Articles

Rethinking the Future with CRM
by Vicks Kanagasingam

The key trend affecting marketing strategy in the current environment is the ability to understand customers and competitors. There is no question that the market is becoming "fuzzy" with more information and aggressive competition that requires effective management.

The winners will be those companies that best understand competition and their customers. Companies need to know how to avoid falling prey to their competitors' strengths while exploiting their weaknesses. Mistakes are costly. It's beneficial to understand customers better, to build a business, rather than to spend a significant amount of resources studying the competitor. There is a need for balance.

In a competitive market, you must know what you're doing. There is little room for company ego (we know what the customer needs, don't have to ask them). The market will punish you for your mistakes, so avoid making them. There are competitors just hanging there waiting, so when you stumble, they get you business/customers.

With CRM solutions, companies that use them effectively are able to improve everything they do, whether distribution or improving their relationship with customers or whatever.

For example, companies are using CRM to help them stay connected with customers who have brought from them in the past. What companies are trying to do is "once we've got you, we are trying to keep you". Once you buy a BMW, they want to keep you as a BMW customer.

With sophisticated and user-friendly CRM solutions, we're going to be seeing more and more of these carefully targeted, service-driven relationship programmes. Not only will this attract new customers, more importantly, it will help to hang on closely to existing customers in this competitive market environment.

The larger the customer base, the more intently focused-and more specialized-companies have to be.

What do you believe is the essence of a good marketing strategy? There are two. Focus is one, and the other component of a good marketing strategy is predicting the future: Will your customers stay or go. You want to know who, why and when, therefore you can intervene to extend the lifetime value of that customer to your business.

When you make a good marketing move, it tends to be based on prediction of the future.

There is a trend in the market where companies are rapidly building sophisticated customer databases from which they can profile the best prospects for an offer. For example, a company may have over 1,000 bits of information about each customer, including demographics, lifestyle and historical transactions. The company can tell you whether each customer is High Value, medium Value or a credit risk. They are then further profiled into segments by certain patterns such as usage/purchasing patterns. One segment might indicate customers who buy a specific item periodically; this gives the company ideas on what they might buy next if the right campaign is targeted at them.

Banks should use their databases to strengthen their customer relationship for example, send happy birthday cards/gifts to their key customers on their birthdays, advise college loans for family with a child who is approaching 18 years and send investment information to families that have just remained "empty nesters". These messages can be customized to fit each customer's situation.

With CRM, we are able to manage customization. I can see consumer products increasingly customized. Today, there are companies that will work with you to design your own bicycle, car, clothing or home. This indicates that the buying process will become far more interactive, with the consumer co-designing the product.

Vicks Kanagasingam is the President Asia Pacific Business Logic Systems Ptc Ltd (UK).

Published in Malaysia Technology Guide