Essay Examples - Marketing Essays
Up to 70% of customer relationship management (CRM) fails to live up to expectations.
Both Relationship & One to One Marketing have failed to live up to expectations. What are these expectations and how have they failed to live up to them?
CRM can succeed if carefully planned. (Lauchlan, 2003) This statement gives one of the clearest views of how organisations' relationship, and one to one, marketing, both of which fall under the CRM umbrella, fail to live up to the expectations. One of the immediately obvious problems is that these styles of marketing rose to prominence during the dotcom boom of the late-1990s when the answer to any technology problem was to throw more money at it.
Typically, that meant buying more licenses for yet more package solutions from various applications software vendors, deploying them and thinking this meant that an organisation was now using relationship and one to one marketing. The market has moved on from such thinking, and there is an increased awareness that implementing effective relationship marketing involves a lot more than buying an off-the-shelf package.
On the technology side, unless there is considerable planning and thought at an early stage, objectives will be unclear and elusive, with there being important factors to take into account before any software is bought, let alone deployed. Jim Parish, strategic relationship manager at collaborative software firm Centra Inc., claims that, In any customer management or marketing scenario, companies should remember the importance of preparation by outlining the four Cs. First is content, which means finding the right information.
The second C is collaboration. The third C is community, since sharing experience from peers is important in any business context. Getting the intellectual input from others is a fundamental part of the collaboration exercise. The fourth C is consultancy. (Lauchlan, 2003) Perhaps the most important of the four Cs is content, with firms too often racing to clamber on to the relationship marketing bandwagon by rolling out packaged applications without thinking first about the availability, accessibility and quality of the data in the organisation. Technology based relationship marketing typically entices companies into believing that they can more effectively target their customers, and that customers will be more likely to heed the 'buying advice' of an organisation which has more of their shopping habits in its database.
However, in a typical organisation, customer data is scattered across multiple systems such as spreadsheets or databases, or in the salesforce's heads, and often in incompatible formats. Without the data, it doesn't matter how good the applications themselves are, customers will be unlikely to listen to a companies' buying advice if it has no relevance to their own needs. (Lauchlan, 2003)
The benefits of developing customer relationships are well established by firms such as eBay and Amazon.com. However, a well-intentioned relationship marketing strategy may also fail because of poor implementation, as well as planning. Colgate and Danaher (2000) looked at the effects of implementing a customer relationship marketing strategy, specifically examining the implementation of a personal-banker strategy as a means to developing customer relationships in the retail banking industry.
The authors show that an 'excellent' personal banker can increase overall customer satisfaction and loyalty compared to customers who do not have a personal banker. However, a poorly performing personal banker can result in lower overall customer satisfaction and loyalty than if no personal banker had been available. Moreover, the effects seem to be asymmetric, with the negative effects of a poor relationship strategy exceeding the positive benefits of an 'excellent' strategy, thus for a wide ranging strategy, the bad effects of the negative parts can outweigh the good effects of the positive one.
However, Bennett and Barkensjo (2005) made an interesting finding, showing that relationship marketing was found to represent an effective weapon for improving both relationship quality, and beneficiaries' satisfaction with service provision, in the charitable giving industry. Charities that listened to their beneficiary clients, by encouraging feedback, and which interacted with them, one to one, on a regular basis were regarded as being exceptionally good at relationship marketing, and relationship quality, as well as actual service quality, induced beneficiaries to want to recommend a charity to other people and to engage in positive word-of-mouth. This shows some of the important potential benefits which can be gained from pursuing effective relationship and one to one marketing strategies.
As a result of some of these effects, in recent years, organisations have begun to realise the importance of knowing their customers better. Customer relationship management is primarily an approach to managing customer related knowledge of increasing strategic significance. The successful adoption of IT-enabled CRM redefines the traditional models of marketing interaction between businesses and their customers, both nationally and globally, and thus potentially enables one to one marketing on a large scale. It is regarded as a source for competitive advantage because it enables organisations to explore and use knowledge of their customers and to foster profitable and long-lasting one-to-one relationships.
However, these expectations are not always met, as an exploratory survey, conducted in the UK financial services sector by Karakostas et al (2005) shows. This survey discussed one-to-one marketing practices and expectations, the motives for implementing it, and evaluated post-implementation experiences. The results show that, despite the anticipated potential, the benefits from one-to-one marketing are rather small, perhaps due to the size of the expectations
As part of their discussions on how organisations can create an integrated cross-sectional and cross-organizational approach for acting on customer's perceptions of products and services, Goodwin and Ball (1999) discussed the expectations around one-to-one marketing. With increased customer expectations, the new business environment includes rapid product changes and increased competition. Based on the success of one-of-one marketing programs, customers expect flexible and customized solutions. Hewlett-Packard (HP) CEO Lew Platt has a vision for creating customer intensity everywhere. HP and other organizations also committed to a strategy of delivering what customers' value.
It would be achieved by focusing on three strategies: a true passion for customers; organizing around customers; a deep understanding of customers. (Goodwin and Ball, 1999) Providing increased value for considered as the key strategy for business and marketing success, and the majority of marketing companies succeed by providing superior customer value. Value, in its simplest format is simply product or service quality; however the customer defines it as quality offered at the right price. Industry research has shown that the customer's perception of value is their primary buying decision factor (Goodwin and Ball, 1999) and thus another way relationship and one to one marketing can fail to meet expectations is by setting customer expectations of value too high.
An interesting article along this line, by Sawyers (2005), informs that Jim Parley, vice president of Scion, the youth division of Toyota Motor Sales U.S.A. Inc. has revealed that young car buyers want all features in the automobiles, and that Scion is struggling to give it to them. Toyota introduced Scion in California in mid-2003 and took the brand national last year, on the back of a high level of interest. Farley recently announced that the company is considering what the next generation of Scion vehicles will be, whilst being force to consider that Scion's customer base demands choice, has high expectations about quality and customer service and prefers one-on-one, nontraditional marketing. And they want all of that for about $16,000. (Sawyers, 2005)
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In conclusion, the marketing industry is one that's facing change on a massive scale: where marketing used to be about segmentation, the Four Ps and mass advertising, now it's all about one-to-one, value networks and integrated communications delivered by state-of-the-art technology. (Dunne, 2004) As such, it requires a new blend of aptitudes and skills, one that various organisations are still trying to figure out.
Most of all, it requires people who have the ability and the attitude to embrace rapid change, accept that they now have to carefully manage customer expectations, and ensure that they are putting in real, valuable, effort, rather than simply implementing technology solutions at the behest of consultancy pressure. Currently, the majority of the industry is failing to achieve these standards, and this, more than anything else, explains how and why the new marketing tools are failing to live up to expectations.
References
Bennett, R. and Barkensjo, A. (2005) Relationship quality, relationship marketing, and client perceptions of the levels of service quality of charitable organisations. International Journal of Service Industry Management; 2005, Vol. 16, Issue 1, p. 81.
Colgate, M. R. and Danaher, P. J. (2000) Implementing a Customer Relationship Strategy: The Asymmetric Impact of Poor Versus Excellent Execution. Journal of the Academy of Marketing Science; Vol. 28, Issue 3, p. 375.
Dunne, D. (2004) Marketer, heal thyself. Marketing Magazine; Vol. 109, Issue 18, p. 9.
Goodwin, R. and Ball B. (1999) Closing the Loop on Loyalty. Marketing Management; Vol. 8, Issue 1, p. 24.
Karakostas, B. Kardaras, D. And Papathanassiou, E. (2005) The state of CRM adoption by the financial services in the UK: an empirical investigation. Information & Management; Vol. 42, Issue 6, p. 853.
Lauchlan, S. (2003) Planning is essential to success of CRM. Marketing (UK); PHASE ONE: PRE-PROJECT, p. 4.
Sawyers, A. (2005) Scion wants to be cool for its cool customers. Automotive News; Vol. 79, Issue 6131, p. 112.
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