The Pitch: Relationships still the key - despite bad vibes from that technology

By GAYLE McGREGOR*

With all the antipathy directed at customer relationship management (CRM), businesses are in some danger of throwing the relationship out with the technology.

Much has been written about CRM and its shortcomings. So much so that it seems enlightened marketers are packing away CRM at the back of the wardrobe in a box marked "shoulderpads - late '80s".

Perhaps they are being too hasty. Maybe CRM has a bad reputation because we tried to use tactical technology to do strategic work.

Maybe CRM has a place: as the technology enabler of a strategic marketing plan, not the marketing plan itself. But maybe what was intended as an operational infrastructure took over from strategy and expensive technology replaced what could have been simple marketing strategies.

That's a lot of maybes. What will it take to convert them into something that businesses can rely on?

We all recognise the importance of building relationships with existing customers as a fundamental component of the marketing mix.

For marketers, CRM can be a powerful tool - and an occasional obstacle. Gartner Group estimates this year some 60 per cent of organisations will feel they overspent on CRM with no suitable results.

CRM is a tactical function that focuses solely on customers, establishing a better understanding of them with available information about their buying patterns.

But how can companies make best use of this customer information? That's where relationship marketing (RM) comes in. This is not just another name for CRM.

Our definition of relationship marketing, appraised by the Harvard Business School and recognised as "one the industry would do well to adopt" in Fred Newall's book Loyalty.com, is this:

"Relationship marketing is a business strategy that proactively builds a bias or preference for an organisation with its individual employees, channel partners and customers (and other key stakeholders) resulting in increased performance."

In short, RM is rooted in the firm belief that relationships always drive business results.

It is a philosophy about the relationships between specific groups of people - not technology - and creating an emotional and value-based connection between these people.

It is a top-down commitment to building solid customer relationships by satisfying the needs and wants of not only your best customers but all stakeholders, including employees and channel partners.

RM is a business strategy that extends well beyond the parameters of CRM - along with components such as communications, training, rewards and recognition.

Nevertheless RM strategies can be particularly effective when built on the top of a well-implemented CRM system - that is, one that provides a single view of the customer.

An RM strategy can maximise the marketing investment, making the best use of the information gathered and customer connections created.

Obviously there's a huge difference between the deployment of technology tools and the marketing-focused business practices.

RM makes marketing even more personal - and rewarding, because strong relationships will always drive positive business results.

Carlson Marketing

* Gayle McGregor is general manager of Carlson Marketing Group New Zealand.

* The Pitch is a forum for those working in advertising, marketing, public relations and communications. We welcome lively and topical 500-word contributions.
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