In the below paragraphs, I will stress those issues that in my opinion are of paramount significance for e-Customer Relationship Marketing (eCRM) systems to actually deliver on their promise.
To begin with, I should clarify that although the roots of eCRM can be traced to the domain of marketing, its implications go far beyond it and could ultimately transform the scope of organisation within industries.
In 1997, marketing revolutionaries Peppers and Rogers postulated that if loyal customers generate the majority of profit and the process of attracting potential customers and converting them to actual ones constitutes a great financial burden - which is true given that advertising costs represent(ed) the greatest expense in any marketing plan - then marketing's role should shift from customer acquisition to customer retention. By creating an interactive relationship and constantly motivating the consumer to give more information, the marketer can offer more products to satisfy increasingly more of the customer's needs, argued Peppers and Rogers (1997).
Naturally, this value proposition did not go unnoticed through corporate radars. Corporations no longer had to invest in attacking new markets and obsessively trying to proselytise new customers. No more risk. Limitless growth and expansion could now be achieved by focusing on your loyal customers. It really caught on: loyal customers cost less to retain, are receptive to what the company has to say or sell and they are the best marketers a company can have since 'word-of-mouth is the most effective marketing of all'. What customers ask for in return is a 'relationship', which on the marketing side, means 'personalisation'. And this was what relationship marketing aimed at. The so acclaimed during the dot.com hysteria[1], e-CRM, was the e-version of Relationship Marketing. Unfortunately, current mass customisation applications and practices are premised on identifying common characteristics within large customer data pools and then proceed on to some kind of segmentation whose focus is always following the straight line from the company to the customer and the market (Postma 1999) rather than from the customer to the market and the company, which would have been rational given that the business world boasts an intense customer orientation.
Theoretically speaking, e-CRM means using the Internet to better serve the customers by getting to know more things about them. In practice though, e-CRM referred to two distinctively different things. One was capturing as much as possible personal customer information by tracking and monitoring every single user 'click'. Long forms to fill in, data mining techniques, cookies, and prying software that came to be known as e-CRM software was deployed to track how people get to the website, why and when they leave and where they go next. The other was replying to customer enquiries via email. No matter how simple this may sound, there are plenty of corporations struggling to respond 'in a personalised' - or simply humane - manner to customer enquiries via email. For CRM applications to provide tangible value both to organisations and customers, this is a chasm that e-CRM practitioners have to cross. CRM has to reconcile the tension between centrally manipulated customer information and an enhanced user experience. The role of User Interface knowledge is thus of primary importance, however, theory should be complemented with practical and easy-to-use (on the user part) technologies that maximise the potential for direct, humane marketer-customer interactions. In my opinion, the technology/social process best positioned to take e-CRM to the next level is Weblogs.
Weblogs[2] are dynamic websites, that are frequently updated - sometimes more than a few times a day and that allow and encourage participation by users in the form of commentary. Although weblogs have not yet gained momentum, several companies have gradually started experimenting with weblogs for a variety of purposes. In a sense, Amazon.com is a weblog because all products made available through the Amazon platform welcome readers' reviews, in essence reproducing a conversational effect among customers. Demos, the leading UK think tank, has a weblog as a PR vehicle. Macromedia deploys weblogs for marketing, development relations, and product promotions (I wrote about Macromedia weblogs here). In a nutshell, weblogs encompass many organisational processes and can be used successfully for a wide range of applications.
Weblogs aside, it can be easily understood why manipulation of customers' information is so appealing. Let aside Orwellian syndromes and big brother theories, cross-selling opportunities that the shift to customer retention is meant to capitalise upon, are hard to ignore. "The Web allows companies to draw a graph of a customer's lifetime value. You can learn how customers end up in your fold, which are the best and the worst ones, and why some abandon their shopping basket before they make the final transaction" (Economist 2000: 43, 44). As a result, in 2000, the Economist pontificates that there is indeed a massive shift from acquisition to retention and emphasises that "companies now also have the tools to exploit what they know about their existing customers. Companies are starting to realise that they cannot offer the same quality of service to everyone. They know that the true promise of customer data is to help them to discriminate, in service quality and perhaps in price, and to target their services so that they give priority to the most profitable folk on their books" (Ibid.). Amazon.com is a good example of an organisation exploiting the 'discrimination and cross-selling' promise of the Web. However, its price discrimination plans largely collapsed when it was fiercely accused of discriminating against customers by quoting different prices for the same book (Ibid.). At the moment, most companies hesitate to accept that such price discrimination practices are deployed or deny that there are any such plans whatsoever. Especially when news travel fast through the Internet. "I wouldn't want to know one of my customers bumping into another and saying we had given them a better deal" says Cisco's Daichendt. (Ibid.). While it is true that the Internet can provide marketers with a tool to determine how customers react to variations in the price; customers may turn out to be rather unsympathetic, thus driving the 'discriminatory strategies' in the underground.
Another major issue to be considered is automation. Organisations have not yet understood when automated, out-of-the-box CRM software should be used and when it should not. I have yet to come across a more lucid explanation than David Weinberger's. In his words: "The irony is, of course, that although the Web is a deeply social environment, Webizens are perfectly happy to have impersonal transactions with companies. Off the Web, automatic teller machines are wildly popular--in part because it's clear that they're impersonal cash bots. They don't pretend to like us or even to care about us. Similarly, on the Web we're delighted to navigate through screens to find the information we want even though--indeed, because--it's so impersonal that it's nonpersonal. The problem comes only when someone tries to jack the frame and to get us to believe that the page or the E-mail comes from a human hand, when in fact it's just uncaring software". The solution to this tension, according to Weinberger is to "either take the person out of personalization or put a real person into it. But either way, make it crystal clear which you've done". However, the problem is far more complicated since the advent of Web services is likely to provide additional incentives to companies to deploy non-customisable, generic and automated eCRM solutions. Indeed, the impact of Web services on eCRM is bound to be dramatic. "By employing universal, non-proprietary standards, Web Services dramatically lowers the IT costs of collaborating with external partners, vendors or clients" (Shirky 2003). The sea change that component-based development (like Web services) will bring about is most certainly to infiltrate the realm of eCRM by means of integrating otherwise separate and non-communicating enterprise processes, systems and applications (Selland 2003). If such integration becomes feasible, the sharing of information across teams, departments, organisations and customers will definitely result in enhanced responsiveness to market needs and more effective sharing of customer information. Needless to say, Web services are based on XML, which from a technology vantage point, will empower end-users (end-customers) and enable them to easily communicate with the company rather than merely consuming corporate - fed information or filling blank spaces in a web-accessible marketing form. The avalanche of industry transformations that the transition to a non - client/server model of enterprise computing (that XML - based CRM systems promise to deliver) should be borne to mind in future attempts to implement client/server based CRM systems.
References[3]
Dafermos, G.N. Macromedia
is blogging at full speed, in Blogging
the Market: How weblogs are turning corporate machines into real conversations,
2003.
Economist (UK). "A Survey of E-Management", 2000, November.
Kaplan, P.J. F'd Companies: Spectacular dot-com flameouts, NY: Simon & Schuster,
2002.
Peppers D. & Rogers M.. Enterprise One-to-One: tools for competing in the interactive
age, Doubleday/Currency, 1997.
Postma, P. The New Marketing Era: Marketing to the imagination in a technology
driven world, McGraw-Hill, 1999.
Selland, C. Beyond
the Hype: the impact of Webservices on CRM, Reservoir Partners White
Paper, March, 2003.
Shirky, C. Planning for Web
Services: Obstacles and Opportunities, O'Reilly Research, 2003;
see also http://webservices.xml.com/pub/a/ws/2002/04/12/execreport.html
Walker, L. Web
survivors take business software where the money is, WashingtonPost.com,
January 18, 2001; see also http://www1.netperceptions.com/articles/WashingtonPost.doc
Weinberger, D. Make
Personalization Human, InformationWeek, May 29, 2000.
Notes
[1] Philip J. Kaplan suggests that the eCRM
craze took off as soon as the dot.com bomb had landed (Kaplan 2002: 81). Therefore,
we can assume that Kaplan is referring to years 2000 - 2001 since the month
most widely associated with being the beginning of the dot.com crash is April
2000. However, the eCRM craze still persists and is often portrayed as the next
generation of e-commerce, which will certainly generate value for dot.coms and
bricks-and-mortar companies alike (Walker
2001).
[2] Weblogs are inextricably linked to the
process of social navigation and the technology of collaborative filtering.
For some, they are exactly the same and cannot be separated. Depending on the
underlying technical implementation, weblogs can either take the shape of a
market conversation and a vibrant community (such as Slashdot)
or a technology making recommendations based on patterns of past consumer behaviour
such as Amazon.com.
[3] I have compiled a much larger bibliographical
section. If you wish to be provided with the enhanced bibliography version,
I will be more than willing to provide you with it.
About the author
George N. Dafermos is an independent researcher and author, and a freelance management & technology consultant. He can be contacted via e-mail at dafermosATdatahostDOTgr.