TECH SPECIAL

STROKING THE CUSTOMER

Companies are using the Net to track, and keep, their best clients

Brian Bergman May 21 2001
TECH SPECIAL

STROKING THE CUSTOMER

Companies are using the Net to track, and keep, their best clients

Brian Bergman May 21 2001

STROKING THE CUSTOMER

Companies are using the Net to track, and keep, their best clients

Brian Bergman

With obvious pride, Dan Evans shows off some of his Web magic. Evans, a senior vice-president with Calgary-based Critical Mass Inc., specializes in designing highly personalized Web sites for a series of blue-chip clients. There is one for Mercedes-Benz USA that allows buyers to customize their orders and comparison shop long before setting foot in a dealership for a test drive. Another, for Nike, lets you fashion your own footwear, right down to the style, colour, stitching and logo. But perhaps most intriguing of all is a site he created for Procter & Gamble, which asks consumers about their hairand skincare habits—and promises to hand-deliver a product suited to their particular needs. As Evans enthuses: “There’s a big warehouse somewhere with a whole bunch of jars of goop, and hundreds of chemists waiting for your order. It’s that personal.” “Personalization” is one of the buzzwords used to describe what Evans is talking about. But it’s also part of a much

larger Internet phenomenon dubbed— wait for it—“customer relationship management” (no one ever accused computer geeks of having a sense of poetry). Stripped to its essentials, customer relationship management—CRM for short—is a

sofiware-based approach aimed at allowing remote corporations to reach out and touch their clients as individuals. To its proponents, CRM represents nothing less than a revolutionary shift away from a century’s worth of mass marketing in favour of attracting and retaining high-value cus-

tomers, one precious buyer at a time. But while it is wrapped in the rhetoric of consumer empowerment, make no mistake: CRM is all about business. Big business.

Just follow the money. The industry expects worldwide sales of CRM software to jump from $8.3 billion last year to $26 billion by 2003, while revenues generated by CRM should more than double to $150 billion. Any way you slice it, that’s an awfully big pie. Which helps explain why so many companies are lining up for a taste.

According to the CRM gurus (of which there are many), businesses that have the most direct and constant interaction with their clientele—such as telecommunications services and financial institutions— have been among the first to see, and seize, the CRM advantage. But really, they say, there is hardly a company or service provider that couldn’t benefit from doing

some serious customer stroking.

“In the 20th century, the most valuable thing any company could make was a product,” says Martha Rogers, a Connecticut-based management consultant who has co-written several books on CRM. “But since the advent of the IT revolution, and from now on, the most valuable thing you can make is a customer.”

And she doesn’t mean just any customer. A key component of CRM is finding out who your most frequent and loyal customers are—and how to keep their business. “The fact is that six per cent of the cola drinkers in the United Kingdom consume 60 per cent of the colas,” says Rogers. “If I’m a cola company, I better make sure I can identify who those customers are.” In the case of a company like Mercedes-Benz, notes Evans, the Net makes it easy to track which owners are on their first car and which are on their 10th—and to shower the latter with perks like tickets to sports events in their home towns.

But CRM is also about building new customer loyalty. This is done, in part, by using software to concisely document all interactions between a client and a particular business, and making that data readily available to anyone in the company. For consumers, this eliminates having to end-

To proponents, CRM is a historic shift from mass marketing

lessly repeat earlier complaints or concerns; for corporations, it provides crucial information that makes it easier to service the client—and, of course, sell them more stuff. “What we’re talking about here is using technology to simulate person-toperson communication,” says Rogers. “From a company’s viewpoint, if I can get a customer to talk to me, I’m going to know something about him that my competitor does not, and I’ll remember that throughout my organization.”

Among Canadian companies employing

CRM is Vancouver-based Intrawest Corp., which owns 10 mountain resorts, including the hugely popular Whisder/Blackcomb. Using software developed by Pivitol Corp., also of Vancouver, Intrawest allows online clients to customize their vacations. They can book accommodations, pre-select ski equipment and procure lift tickets. “Our surveys show customers feel they are wasting less time and that we are paying more attention to them,” says Matthew Dunn, senior vice-president and chief information officer with Intrawest. At the same time, data gleaned online promise to take some of the guesswork out of future marketing strategies. “If I see that 30 per cent of our people are looking for three-night stays and we only offer fournight packages, then that’s something we have to fix,” says Dunn. “Previously, guests would make their own compromises, but go away not very happy.”

Another intriguing example of CRM in action is the way a Montreal Internet company, Aptilon Inc., is putting several international pharmaceutical firms in touch with physicians throughout North Amer-

ica and parts of Europe. Pardo Mustillo, vice-president of advanced solutions for Aptilon, notes that drug companies have traditionally dispatched sales representatives to doctors’ offices, a cosdy and time-consuming exercise. By contrast, Aptilon’s software tracks physicians’ queries on its Web site and in online forums, and uses that information to target those who might be interested in a particular drug. They then e-mail the doctor for permission to send more information on the drug, and if requested, free samples. “The advantage,” says Mustillo, “is that this can be done at the doctors’ leisure, anytime they go online.”

The sheer reach of the Net raises inevitable questions regarding privacy and whether CRM has more to do with manipulating, rather than managing, customers. Privacy legislation in Canada and the United States provides some protection, and many company Web sites now feature notices assuring clients personal information will not be shared or sold. Still, even some CRM proponents say consumers are right to be suspicious—and on guard. “There are so many promotions built around ‘I want your name, address and e-mail,’ says Dunn. “Well, no way. My time and attention is a commodity. So I understand that reaction.”

Despite the current hype about CRM, many companies fail miserably at adopting the software—often at great cost to their shareholders. Jerry Garcia, a partner with Accenture Inc. and a CRM specialist, describes the most common pratfalls: “They don’t change their business processes to go along with CRM. They don’t train their people correctly or reward them for doing it right. As a result, they are almost guaranteed to fail.” Even so, Garcia argues that companies that do succeed are raising consumer expectations about service—and forcing competitors to take the plunge into customer relationship management. Now, if they could only come up with a better name. G3