Use Online CRM to Hook Customers

Its a gold mine just sitting there, waiting. You need to find out fast how you can tap into the value of your customer base intelligently by understanding-I mean really understanding-who your customers are and what they are buying. Then treat different customers differently. Sounds simple, but its hard to do well. Do you know who your high value customers are? Finding out means the difference between staying competitive or just being a mention in the sales history books. Who are the customers you havent seen in a while? Following up with them isn’t as easy as you think. Once you’ve identified them, you must develop a web strategy thats personalized to convert them from buyers or lookers into loyal customers. But how?

It used to be called marketing automation and database marketing, but apparently that moniker is being tossed in favor of the latest industry buzzword -- CRM. While many marketers know that "customer relationship management" is an age-old concept, an avalanche of new players are trying to bring a new cachet to customer service.

Their mantra: The Internet is the perfect medium! The epitome of examples is E.piphany, which recently launched version E.5 of its software and now considers itself a CRM player. The field of CRM wannabes is vast and includes companies ranging from those that merely deliver customer-support solutions to complex cross-media solutions, and micro firms as small as TopDog.

Every customer interaction is its own window of opportunity. Some companies know how to execute cross sell opportunities elegantly. Others don’t have a clue. As an example, do you know what products should be bundled together? Can your database, campaign management or CRM system determine which products are best for which customers or niche customers?

Today, many major companies are elbowing their way into this CRM space. The companies listed below are significant forces that are shaping the way you will look at your customers. All of them use the Internet to launch their CRM platforms.

Todays CRM Competitive Landscape

* E.piphany * MicroStrategy
* Kana * Broadbase
* Quintus
Action

* Siebel Insight
* Oracle * Xchange
* Nortel * Net Perceptions
* PeopleSoft * Prime Response
* Annuncio * Top Dog

Source: July 2000 E.piphany Inc./ICONOCAST

In the above scenario, players are arranged in a circle that moves clockwise from insight to action. Judging by the chart, ICONOCAST believes that Kana, E.piphany and Quintus are close competitors. Siebel is a "legacy player with a large footprint," coming from the sales automation frontier. Today’s Crm world is new versus old, skilled and entrenched.

Siebel, and other "old school" outfits as Vantive and Clarify, are faced with a world in which customers are increasingly shifting from a fully-assisted sales system to a self-help model. The old world also tends to be telephony focused, with new channels, such as Web commerce, tacked on. Many of these existing systems lack direct marketing focus or strategy and need to learn quickly. In contrast, the younger, more agile but less experienced players need to know how to manage a business.

The cost of entry is not cheap. Per module cost is $250,000.The "Integrated Suite" sells, in the $700,000 to $900,000 range depending on the number of seats. This does not even cover all the costs, such as consulting and data integration, and tie-in legacy systems if you are not a new click-only company. It is critical to create a fast ROI, if you plan on keeping up with the Jones.

Using CRM to Influence Retention

The real payoff for CRM is in retention rather than acquisition. This is because the return on investment for retention is usually several times greater than for acquisition. The most common use of CRM in retention is to create customer segments based on lifestyle and purchasing habits. An example of one customer segment breakout could be:

Day Time Shoppers
Evening Shoppers
Weekend Shoppers
Internet Shoppers
Catalog Shoppers
Cross Shoppers (members of two or more groups).

Good CRM requires a different communications method for each segment.

· The Cross Shoppers may, in fact, be the most profitable of the entire group. A typical Cross Shopper may use the Internet and also be a Weekend Shopper.
· Messages sent to Catalog Shoppers to encourage them to come in to the store may be a waste of your money and their time.
· It may be useful to advertise a members only evening opening just to the Evening Shoppers.

Another method of segmentation might be to combine the above categories with Lifetime Value and demographics to produce these groups:

Gold Customers
Business Professionals
Regular Customers
Sale Shoppers
Occasional Shoppers

So, what can you do with these categories? One major chain created categories similar to this based on their customers’ behavior. Using CRM, they created separate marketing budget for each group. Here is what might happen if a $2 million marketing budget were spent equally amongst all customers. Assuming that they used the money to craft personalized communications, created a very helpful web site, and improved their customer service, the overall result of their efforts could be a significant 12% increase in Lifetime Value.

Getting into the CRM world is not easy. For some C.E.O.s it is a mandate damn the torpedoes and full speed ahead, while for others it is a toe in the water. Either way, it’s the strategy for success in an uncertain future.

About the Author.

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DBMarkets@aol.com
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