Call it the Goldilocks approach to customer relationship management. At the American Automobile Association (AAA), each of the 81 clubs can pick the CRM approach appropriate for its size and member base.
But all of them, from the small clubs to the very largest, have one element in common. "We have learned that to invest in something with three to four years ROI doesn’t work," Daniel Matheiux, the association’s director, marketing technology said during a panel discussion at the National Center for Database Marketing Winter 2001 conference in New Orleans.
Matheiux advocates introducing programs that show incremental results. AAA has broken the clubs into four tiers (small, small-to-medium, medium-large and very large) and tailored CRM efforts to meet their needs. As each club’s sophistication grows, it can be migrated to new CRM efforts.
The smallest clubs, with limited knowledge of their customers, were initially offered AAA’s Insite Lite program. For them, the ability to bring their customer base onto a desktop computer and perform basic segmentation was a big step forward.
The largest clubs required only that the national organization cut a sweetheart deal with software provider Epiphany, as they had budgets and staffs to meet their CRM needs in place.
The two middle tiers had the customer potential, but were not mature enough to devote large amounts of money to CRM efforts – or to a host of Epiphany products. For them, AAA developed Insite and AAA Direct, two customized product suites.
These products gave clubs access to predictive response analyses modules, enabling them to evaluate campaigns before they went into the field. Mapping software enabled them to demonstrate penetration within a geographic area, strengthening their ability to create partner programs with outside entities. And campaign wizards allowed them to track and limit promotions to individuals.
So far, 35% of AAA’s clubs, representing 40% of the organization’s 45 million members, have enrolled in one or another strategy.
But implementing a CRM strategy does not come without its perils. Matheiux stressed that having an open system, one that could be modified to provide optimal results from a campaign engine – was a necessity.
There were other yellow flags raised during the panel discussion. While its official title was "Case Studies in Identifying and Implementing CRM Technology", as moderator Geoff Ables, principal of Customer Connect noted, it could just as easily have been called "Tales from the Trenches."
For Prodigy, CRM goals included increasing measurement abilities and customer value at all touch points, such as its call center. Every time an individual dialed in, it racked up costs. Was it money well spent?
It depended on the customer. For a subscription-based Internet service like Prodigy, customer value was based on longevity and churn rate. Those that had not called much but were long-time subscribers were pushed to a service representative.
"Someone who has used three free months repeatedly can stay on hold," Edward (Ned) Cullen, director, database marketing and research, Prodigy Communications, told an amused audience.
Cullen cautioned buyers to start small with a solid data warehouse that drives marketing intelligence, as opposed to an all-encompassing enterprise tool. As with AAA, marketers can incrementally add tools as needed.
"It’s not always about technology. It should be grounded in sound strategies and tactics," Cullen said.
Paul Briggs, director, customer marketing for travelocity.com, agreed. "When suppliers call, be sure to ask them what they mean by CRM," Briggs said. "Ask them about a business problem they have solved recently. If they are not doing something that is of concern [to your plans], get them off the phone."
According to Briggs, CRM software objectives are fairly basic: marketers should seek to manage the customer lifecycle thorough management of individual purchase cycles, thereby increasing customer lifetime value, and providing additional value to the customer. Analyzing behavior during the entire cycle allows a marketer to tailor messages to the different stages of the sales cycle.
As an example, Briggs described how Travelocity watched a customer in San Antonio use its site. At first the customer casually looked at fares to London. The customer then began researching London-to-Paris trips, and finally began focusing on a specific departure date.
Even without a sale, Travelocity could offer a fare watch program that will alert the customer to low rates. If the traveler has indicated the number of people traveling, and whether or not children are traveling with them, Travelocity could offer vacation packages or ancillary services such as transportation, providing extra value to the Web surfer, and increasing the likelihood of a sale.
Investing in a data warehouse that would support such a program is not done lightly. Briggs suggests several questions that need to be addressed internally, even before researching which system is appropriate. Sample questions include:
* Is CRM Data warehousing a core initiative of my company?
* Do I have the support to purchase the right solution?
* Can I justify its costs?
* Do I have the support to hire adequate personnel?
* How frequently will we need to make changes to campaigns we develop?
* How important is a single view to our campaigns success?
* Do I have the tools and staff to measure and report results?
The National Center for Database Marketing Conference is being held in New Orleans and runs through Tuesday, Dec. 11.
