What Is CRM? Some Definitions

(Direct) Ask any four marketers what customer relationship management means to them and you’re likely to get four completely unique answers.

Direct magazine knows—because it did just that. It talked with four practitioners to get their thoughts on the state of CRM in today’s business environment.

Do you disagree with these definitions, or have anything to add to them? Please e-mail us at [email protected]

Participants:
Kim Collins, research director, Gartner Inc.

Ron Jacobs, president, Jacobs & Clevenger, Chicago direct marketing agency

Jo Sullivan, senior vice president of development and communications, ASPCA

Jim VonDerheide, vice president of CRM strategies, Hilton Hotels Corp.

Direct: How do you define CRM for your organization?

Ron Jacobs: You know, I don’t. (Laughs). I truly don’t. I think CRM is a customer-centered philosophy and business strategy, as well as a set of strategic executions, which may be enabled by technology. And I know that’s nowhere near close to a textbook definition, but I think all those things are part of it, and that’s part of the problem with CRM. People I talk to still think CRM is [just] technology.

Jo Sullivan: For the ASPCA, it’s letting donors know we help animals every single day, and [connecting with them] through multiple mediums of TV, the Internet, direct mail, and PR and advertising. For us, the idea of CRM is the ability to meet the donor in the venue where they want to be met. We’re ready and available to customize a communications program for each individual donor.

Kim Collins: Gartner has long defined CRM as a business strategy. It’s strategy and vision, it’s about business processes, and information and technology as well. [At Gartner,] we actually got into a bit of a debate earlier this year about changing the name CRM. I think that for the most part, when the industry heard CRM they equated it with sales force automation, or call centers, whatever. A lot of the implementations were very siloed, and the processes were reworked within those silos and not across the organization. I think that contributed to a lot of the failures, so there was a backlash against the term CRM.

Jim VonDerheide: For Hilton, it’s bringing service to the forefront and giving customers choices, and moving toward a customer-centric approach. Recognizing we can’t deliver everything to everyone, we’re trying to deliver the things that matter to each individual, especially our frequent guests.

DIRECT: Are you seeing companies turning away from the 360-degree enterprisewide CRM systems, in favor of more focused applications like call center management or sales force automation?

Jacobs: Rather than looking at the 360-degree solutions, people are looking at the hosted kinds of solutions for small to midsize businesses. CRM started in very large companies with this 360-degree view, which never worked because they really didn’t have good data integrity. [Often] CRM failed because sales, marketing and customer service didn’t work together to integrate the data. I think more small and midsize businesses have successful CRM programs than do the larger companies for exactly that reason.

Collins: There are a couple of different trends I’ve seen. There are a lot of large companies, [in areas like] financial services, where you can sometimes find over 50 applications across the company. Their problem is they’ve got all this technology and now they’ve got to find out how to leverage, integrate or consolidate it. The emerging software categories — [like lead management] — are getting more value out of applications that firms already have invested in. For companies coming to CRM for the first time, I see them realizing that this is a transformation. They’re looking more for a CRM suite — but that doesn’t mean they’re going to roll out everything at once. Most phase in the implementations. Sometimes the call center is year one, sales force automation year two.

Direct: How would you describe the ASPCA’s and Hilton’s programs — 360-degree or smaller initiatives?

Sullivan: We’re unusual as an organization. We’ve got a lot of different customer bases. We have shelters, and that means everything from the executive directors to the animal handlers in those shelters. We have veterinarians we serve and then, of course, we have our donors. Our donor programs are very 360-degree — we always consider how this will serve and inform the donor. We have very different applications of that for our various customer bases.

VonDerheide: It’s 360-degree. Our CRM program started off about three years ago very much focused on the guest. The sales force focuses on B-to-B and groups, conferences and large corporate accounts. We’re concentrating on the individual guests of those customers the sales force is selling to. Tying the two together probably will be the next thing we’ll work toward.

Direct: There’s always a danger of customers feeling like they’ve been stalked if information is used in the wrong way. What kind of guidelines should be in place for using and not using data?

Sullivan:If we know someone has expressed they’re a cat parent, I don’t think it’s going to be offensive to them to receive cat-specific information. But if they’ve told us their cat’s name is Fluffy and we send them a birthday e-greeting on the month of the cat’s birthday and the cat just died, obviously that’s a bad practice. I think we try to use species status indiscriminately when we can apply it. It gives the people a higher level of engagement, but we’re not using true statistical information — birthdays, pet names, that sort of thing. We’re gathering some of that for potential one-on-one communications with major donors, rather than for use in mass fundraising programs.

Jacobs: I think we’re all stalking our customers. There’s a guy by the name of Robb High who does new business consulting for ad agencies and he likes to equate what we do with new business prospecting to teenage dating. When we get prospects, we treat them like a teenager does his first date. We want to go right to the back seat. And it’s a wooing process. When I look at many companies’ CRM systems, they put out far more communications than anyone would ever want. Just because I can e-mail you three times a day doesn’t mean I should. They continue to do targeting based on the misguided notion that if you bought something once, you’ll buy it again. Sure, RFM is a basic tenet of direct marketing, but just because you bought something once — say an album of Polish dance music for a friend on Amazon.com — doesn’t mean you want to find out every time a new Polish dance album comes out.

Collins: I think most consumers are taken aback by [companies having too] much information. It’s not so much about how much a company knows, it’s how they communicate what they know. Instead of saying ‘We’ve scoured all the databases and figure you have a loan for $X and are paying $X and we can offer you a better deal,’ why not say ‘We can offer you a loan at X for X%.’

VonDerheide: We think of privacy as a service we can offer. With the frequent guests in our loyalty program, we have an almost 100% guarantee we’ll be able to recognize them. The fact that there’s 12 VonDerheides on the Honors database scares me, I thought there were only three of us in the world. (Laughs.) I hate to think what happens when we get into the more common names. The ability to identify is one of the first things. We don’t want to give you a differentiated service that was really meant for your sister. You can choose how you receive your statement: paper or e-mail. You can opt out of specific types of solicitations.

Direct: In what business area is CRM having the biggest impact for the ASPCA and Hilton?

Sullivan: Definitely the sustainer, monthly donor portion of our database. The average gift on our sustainer file is a committed $21 per month, primarily by credit card and electronic funds transfer from their bank. Our primary communication with them is a quarterly newsletter, so it’s really important that they feel they can reach us in any number of ways. They can access information through a unique Web site and they have a dedicated customer service person available by phone.

VonDerheide: Differentiated service — basically, choice. Direct marketing went through a period of thinking it could intuitively figure out what someone wanted. I think the Web era has helped consumers be more up front if they can get something in return. Opting in has its advantages, if it’s a service you’re going to be using frequently.

Direct: Are enough companies focusing on the real strategic issues of CRM?

Jacobs: We always think about the wrong things. We’re focused on these little things that annoy us, not the big ideas that will create a strategic difference. From a CRM perspective, it’s a real peril, because what companies end up doing is focusing on a lot of minutiae, and minutiae is very expensive. Companies should identify three or four really big pain points and work to solve them, and then relate it to the CRM implementation. What you find out many times after your CRM is in place is that you might not be able to get [something basic] from the application, like the customer information you need for a mailing.

Direct: What do you think is the next big thing in CRM?

Collins: One thing that’s interesting to watch is lead management. It’s really a process [that can close] that gap between sales and marketing. Another area is marketing resource management. And in the call center, inbound scoring, and knowing what the offers and opportunities might be for customers when they’re on the phone can help response. Telemarketing could be the bane, but customers [will] respond more favorably if you convert an inbound service call to a cross-sell opportunity.

Jacobs: There are several things. One is coming to grips with the notion that every business is in the customer and information business, and we should use that data to [better] talk to customers, whether it’s to sell or find look-alikes. The second thing is a strategic renaissance, where people are going to start asking half a dozen really important questions [to focus their] CRM strategy. And I think that 360-degree views of customers are great for companies that can afford them, but I don’t expect to see those much anymore. I expect to see campaign automation and sales force automation take off. I see smaller CRM, more compact CRM.

Direct: What’s the next step in CRM for Hilton and the ASPCA?

VonDerheide: In essence, fully engaged choices for almost every guest. Keep in mind, by the time someone is calling the reservation center or looking online at specific locations or properties, they’re [going to] travel. So we’re not trying to sell them at that point, they’re there. We’re trying to give them the best thing for their money. It’s a little different from calling a catalog company to buy shoes and they try to sell you a shirt. And there are some CRM efforts that we’ll be entering that will be available at additional cost. For example, if we know your arrival time and that you’d like a burger in your room, we’ll be able to check the flight arrival and [have it there] when you arrive. That’s not going to be something we’ll deliver as a free service. We’re moving toward being able to schedule and pay for tee times, tennis time, spa time, etc. You’ll be able to pre-order the things you want available.

Sullivan: Our poison-control center has a database of 600,000 cases of animals we’ve helped over the years. There’s several groups — our hospital group of 25,000 clients, and adopter groups. We’ve never actively raised funds or cultivated any sort of relationship with those groups in the past because of data limitations. Those databases just didn’t talk to each other. So for us, the next big level is extending our message to all these other groups of people who have interacted with the ASPCA.