CUSTOMER RELATIONSHIP MARKETING: Building strong relationships

Sep 01, 1999 9:30 PM  By

CRM moves b-to-b firms toward a customer-driven marketing dynamic

Every cataloger knows that the secret of long-term success is holding on to customers. And the best way to increase customer retention is to increase your knowledge of your individual customers, their behavior, and their needs.

For the larger, more sophisticated business-to-business catalog marketers, customer relationship management (CRM), today’s hottest marketing buzzword, is an attractive, albeit costly, way to achieve this. The CRM business methodology involves creating a common, integrated database from multiple input sources; using data mining and analysis tools to determine customer channel preferences and contact strategies; and providing widespread access to this information (see “CRM: More than just a buzzword,”below).

The degree of difficulty involved in moving to a CRM strategy can vary. For New England Business Service (NEBS), a $471 million cataloger of business forms and packaging supplies, implementing CRM first involved the daunting task of bringing together the individual databases of all 18 NEBS brands, including the Chiswick catalog of packaging materials and the Russell & Miller sign catalog. But the effort was worth it, according to senior vice president of channel marketing Joel Hughes. By doing this, “we understand what every customer is buying from every division,” he says.

Using its integrated 2.6 million-name-database, NEBS is now able to create “a contact management plan by customer to manage the amount of times we contact customers and the methods of contact, based either on past preferences or on channels that have been most successful,” Hughes explains.

Groton, MA-based NEBS also looks at customers’ purchasing patterns to understand what they buy, when they buy, and what business they’re in. For its best catalog customers, NEBS uses selective binding and ink-jetting to tailor catalogs to their individual needs. For customers who prefer electronic communication, NEBS is considering targeted e-mail messages, with the ultimate goal of reducing print catalog circulation.

In an effort to keep first-time buyers coming back, NEBS’s outbound telemarketers call each of these customers – nearly 200,000 a year – “to ensure that they’ve received the quality of service and timeliness of delivery that meets or exceeds their expectations,” Hughes says. NEBS also uses the calls to explain its goods and services, identify customers’ problems, and seek new product ideas.

Giving control to customers.

Insight Direct, a $1 billion computer marketer, has also recognized the power of CRM. For the past year, it has been combining all the databases of its outbound telemarketing, catalog, Website, and e-mail customers, says vice president of marketing Chuck Jarrell. “Our goal is to merge our database into something on our Website where our customers can access their own buying history and search our product database based on their requirements,” he says. “We’re working actively to move all that data to an environment where all our databases are talking to one another in a logical way.”

Insight has been using an Oracle database architecture to combine its databases and allow them to exchange or extract information to satisfy different types of business applications.

Outbound telemarketing and targeted e-mail programs are the focal points of Insight Direct’s customer communication program, says Susan Heywood, electronic marketing manager. Insight approaches CRM by using a combination of these and other customer contact strategies – namely catalogs and direct mail – to determine customers’ and prospects’ needs and how they prefer to be contacted. “Based on those needs, we offer an interface tailored one-to-one,” Heywood says.

While most marketers would say that CRM efforts are well worth the price, sophisticated programs, consisting of various technology modules, aren’t cheap. Heywood won’t reveal how much Insight spent to implement CRM, but she notes that computer programming costs “are a big component.”

As for NEBS, Hughes says that it’s difficult to determine its total CRM expenses, “because we have an enterprise-wide system that’s augmented regularly. But it exceeds $30 million annually.”

Customer relationship management is a more than a business school buzzword. It defines a strategic framework for optimizing the value of customer relationships over time. Here are just the basics of what’s involved in creating a CRM strategy:

- combining customer data from all touchpoints (channels) by integrating multiple databases and housing this information in a data warehouse; – making this integrated customer data available to all departments in the company;

- using data mining and analysis tools to segment and profile your customer base, and to identify upselling, cross-selling, and follow-up sales opportunities;

- determining how and how often to contact your customers and tailoring your offer contact strategies – from custom field sales programs to selective binding of catalogs – for specific customers.

Want to increase customer loyalty? Lend a helping hand to customers when disaster strikes.

At business forms and packaging materials cataloger New England Business Service (NEBS), a customer service rep is assigned to review daily news services nationwide. “If he sees that any natural disasters have occurred anywhere, he’s to coordinate through the Red Cross to find out which areas are affected,” explains senior vice president of channel marketing Joel Hughes. NEBS then calls up from its database all the active customers in those areas and immediately sends them letters offering free replacement of any NEBS products lost to the disaster or an extension of payment periods.