Now that customer relationship management has been actively in place for a couple of years, we thought it would be good to gain an understanding of who is making vast strides and who is struggling to make it work.

We've searched high and low over the last few weeks in an effort to find glimmers of progress and glimpses of customer relationship success. The table accompanying indicates what we found. The first column lists a number of different suppliers with whom we've had contact in the past three weeks. The CRM score is our assessment of each supplier's notable customer relationship management practices.

Note that there are significant differences in CRM practices within industry groups. For example, our experience with travel agents has been very different than our experience with airlines. Also note that several of these suppliers could be investing in fairly sophisticated customer relationship management efforts ­ we just don't know about them. This begs the question of what really qualifies as a customer relationship management effort. Do cost-saving applications which improve the efficiency of marketing programs or organizational efficiency and profitability qualify? If customers do not notice any benefits from a customer relationship program, is it really a customer relationship program?

We would 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.

Supplier CRM Score (4=high) Comments
Retail/Catalog:    
DM-based music, video and book clubs 3.5 Able to collect and use a depth of customer behavioral and preference data.
Online bookstores 3.5 Able to customize and personalize customer experiences based on profiles, stated and unstated preferences.
Pharmacies/drug stores 2 Card-based programs that gather data at checkout. Marketing programs somewhat relevant but often driven by the manufacturers.
The "corner grocer" (large supermarket) 1.5 Card-based programs that gather SKU-level data at checkout. This data is used for market basket analysis and business reporting, most often by the manufacturers rather than the grocers. This data does not seem to be used to tailor future customer experience on an individual basis. Trigger-based competitive couponing (generally funded by manufacturers) at checkout based on products purchased during the current shopping experience, not on individual characteristics, behavior or value.
Fashion retailers 1.5 Limited individual data collection or application. Mostly mass-marketing.
Video stores 1.5 Also major data gatherers on everything I watch. Have not provided any individualized benefits to date.
Dry cleaners 1 Varies in terms of data collection or use. Some offer a card-based "express service" for added convenience and data collection, but limited use of the data to segment and customize service based on customer value, frequency or individual requirements. Weekly express service at my dry cleaner, however, didn't eliminate the requirement to provide a paper coupon each time, despite weekly spending in excess of $65.
Service stations 1 Very little going on here. Although some major gasoline companies are collecting the data, there have been few attempts to use it.
Utilities:    
Phone companies 2.5 A lot of data on local, long distance and a variety of other telecom services. Use data somewhat to determine contacts, although product lines/business units often not coordinated, primarily due to regulatory issues that require companies to gather customer permission (CPNI). Spend significant CRM $ on reactivation.
Cable companies 2 A lot of data on customer interests and viewing habits (genre, day of week, time of day) but no tailoring of offer or contact strategy. Mass marketing employed for upgrades (often funded by the premium channels) frequently encourages higher levels of churn.
Energy companies 1.5 Mostly data-driven acquisition efforts; mass mailings.
Internet service providers (ISPs) 1 A lot of data; just not used.
Travel:    
Airlines 3.5 Sophisticated data collection. Heavily focused on best customers; meaningful customer information at most points of contact; several data-driven applications with best customers.
Hotels 2.5 Data collection; often a lack of data at key points of contact. A few applications other than base-level recognition.
Car rental agencies 2 Data collection, but very limited use of information in driving customer relationships.
Cruise lines 2 Sophisticated data collection; hampered in usage by concerns over channel conflict. Have not developed strategies to cooperatively share information with agents for targeting and relationship building.
Travel agents 1.5 Surprisingly little done here relative to the wealth of information they capture; data often not archived past two to three months.
Financial Services:    
Banks 3 On top of data collection; significant variation in data-driven applications including customer valuation and relationship building.
Credit card issuers 3 Naturally good at data collection; typically use this data at all key points of contact.
Insurance companies 2.5 Sophisticated data collection; applied to some business and marketing decisions but more often based on risk management than CRM. Becomes more difficult with agent-sold policies.
Manufacturing:    
Car manufacturers 2 Collect data up front for warranty and recall purposes; have not traditionally maintained ongoing relationships. Some of the newer upscale manufacturers promoting ongoing service and relationships through the dealers.
Packaged goods manufacturers 1.5 Limited ability to collect data due to channel issues. Some efforts succeeding with "high-end" packaged goods categories.
Hardware/software manufacturers 1.5 Limited ability to collect data due to channel issues for many. High-priced products requiring upgrades justify relationship expenses.
Other:    
Fundraisers 2.5 Very large differences in CRM activity, from very sophisticated to mass.
Services: lawn care, security,pest control, cleaning 1.5 Low level of sophistication but very actively pursue tactical targeting programs.
Newspapers 1.5 A proven mass media; somewhat difficult to make targeted circulation equation work. Targeted advertising as key application.
Hospitals 1 Collect data for record-keeping purposes; do not use it to actively market ancillary services
Realtors 1 Limited information collection and application due to decentralization.

A notable trend in the business establishments listed in the table is that those who have significant differences in customer spending tend to invest more in customer relationship initiatives. An example would be the airlines. The dollars that an individual customer spends with the airlines range from under $100 to over $100,000 per year. Therefore, it is in the airlines' best interest to identify the high rollers (or flyers) and invest in keeping them happy. The major carriers know your annual and lifetime miles at the ticket counters and on the 800 number phone lines. The gate agents can review a history of your recent flight activity and whether those flights were on time. The flight attendants have pegged the frequent fliers throughout the plane and are able to give them preferential treatment. On a flight last month, I received a note from the pilot thanking me for my business. The airlines know how to use customer information to your advantage and, in turn, to their advantage ­ so it is a win/win relationship.

What if all companies knew how to use the information about you that they have been so feverishly collecting?

  • Would the major hotel chain have to ask "smoking or non" with each check-in?
  • Would the bank be treating like you just like everyone else?
  • Would the grocer be churning out coupons on a somewhat knee-jerk basis?
  • Would the typical retail shopping experience feel like a mass frenzy?
  • And, would you be increasingly frustrated with the application of the data they have collected?

The answer is a resounding no. Customer relationship management will be raised to a new level when marketers understand that it is a two-way street and that they have to use the information that they are collecting to improve customers' everyday experiences.

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