With Wendy Riches
An agency executive describes what agencies – and their clients – have not learned about CRM
Q&A Agency watchers were surprised last year when they heard Wendy Riches was back in New York. The British expatriate had left Hasbro, in Pawtucket, RI, and returned to the agency business, to head D’Arcy Marketing Services.
Having created Hasbro’s interactive and customer relationship management initiatives, she now had to help D’Arcy do the same for clients.
Given her new job, and her three-year stint as head of Ogilvy One (which was O&M Direct when she got there), we thought it was time to sit down with Wendy and explore just where general agencies and clients stand in relation to one-to-one. Her answer? The agencies don’t get it. Among other things, they fail to see the true relationship between CRM and the Internet.
Riches earned her stripes as a communicator during 10 years as a magazine editor in London. She then ran her own editorial consultancy, co-authored two books, and went to work for Save the Children, where she got into direct marketing. Eventually, she joined Ogilvy, which brought her to the United States in 1995.
Schultz: Are advertising agencies equipped to handle one-to-one? Our impression is that they really have not paid a lot of attention to it.
Riches: They are absolutely not equipped to handle one-to-one. Until the Internet came along, ad agencies couldn’t have cared less about one-to-one, and life did begin and end with the 30-second TV commercial. When I was at Ogilvy, the advertising agency was perfectly happy to leave anything to do with digital to Ogilvy One, and then of course, as the spin started to happen and the dot-coms started to have these enormous marketing budgets, then suddenly the agencies took them seriously. So then they started to try to develop capabilities. But many have approached it as if one-to-one and digital are the same thing. And that is a fundamental mistake, because there’s much more to one-to-one than just digital.
Schultz: For example?
Riches: CRM should be thought of as taking any opportunity to acquire customers with whom you can build a relationship at all points of contact between the brand and the consumer. You want to communicate with the consumer through the Web, because it’s cheaper than paper or telephone communications, and so much quicker. But if the consumer wants to communicate with you either through the telephone or mail, you’ve got to be able to deliver that. And what is missing from agencies’ basic understanding is that online branding is a different issue to offline branding. It requires a much greater emphasis on service. We relationship marketers understand about service because for years we’ve had to deliver virtual service. The advertising agency people are not accustomed to delivering that relationship. They’re just accustomed to delivering the brand – here it is – and it’s a one-way communication.
Schultz: What about the direct marketing agencies?
Riches: The direct marketing agencies that got into database marketing as well as creative were quicker to understand the power of the Internet, and to understand about delivery. It’s taken the old-fashioned direct marketing agencies longer to get there. I think now they are there, but there’s still a leap to be made, which takes you from what was database and Internet to CRM and digital. CRM is enterprisewide and it needs to cover things like sales, service and marketing, and to knit all of these very closely together. That’s the thing direct marketers have not been accustomed to doing. They have been accustomed to doing a facet, or maybe two or three facets.
Schultz: Given that prognosis, how advanced are the clients?
Riches: Companies are at different stages of development, and the stages are to some extent the same stages that companies followed with direct marketing. Pure service companies – for example, financial services firms – are there. They know about CRM. The database may not be in a great state, it may be in silos. They may be facing the challenges of marrying together the front-end and the back-end. But they know what they need to do, and the customers are used to communicating with them through other ways than face-to-face. It’s a bigger challenge for companies where there is a physical product. A lot of these companies are still in product silos. So a company like Procter & Gamble absolutely recognizes that it needs to change – it’s changing faster, I think, than the Street has given it credit for. It’s doing some interesting things, like Reflect.com. Reflect is all about is customization. And it doesn’t conflict with what P&G does through retailers.
Schultz: How do manufacturers like Hasbro pursue interaction and customization, and is it desirable for them to do so?
Riches: I believe it is desirable for them to do so, and it’s not easy. The first thing they have to do is to build a database of customers. The advantage a company like Hasbro has is that it has never dabbled in database marketing, so it starts with a clean sheet. Many companies have done their database marketing in silos, and now have the problem of having to get the different things to speak to one another. They’ve almost got to start again, so they’ve got turf wars, they’ve got people in different divisions who don’t want this to happen. It’s much easier for a Hasbro to start from scratch and say, “We will build a pan-Hasbro database, and what’s more, we’ll make it global. And we’ll make sure that wherever our products touch a customer, we’ll capture information on that customer, and we’ll share it across the board.” Hasbro has a very interesting digital initiative, Games.com, which is taking its content – and it has wonderful, rich, gaming content – and putting that online. This is a marvelous opportunity for Hasbro to set up a channel of communication with the consumer.
Schultz: Can Hasbro or anyone else actually get down to the individual level?
Riches: We direct marketers know in our blood that we’ve never really done one-to-one. Direct marketers have become smart at identifying a cluster of people who have the same interests and wants, understanding what those wants are, and being able to offer them at a price that makes sense. Let’s look at the Blue Card from American Express. It took AmEx a very long time to develop Blue, and I think it’s been quite a success for them. But Blue is not about you having a Blue Card or me having a Blue Card, it’s about there being enough of us to make a Blue Card worthwhile, and about it being just sufficiently tailored in what I think is a neat mixture of tailoring the product and the message. So what I like about the Blue Card is you not only have a card that suits your needs, but you can access information about that card in whatever way you want to, and whatever depth suits you.
Schultz: What would you tell a client that wanted to get into CRM?
Riches: You have to think about it as being completely in the round, whereas sometimes people don’t necessarily think in the round. For a long time, promotion was separate to direct marketing; now it’s almost become a subset of direct marketing. Then there are all these points at which a brand interacts with a customer – they might be through field marketing, sampling in a store or through an event. You need to say, “How do these things fit together?”
Schultz: Where does the Internet fit in?
Riches: Digital can be a huge part of CRM. How huge a part will depend upon the nature of the company. Digital is much less important for Procter & Gamble at the moment than it might be in 10 years, and it’s a small percentage compared to, say, a financial services firm. Look at Schwab. There’s a dramatic increase in the number of people who’ve wanted to trade stocks through Schwab. Will we see Schwab one day be totally digital? Actually, I suspect not. The Internet is a bit like television. It’ll settle in as a part of our lives. We’ll use it for convenience, we may use it for price, but we will still want that face-to-face contact. Something like field marketing could be more important in five years because people will be saying, “Hey, I don’t want to only buy stuff on the Internet. I want some contact.”
Schultz: What if the company has no background at all in either CRM or digital?
Riches: My advice to any company now is to look at what it has got in its locker. What is it doing? Not everything that companies are doing are appropriate to sell direct at all, let alone to sell direct through the Internet. So the first thing is to look at what they’re doing, and see if there’s something there that makes sense. And if there isn’t, to then work out what it could be and to start therefore actually with the product. We often forget about the product in offers; we get carried away by being customer-centric. You can’t look at the customer without looking at the product and the brand together.
