A Little CRM a Day Keeps the Liquidator Away

Jason Burby

Updated · Jul 30, 2001

Dearly E-Loved,

We gather here to bid farewell to the online departed.

As they learned, simply tagging “.com” to the end of a catchy brand name does not guarantee success. Take, for example, some of the most recent high-profile e-commerce tragedies:

  • Pets.com: Put to sleep before its third birthday.
  • Priceline.com: Hung out to dry in 1999.
  • Boo.com: Scared stiff in summer 2000.

They're not alone. The failure of some of the most recognizable commercial Web sites has sent shock waves throughout the stock market and may soon have Silicon Alley denizens dodging their landlords. The problem is, most dot-coms and other Internet start-ups forgot the basics of business, the ABCs, if you will. But it's not too late for them to turn things around, provided they're willing and capable of understanding the value in three other letters: CRM.

The E-Blind Leading the E-Blind

The C in “CRM” stands for “customer,” and dot-coms would do well to realize that one unhappy customer in today's Internet age can bring an e-business to its knees in a nanosecond. An exaggeration, yes, but while the Internet has proved to be an extremely powerful shopping vehicle, it also means you're not only competing with the store down the street, but also with every dot-com around the world. Geography means nothing in cyberspace, and losing customers to your competitor is always just a click away.

Too many dot-coms focused on attracting customers and too few know how to keep them. Rely only on an awareness campaign to keep customers coming back to your site, and you'll end up with a highly recognizable URL that no one uses to make purchases. Take, for example, Pets.com — the site with the sock-puppet mascot. It won awards. It was recognizable by everyone. It did everything but bring a return on investment. So it took a one-way trip to the vet.

Banner ads used to reach millions of new and naove online shoppers, but now they've become so wallpapered on Web sites that they're almost invisible to consumers and, more often than not, waste advertising dollars, especially if no tracking technology is used to measure their bottom-line effectiveness.

Capture and Recapture

Seriously, e-commerce needs the help only CRM can give. If the predictions of analysts and pundits are any indication of CRM's importance, we'll all be better off in the not-too-distant future.

For example, one-third of American companies either have a CRM program of some sort in place or are planning on implementing one within the next 12 months, according to a recent Harte-Hanks survey. Among those that have not yet started a CRM initiative, 47 percent say it will be fully up and running within a year. And International Data Corp. estimates that the market for CRM services will balloon from about $40 billion last year to $90 billion in 2003.

To the uninitiated, CRM can sound confusing, but it's actually simple: If you're a marketer developing a marketing strategy based on existing information you already have in-house, you're already putting CRM principles into practice. CRM uses software to collect and analyze databases of existing customers and to locate purchasing patterns and brand-interaction behavior. When used correctly, CRM supports marketing programs and spends those precious ad dollars effectively.

With the data at your fingertips, you may determine that radio is the most effective means of targeting your customers. Or maybe it's an email campaign. Regardless, e-CRM can be used in any medium because it studies your customers' response to the messages you're sending them, no matter how you send them. It locates trends, records purchases, and can detail empirically the effectiveness of your campaigns.

Traditional marketers may develop a 30-second television commercial broadcasting “Pants for sale.” A CRM-based marketing program would determine who recently purchased pants and pinpoint who is most likely to make additional purchases. Then a personalized email would be sent saying, “Dear Bill [your name, in this case, is Bill], we hope you're enjoying your pants. Here's a coupon for 20 percent off a matching belt and socks. And don't forget to fill out our special gift card offered only to select customers.”

By providing a “gift card” in exchange for more information, we acquire additional customer data to improve our existing profile on “Bill.” It's a cyclical marketing strategy that uses your ad dollars efficiently by targeting your best customers and designs personalized messages.

Whisper, Don't Shout

In marketing, as well as in sales, customer relationships are everything, and CRM is the necessary foundation for building any good customer relationship. It turns your huge, cold, and impersonal Web site into a quaint little general store where the person behind the counter not only knows you, but also knows what you like. Since CRM software constantly keeps track of customers' purchases, you can use your ad budget more efficiently to develop personalized offers you'd expect from a local general store.

The way e-tailers have been marketing to online customers has been rude and crude. Loud advertising got them only so far. A shout may catch your attention, but you tend to listen intently when someone whispers. CRM-enabled marketing initiatives are more personal — the customer dictates how he or she wants to be touched. And, let's face it, a whisper — a personalized message for your ears only — is far more attractive than listening to a sock puppet.

OK, the sock puppet was cute, but because his masters couldn't deliver, he was doomed to the big kennel in the sky. There will be other e-fatalities, but those online and offline ventures that embrace CRM stand a good chance of ensuring their survival and their success.

Reprinted from ClickZ.

  • CRM
  • News
  • Read next