A look at CRM initiatives and examples

Companies in almost every industry are trying to use customer information to manage relationships. The proliferation of loyalty programs is one example. More recently the ease of customer communication through the use of e-mail has spawned a torrent of attempts to develop what some marketers consider CRM dialog. Few of these efforts have been developed with an understanding of their CMR potential.

Loyalty Programs

The airline industry provides the best and the worst examples of current initiatives. It introduced the concept of loyalty cards long before anyone talked about CRM or database marketing. When American Airlines launched its Advantage Program in 1981 the term frequent flyer was born and loyalty marketing was changed forever.

In the earlier days of the airlines’ loyalty programs, American and United and the others who soon followed tracked little more than flight miles customers could accumulate for free award flights. Over the years as they have captured more and more knowledge about their millions of customers, the airlines have adopted the fundamental rules of CRM:

• Obtain individual information about customers

• Understand what different customers are worth

• Treat different customers differently

They have done this in outstanding fashion with the creation of valuable perks for the best customers. This year I will complete five million miles with American Airlines, and American knows it. Like other Executive Platinum AAdvantage members I get to board early while there is still room in the overhead for my roll-a-board, and I get frequent upgrades. I save time at check-in with the Executive Platinum line, and since 9/11 American has added VIP Executive Platinum lines at the security checkpoints at some airports.

Beyond Executive Platinum status my multimillion-mile history earns special surprise gifts sent personally by Michael Gunn, American’s senior vice president of marketing: ice-cream toppings, interesting books, even crystal glassware from Tiffany, all greatly appreciated. This is neat stuff and certainly indicates American’s desire to manage customer relationships (CRM), but it’s not yet customer management of relationships (CMR).

As beguiling as these perks are, they have not been personalized. All Executive Platinum members get the same early boarding and upgrade privileges, and it is safe to assume that whatever percentage of flyers are selected for the special gifts, they all receive the same books and glassware. Going one step further—with CMR—would mean delivering services that address my personal desires. I enjoy a drink now and then on long flights, but I don’t care for Bombay Sapphire or Tanqueray. How thoughtful would it be for American to stock Beefeaters, my favorite gin, when they know I will be on a flight, just as they already can provide me with a vegetarian special meal? Or for them to include the current issue of Yachting magazine aboard my flights because they know I am a sailing fanatic.

Please believe me, I’m not picking on American Airlines. My flying experience makes me believe American Airlines is the best. I’ve logged over a million miles on several other airlines and they, too, offer perks that show me they are treating different customers differently. But the industry’s customer differentiation is still designed around their product and their services, not around individual customer needs. Customers don’t want to be treated equally. They want to be treated individually.

It’s as if companies believe the technologies that allow them to capture customer data will allow them to change results without having to change what they do. They haven’t, yet, invited customers to be part of the process, understanding that the customer can add value to the product.

They ask if I’ll need a rental car (a purely generic offer). Why can’t they know my limousine preference and book my limo right along with the flight? Why can’t they know my first hotel choice is Hilton and offer to reserve my preferred room near the elevator as part of the airline reservation—maybe even include the wake-up call? In the true sense of CMR, they should be able to allow me to manage my complete travel experience, with their help, with a single phone call or mouse click. Some could argue that this is asking the airlines to function as travel agents. Since all of the airlines have now reduced or, in many cases eliminated, travel agents’ commissions, forcing agents to charge service fees, perhaps the airlines could even add a small charge for this extra customer service. As the Teradata survey indicated, customers would be willing to answer questions and give personal information in order to get these more personalized services.

E-Mail

I really shouldn’t pick on the airlines when there are firms in many other sectors that are worse offenders. I don’t spend as much at Neiman Marcus as I do with the airlines but I do have a relationship with them. When I open my e-mail in the morning I really don’t care about the “new sunny looks” from the N/M resort collections. I don’t think any of the hot swimwear, straw totes, fresh fashions, or romantic sandals are right for me. I wonder why someone at Neiman’s thinks they are, and wish they would ask me what I am interested in.

There are folks who do just that. And some do it badly. For example, one bookseller I deal with sent the following request:

Hello, Fred Newell

Hmm. We were unable to find any titles to recommend after looking at your purchase history.

Help us create useful recommendations for you by telling us about your interests with the Recommendations Explorer.

I did what they asked, and the next screen said,

WELCOME TO

Your Recommendations

Exploring products or interests that you are familiar with and clicking “I own it” or “not interested” will help us generate recommendations personalized for you. To refine your results, click “more like this.”

I did exactly as they asked, checking off my preferences for several categories of business books and some on sailing. I have gotten several offers since that dialog but all have been offers for Tea of the Month, Snow White and the Seven Dwarfs, The Mummy Returns DVD, The Best of Martha Stewart Living, and the latest Diana Krall CD—none of which match preferences on my list!

For all their good words about wanting to create useful recommendations for me, this company is not letting me manage the relationship. They still come across as trying to do more for their sales curve than trying to do more for their customer. If they are asking customers for sensitive information and aren’t using that information to the customer’s benefit, they should stop asking those questions.