CRM is a Four-Letter Word

February 5, 2018

By: Jeff Fowler

Years ago, when CRM was still an idea and not a religion, I attended a presentation at a marketing conference in which the fervent speaker passionately conveyed an undeniably powerful image: “CRM will let you treat your customers like people. Instead of answering the phone and asking a caller to identify themselves for the tenth time, place an order, and provide their name and address along with payment information, you will be able to pick up the phone and say: ‘Why hello Mr. Smith! How’s the tractor running? Did the new carburetor I sent you work out OK? It did? Great! And by the way, I have sent you a special flyer on a sale we are having, which we have tailored to match your interests. You should be getting it in the next few days. Now, how may I help you today?’”

Wow, pretty heady stuff, eh? Armed with such a novel, exciting new concept, you would think that businesses would be so doggone profitable by now that they would be throwing handfuls of cash out the windows at passers-by, themselves so well-heeled that they will not stoop to pick up anything less than a $20 bill. Alas, instead we find that after blowing millions of dollars chasing the Holy Grail of CRM, businesses are no better off than they were before they started, except that they are a little less gullible. They also have much less money, are laying off employees, and are outsourcing business operations overseas.

We are a nation of fad-addicted lemmings. From Snapchat to Uber, Americans react either in horrified panic or fanatical enthusiasm by plunging head first into the current rage, whether it is buying bitcoin, fidget spinners, or the latest Iphone. You are either in or you are out. Get on the bandwagon or be run over by it. Buy into CRM or be left to wither in the dust left behind by your more forward-thinking competitors.

The More you Know…

I have got a dirty industry secret for you: CRM is not and never has been an earth-shattering new concept. It is simply three letters that put a new face on an old idea: the more you know about your customers, the better you can market to them. In the old days we accomplished this by building a marketing database, which quickly became passé and was reborn as a “data warehouse” (I prefer the more scientific term GBD, a.k.a. Great Big Database), in which you accumulate every scrap of customer data available, good, bad, or indifferent. The continued metamorphosis of this concept is CRM, which is basically the intelligent application of this accumulated customer data. But CRM has an Achilles heel: it is an inherently inbound, reactionary method of marketing, generally initiated by a customer or prospect performing an action such as placing an order or making an inquiry. Sitting astride monstrous data warehouses, CRM systems are tailored mainly for interactive marketing rather than large-scale batch operations, and to work well as outbound channels they need real time methods to – as the saying goes – reach out and touch someone: e-mail and telemarketing.

Ah, the irresistible lure of e-mail. It is easy! It is fun! It is instantaneous! And best of all, it is free! Well my friend, the excitement is short-lived. Spammers and CRM lemmings are about to render e-mail marketing practically useless, if not downright illegal. I have heard more than one marketing person say things like: “E-mail is so cheap, it is easier to just blast our message to everyone than waste time figuring out who to send it to. In fact, we do not even bother checking to see if the address is valid.” Although we in the industry are adamant that as upstanding, reputable marketers we do not/have not/will not send spam, it is becoming a moot point. Call it what you want, but even though none of us are guilty of spamming, consumers are still so flooded with e-mail that they filter out most of it anyway, and that will become even easier if the government starts forcing marketers to use an “ADV:” prefix on the subject line. We have all seen the way consumers responded to the national Do Not Call registry; what do you think will happen once there is one for Do Not E-mail? Even scarier prospects are the lawsuits and possible government regulation (spam has become quite a popular whipping boy for politicians eager to win and impress constituents).

Digging for the Truth

Digressing for a moment, another severe problem with using e-mail for prospecting is (brace yourselves) people do not always tell the truth about themselves when filling out web surveys. Actually, people are often dishonest when completing the surveys. OK, alright, let’s face it: most people lie like dogs on web surveys. So, given this unfortunate tendency, how do e-marketers target young, rich, talented, and attractive people when everyone qualifies? This, of course, provides yet another justification to blast the message to the world rather than trying to figure out who to send it to.

Let us get back to CRM. Because it fundamentally consists of interactive operations (like retrieving all “touch points” for a given customer or prospect in order to drive a message), the database design must be transaction-based, rather than query based. In other words, it needs to perform lots of small, fast queries to retrieve variable data pertaining to a single customer or prospect, rather than a single long-running query that processes a fixed set of attributes for tens of millions of customers. In techno-geek parlance, this distinction is referred to as interactive vs. batch operations, and unfortunately, they are mutually exclusive: databases are designed for one or the other, but not both. The reason CRM meshes well with e-mail is obvious: e-mail is an interactive means of communication; it is done in real time, and there is no cost difference whether you send out a few dozen or a few hundred thousand. Inbound telemarketing is also interactive. But – unfortunately for CRM systems – direct mail and outbound telemarketing are batch activities.

Buying in Bulk

The fundamental reason why it is not practical to use interactive processes to do direct mail are: time and money. It is simply not cost effective to mail a handful of solicits. Lettershops and merge/purge vendors quote prices by the thousand, not by the dozen, and they offer volume discounts for large jobs but penalties for small jobs. The US Post Office provides discounts to bulk mailers, and to take advantage of these discounts, mail files undergo processes such as CASS (Coding Accuracy Support System), NCOA (National Change of Address), postal presorting, and so on. All of these operations tend to be batch processes, crunching through thousands or millions of records and consequently using a CRM system to do bulk mail is roughly analogous to starting an assembly line to build a single car.

So, with our elegant and expensive CRM solution standing by waiting for an inbound contact from a customer or prospect, while rapidly being constrained by legislation governing telemarketing and e-marketing, how do we get our message in front of the consumers most likely to respond? Here is a novel idea: perhaps we could go back to building marketing databases and using traditional campaign management systems. Whatever that is being called these days.

Learn How DSI Can Increase Your Bottom Line

©2018 Decision Software, Inc., All Rights Reserved