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Giving Up on E-CRM?

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Posted November 12, 2001 By David Gumpert     Feedback

E-CRM isn't dead. It just isn't being exploited to anywhere near its full potential.

It wasn't long ago that the Internet was going to change direct marketing as we know it. The vehicle for that change? Something called electronic customer relationship management, or e-CRM.

Quite simply, e-CRM would allow companies to instantly track and respond to customer actions in ways never before possible. For example, your favorite online bookseller could analyze your purchases and use email to keep you informed about new books coming out in your areas of interest. As the bookseller learned evermore about your tastes and purchasing patterns -- and its own margins on your purchases -- it could continually adjust its offerings to you. It would constantly expand sales to existing customers and grow the value of each of its customers.

The classic example of e-CRM in action was supposed to be

Now we hear from a Lehman Brothers Internet and media analyst, Holly Becker, that this vision has nothing to do with reality. She didn't quite say it like that, but in a recent New York Times interview she came pretty close:

"One of the biggest surprises to me this year has been that the customer relationships and brands at companies like eToys and Webvan, which both failed this year, ended up being essentially worthless. I don't think Amazon's brand is worth $1 billion. A retailer's brand is essentially worth the cash flow it produces."

Her conclusion: "I can't really think of anyone who would want to own Amazon [stock]."

So if I understand this correctly, the fact that eToys and Webvan crashed and their customer lists failed to make the brands attractive to potential acquirers suggests that e-CRM is highly suspect and also makes Amazon of dubious value.

But another factor may be at work here: namely, that eToys and Webvan failed to effectively use e-CRM to exploit their customer lists and thereby build their brands. And the same goes for Amazon, though perhaps not to the same degree as the failed companies.

The reality is that e-CRM is much more than getting people to give you their email addresses and then sending them promotional email newsletters. In fact, those are merely initial steps. E-CRM requires a number of other steps, these among them:

  • Putting the tools in place to assess what customers are doing on an individual basis. Managers need to be able to easily track customer and prospect Web site activity on both a micro and a macro basis. The key word is "easily." Too often, carrying out such analysis requires assessing and reconstructing logs. When the task is too difficult, it tends not to get done.

  • Being prepared with the appropriate promotions and content based on the assessments. Once companies know what customers and prospects are up to, they must be prepared to respond quickly, regularly, and in a customized fashion. More often than not, the responses of companies such as Amazon are the same to everyone -- free shipping for some amount of time or 15 percent off your next purchase, regardless of how or what you purchased.

  • Evaluating the data on a regular basis and making adjustments to promotions. Every action creates a reaction. Many companies commit to putting out a weekly or biweekly email promotional alert but neglect to adjust the alerts according to how customers are reacting. Some don't even cleanse their lists of bounce-backs. Is it any wonder that response rates drop steadily over time?
E-CRM isn't dead. It just isn't being exploited to anywhere near its full potential.

David E. Gumpert is president of Gumpert Communications Inc., a marketing communications and public relations agency.

Reprinted from ClickZ.

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