Our column in the September 1999 issue of DM Review discussed how much relationships have improved since CRM became a hot initiative for so many companies. Now, a year later, let's take a look at what has changed.

The good news is that many industries are making strides, yet many others continue to score only one out of four possible points. The bad news is that none have yet earned the top score of four.

While we now know that many of these suppliers are, in fact, investing in fairly sophisticated customer relationship management, customers continue to be treated substantially the same. They do not notice any benefits from these customer relationship programs because nothing appears to have changed in either business focus or at the point of contact. We continue to maintain that a CRM initiative can't really be effective if customers do not see the impact.

Retail and Catalog

In retail and catalog, the direct mail or online-based music, video and bookstores continue to lead the pack. These stores and catalogs continue to demonstrate the ability to collect and use a depth of customer behavior and preference information.

Pharmacies and grocery stores have moved up slightly. While card-based programs that gather all purchase data at checkout proliferate, electronic couponing is the primary driver. Customers "automatically" get the discounts advertised on shelves without carrying paper coupons, but store treatment of customers is not customized or personalized to customer lifetime value (LTV) or purchasing behavior over time. Every customer with the card receives the same benefit, regardless of whether they are frequent or only occasional shoppers.

Many of the major video stores and fashion retailers, however, have begun loyalty programs that facilitate data collection and offer individualized benefits. Interestingly, less valuable customers pay a fee for participation in some of these programs, demonstrating that these retailers are beginning to tier services and rewards based on customer value.

Dry cleaners continue to treat all customers alike; if you have a coupon, you get a discount. While the data is available for many with "express" services, very few attempt to look at long-term spending of customers and differentiate or personalize service for high-value customers.

Even with "pay at the pump," allowing for increased data collection at gas stations, there is still very little going on for this group.

Utilities

CRM initiatives are top priorities for every category of utilities from energy through phone, cellular, long distance and cable. Ongoing consolidation has also reduced the total number of companies. Still, for the most part, customers are not seeing the results of these efforts; and scores for these groups remain relatively low. This is generally because these initiatives are still focused on the technology aspects of CRM. While huge investments are being made in software and infrastructure, no changes are yet apparent in marketing or customer interaction.

  1999 Score 2000 Score
Retail and Catalog:    
Direct Mail-Based Music, Video and Book 3.5 3.5
Online Book and Music 3.5 3.5
Pharmacies 2 2
Grocery 1.5 1.5
Fashion Retailers 1.5 2
Video Stores 1.5 2
Dry Cleaners 1 1
Service Stations 1 1
Utilities:    
Phone Companies 2.5 3
Cable Companies 2 2
Energy Companies 1.5 1.5
Internet Servie Providers 1 2.5
Travel:    
Airlines 3.5 3.5
Hotels 2.5 3
Car Rental 2 2
Cruise Lines 2 2
Travel Agents 1.5 2
Finacial Services:    
Banks 3 3
Credit Card Issuers 3 3
Insurance Companies 2.5 3
Manufacturing:    
Car Manufacturers 2 2.5
Packaged Goods 1.5 1.5
Hardware/Software Manufacturers 1.5 2
Other:    
Fundraisers 2.5 2.5
Services (Lawn Care, Security, Pest Control, Cleaning) 1.5 1.5
Newspapers 1.5 135
Hospitals 1 1
Realtors 1 1

Figure 1: CRM Scores by Industry

The one exception appears to be in long distance, where major providers are more frequently using historical customer behavior and LTV to proactively address customer churn.

ISPs continue to collect massive amounts of data and, now more frequently, allow customers to tailor their home pages and the content they see. However, mass banner advertising is rampant with targeting only being attempted at the page level.

Travel

Airlines continue to score high, with hotels improving slightly. Both of these groups offer differentiated service at almost every point of contact based on a recognition of customer value. The rest of this category has seen no movement.

Financial Services

Financial services organizations have traditionally done a fairly good job of capturing and using customer data. Most in this category are dealing with the results of ongoing merger and acquisition issues and have had little time or resources available to concentrate on differentiating at the point of contact based on customer value.

Manufacturing

Car manufacturers have begun to take advantage of the Internet to communicate and interact with customers between purchases. While hardware manufacturers and software developers continue to be challenged by channel issues, they are beginning to use large customer and partner databases to tailor communications and develop loyalty programs targeted at best customers.

No changes in the whole of the "other" category ­ all collect data for record-keeping purposes, but do very little targeting or customization.

We continue to maintain that a customer relationship program requires an end benefit for the customers who are involved. Customer relationship management cannot be a one-way street where the vendor benefits from cost-saving targeting efforts or more efficient modeling applications. Customer relationship management requires a tangible end result that can be measured by customers.

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