach actually involves data mining processes wherein customer databases are developed; these in turn will be used by the company in order to acquire new potential markets. However, as direct marketing becomes integrated to CRM, its role to business has transformed as well. Direct marketing is no longer concentrated on acquiring new customers or identifying new markets; rather, it is now more centered in enhancing sales productivity while strengthening relations with existing customers.

 

With this reformed role, direct marketing can now be used to cultivate existing customers for customer base expansion ( 2001). The use of direct marketing practices in business has been integrated with CRM as businesses wanted to use a strategy that will help them build effective relations with the customers. This relations should be based on mutual trust, interest and healthy interdependence.

 

Direct marketing as a CRM approach had actually gone through other major changes. For instance, instead of measuring direct marketing success through campaign or transaction-based measurements like number of calls per hour, cost per thousand or response rates, CRM-based direct marketing now prioritizes various qualitative measures such as referrals, account penetration, product penetrations, customer satisfaction and loyalty ( 2001).

 

In CRM application, direct marketing is also used in order to reduce the number face-to-face contacts with the customers. Through this transition, unprofitable marginal accounts that cannot be achieve through face-to-face sales calls can be prevented. The use of direct marketing for the CRM strategy is also useful in establishing sustainable relationships with the consumers at a lower cost ( 2001). Thus, in general, direct marketing enabled businesses to form a more stable customer community and provide product and services that are of value.

 

Direct marketing as an application of the CRM strategy has been developed further as information technology was introduced for business utilizations. This development then gave rise to a more recent strategy known as online or electronic marketing. E-marketing is a powerful tool used by different business organizations around the world. It is defined as the process of achieving marketing objectives through the use of electronic communications technology.  (2001) have provided a 5Ss’ mnemonic for how the internet can be applied by all business firms for different e-marketing tactics.  These 5S’s are selling, serve, speak, save and sizzle.

 

            E-marketing is also known to be the online marketing strategy utilized by different company whose objective is to be the best company in their field.  In various countries worldwide, more and more business firms have been using e-marketing strategy in order to be competitive. From books, foods and beverages, automobiles and other products and services, various firms, irregardless of their company sizes, are trying to survive by means of e-marketing strategy.  Aside from being a promotional medium, the internet is a tool for marketing communications as well. Due to its interactive nature, the internet is an efficient method used in communicating with the consumers. Companies then started to concentrate on designing web-related strategies and employing interactive agencies that will facilitate their development of specific company web sites as part of their integrated marketing communication strategy.

 

Online marketing is considered to be the most expensive yet seems to be the most comprehensive marketing strategy that every company wants to implement and apply. At present, people, particularly those in the business arena, tend to engage themselves within the trend of rapidly growing technology so as to stay competitive. Upon surfing the internet, various companies have put up their official sites online for customers and potential consumers to view. Online or e-marketing is the latest marketing approach for any firm who wants to effectively market its products and services. In addition, e-marketing enables the company to be known worldwide since more and more people are able to access information derived from the internet. Within the business world, where competition is strict, internet marketing is one essential marketing strategy applied by most industries.

 

While e-marketing had been applied in order marketing goods local and internationally, this strategic option has also been used effectively by business operators in order to communicate with their customers. One common CRM technique based on e-marketing is electronic mailing; through this tool, companies can send in letters to the clients in order to obtain useful information in line with their specific product needs or preferences. This techniques has in fact been realized an effective instrument for driving revenues as well as obtaining customer retention and loyalty. While direct mailing techniques use the telephone, fax or send posts to gain information, e-mails offer lower contact costs ( 2000).

 

In general the use of web technology for the CRM approach paved the way for a more cooperative information flow that help marketers understand the needs of their customers more accurately. Perhaps to stress the function of e-marketing for CRM, an example can be used. The official website for Martha Stewart Living for instance, employs a two-part online registration form for members. One form asks about the users basic personal data (e.g. name, e-mail address, postal address), while the other form pertains to the user’s personal interests (e.g. Martha by Mail products, crafts, cooking, gardening). In addition, the site offers purchase discounts and other incentives to encourage users to submit a personal data through the site. The information gathered by the site on the other hand is used by the company in developing new products and customizing its services (2000).

 

Flaws of CRM

            Although the CRM strategy has its beneficial effects, the strategy is also considered flawed. Specifically, certain issues had been raised in relation to CRM and it use of both direct and e-marketing practices. One of the major issues related to this matter is the concern of the customers on privacy. With the application and popularization of the CRM strategy, customers have been aware that technology enables companies to track down their movements and that Web registries are used to collect customer data. However, without the provision of customer control, direct and e-marketing approaches can affect customer relations. For instance, direct e-mailing can be considered by other consumers as unwanted communication; as users do not have the control as to how this unwanted communication can stop, customers are often left irritated. Moreover, this issue often hinders others from filling up online forms or replying to company e-mails. Hence, it has been suggested that marketers should provide sufficient information about themselves; users should also be informed of the purpose for the data collection, how the information will be used and in what ways they could control the use of their personal information (2000).

           

It has been known that direct marketers develop databases in order to improve the companies’ services and meet the needs of the consumers. Nonetheless, the use of direct e-mails for the CRM effort allowed marketers to secretly obtain data from random users; this process is done as users browse the Web. This made consumers concerned as their personal data is being used for business without their consent. In a research done by  (2000) for Forrester Research, it has been stressed that privacy concerns in relation to the CRM strategy still continue. In particular, participants of the research indicated that they feel irritated and violated with this type of business strategy. Due to lack of security, other fear that this business strategy could bring them harm as well.

 

            In general, CRM systems are often based on standard software; this allow companies to implement the systems with increased speed of development and less need for development staff requirements. The use of standard software also enables system integrity maintenance by means of pre-coding and upgrades. Nonetheless, it has been noted that utilizing standard software also has certain flaws including problems on cost, flexibility, control, competitiveness and functionality (  2000). With this issue, the main root of the problem appears to be the assumption of CRM software developers that all companies share similar processes of business relationship management. In a study done by  (2001), the researcher identified the different issues related to CRM by analyzing some companies. Findings showed that due to the use of standard software for CRM, the users encountered problems on identifying specific customer characteristics . In addition, some of the companies also experienced difficulties in monitoring the services they had given to the customers as well as the progress obtained from the system.

 

            CRM is also flawed especially if the system is not applied with a holistic approach. This means that the system must be assimilated well to all the processes within the organization, from marketing to collections. This is said to be a challenge as most companies employing CRM have this tendency to view this strategy narrowly, seeing it as a mere tactical series of transactions. In contrast, the effective strategic implementation of CRM requires the information from all related departments; this will allow the effective and intelligent use of customer information, which will eventually lead to the creation of strong customer partnerships or relations (2000). The utilization of CRM systems in the company appear to based on the concept of relationship marketing but not on the features of the software, resulting to ineffective outcomes;  (1999) stated that this clearly stress the need for a holistic approach in applying CRM systems by involving the entire organization in the process.

 

            In summary, the flaws of the CRM system originates from its inherent feature and the insufficient skills users have for its successful application. From the flaws identified, it is then essential that a better system is developed; specifically, this should be focused on integrating greater control among the consumers. Not only will this help address the issue on privacy but will also encourage the customer to willingly give their personal details for the company’s use. In addition, the enhanced CRM system should consider adding features that would allow customers to control the use of these information. This then makes customer managed relation (CMR) a recommended strategic choice.

 

Shifting to CMR

            Customer managed relations or CMR is actually  part of CRM system and applied for the same purpose; the only main difference is that CMR put the consumers in control. Rather than asking the customers of their needs and preferences, the customers are the one who freely give the details for the company to use. The concept of CMR is actually supported by certain basic tenets. One of which is that in CMR, the customers are the owners of their information including their profile as customers, their transaction history and other relevant business interaction data. Aside from these, instead of getting information sources from the customer side only as with the CRM system, the application of CMR allow customer to gain important data about the company including its product lines, business units or departments and corporate account information. Finally, in CMR application, the experiences of the customers should be prioritized; the needs and feelings of the customers should matter to the company over the needs and objectives of the company. With the CMR principle, the needs of the customers should be satisfied first in order for the company to gain information. This is then followed by prioritizing the needs of the workforce and staff ( 2000).

 

            From this definition, it is clear how CMR is an enhanced version of the CRM system. Based from the raised issues, it has been noted that direct and e-marketing approaches tend to reduce the efficacy of the CRM system due to the consumers’ concern on privacy. However, with the CMR system, customers are given more authority on which detail do they wish to impart to the company and how they want these information processed. This makes the customers more willing to provide pertinent information about themselves. In addition, compared to CRM where the scope and objective of the system is not understood in universal means, the aim of CMR is clear – and that is to satisfy the needs of the customers and let them be the one to establish the connection between them and the company. Having clear objectives and understanding of a operational system is essential in business as this will prevent CRM issues such as uncoordinated application and lack on involvement. From this analysis, the function of CMR is addressing various CRM issues has been emphasized.

 

Conclusion

            CRM has become a common element among customer-oriented business organizations. While this system has been effective through the application of direct and e-marketing approaches, CRM still has certain flaws that companies must address. Specifically, privacy concerns, the use of standardized CRM software and the absence of the holistic approach are some of the main flaws related to this strategy. In general, CRM is flawed as it does not particularly involve its main target – the customers. On the contrary, CMR functions in the same way as CRM; however, unlike the other strategy, CMR gives more control for the customers and elicit a clearer company objective, making it an effective strategic choice to address various CRM issues. In conclusion, applying alternatives like CRM and CMR require sufficient analysis and support form the organization; users should then consider integrating these need when applying similar strategies. Lastly, customers are the companies’ sources of opportunities and resources, thus, businesses must ensure that their customer-oriented strategies are truly directed for the benefit of their main targets.

 

References:

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