The Marketing Bureau

By Brian H Meredith
From the NZBusiness Magazine"Marketing Maestro" Archive.
First published November 2002

Once again, I find myself addressing a current marketing issue that is plain old fashioned common sense being packaged and touted as the latest in a long (neé, interminable) line of “new”, “breakthrough” “leading edge” business, management or marketing “ideas”, “techniques” or “panaceas” .

CRM (as the touts insist on calling it) or Customer Relationship Management, is neither new nor is it a breakthrough and it is certainly not leading edge. It is neither an idea, a technique nor a panacea.

Go to your favourite restaurant every Saturday night and spend up large and you’ll soon find yourself getting the royal treatment – greeted by name like a long lost friend, taken to a good table with a view of the bay and offered a drink or two on the house.

But start demanding items not on the menu, sending meals back to the kitchen, arriving late for your reservation and constantly quibble about the bill and soon you’ll be lucky to get a glass of water (at your table right outside the toilets!)

This is CRM.

In a small business with a small number of customers, business owners quickly (and instinctively) learn that the biggest profits can come from a small group of free-spending, easy to satisfy patrons and that cheapskates who tie up staff and other resources in return for very little profit should not be encouraged to return.

This is CRM.

What is new, however (and, as I have already noted, the CRM concept is not new) is the way in which the development of computers and related technologies now allow the biggest organisations with millions of customers interacting with them in a bunch of different ways (internet, email, call centre, face-to-face etc.) to begin to apply the same principles.

And at its core, the driving principle behind CRM is, itself, hardly new. It’s Pareto’s Law of Optimality which says that “80% of the outcomes result from 20% of the inputs” - the 80/20 Rule.

Call your bank about your cheque account and you may discover the person on the phone is looking at a screen that summarises your previous calls and displays information about your mortgage and credit card as well.

That’s CRM getting sophisticated. That’s CRM moving from the corner dairy (where it is informal and instinctive) to the banking world where it needs to be highly sophisticated in technology terms in order for it to work.

And somewhere in between the corner dairy and the bank is likely to be your business. The chances are that you have heard about CRM but the chances are also that you are still unsure of what, precisely, it is (concept? philosophy? tool? technology?)

To hear proponents talk about it, all a company needs to do is to buy and install a Customer Relationship Management system, a sophisticated approach to tailoring service to individual customers, and gathering valuable data at the same time.

At their most magnificent, these systems are big, integrated infrastructure systems and at this early stage of CRM development much of the effort has gone into computers, software and related stuff but with a big “but” – most organisations are not entirely sure what their systems will really have to do to build enduring and profitable relationships with customers.

While CRM can undoubtedly be valuable, it is also something of a fad. Everyone is flocking to it but not necessarily getting anything out of it. Many companies will fail to make the cultural and organisational changes necessary to make CRM work. Distinguishing profitable customers from unprofitable ones seems appealing but it can be counterproductive if the company uses that knowledge to drive away small customers who might become profitable in the future.

Is CRM for you? The concept certainly is - every business should have a Customer Relationship Management Strategy (even if its only in your head!). But the development of technologies, systems and the rest? Maybe. Maybe not.

Before you spend a cent on it, here’s my Step-by-Step Plan for the development of CRM in your business:

Step 1

Ensure that your business is truly market oriented on all traditional measures


Step 2

Set clear & quantifiable objectives for your Customer Relationship Management Programme

Step 3

Decide on what data any CRM “system” (which may, in some business, be manual and not require technology at all) needs to collect for you.

Step 4

Make specific decisions on what you will actually do with that data when you have it (i.e. what decisions will the data enable you to make)

Step 5

Outline a Relationship Marketing Plan (Who, What, How, When) that identifies, in broad terms, how you intend to set about managing relationships with specific groups once you have been able to identify them.

Then, and only then, are you ready to even begin thinking about the CRM “system” that you might need to enable you to:

•   Gather the data about who your customers are and how they behave

•   Implement a Relationship Management Plan designed to exploit the 80/20 Rule

•   Monitor the effect of your Plan and make the constant changes that will be required to keep it current and effective.


And at the risk of my Editor chastising me for self promotion, I strongly urge you to seek specialist assistance, preferably at the beginning of this process and certainly before you invest a single dollar in purchasing hardware, software (or even a Rolodex!)