Relationship Marketing & Marketin 97: Round Table - Seeds of a revolution/In the run-up to Marketing 97, we gathered five senior marketers to debate where relationship marketing is now - and where it’s heading. Ken Gofton reports on their of

Marketing is always going to be about differentiating a company, its products and services, from those of competitors. Increasingly, however, the process is being driven by the knowledge and insights derived from customer databases. Technology is transforming the business.

Marketing is always going to be about differentiating a company,

its products and services, from those of competitors. Increasingly,

however, the process is being driven by the knowledge and insights

derived from customer databases. Technology is transforming the

business.



Does this mean that the next generation of marketers will be computer

geeks? No, but it does imply radical changes for the marketing

department.



And, perversely in this computer-powered environment, the role of people

in an organisation, and especially how they relate to customers, will

become ever-more important.



’I see the marketing department becoming a two-part operation,’ says

Alan Bigg, consultant and former chairman of Brann, the direct

marketing, telemarketing and database agency. ’You’ll have a group of

highly experienced communications experts, who will use the new

technology, and you’ll have a large number of customer managers who will

be in genuine contact every day.



’They may sit in call centres or in stores, but they will be talking

directly to customers, and feeding information back to the

communicators.’



Or take this rather different perspective from David Perkins, chairman

of Carlson Loyalty Systems: ’In the kind of marketing department I grew

up in, most of the time was spent dealing with outside agencies, such as

advertising or PR. They will still be there, but in future the marketing

department will spend more time talking to the IT director and the human

resources director and, if it is a retail organisation, the stores

director.



’In other words, marketing will be much more involved with the internal

organisation. That will be the key shift.’



Marketing’s role in the past may have been to understand, and

communicate with, the customer. But now that customers are becoming the

remit of the whole organisation, and there are many more points of

contact, where does that leave marketing? With a changed but enhanced

role, to interpret the data, provide the guidelines for everyone else,

develop a very customer-focused strategy, and listen to the

customer.



These thoughts emerged from a round-table discussion we organised as a

curtain raiser to Marketing 97, next week’s three-day conference and

exhibition on relationship marketing. Since relationship marketing

embraces so many disciplines, the aim was to bring together specialists

from different areas of expertise, all of which are relevant to the

debate.



Heavyweight line-up



Participating with Bigg and Perkins were Nigel Gatehouse, strategy

director at DunnHumby Associates, the consultancy best known for setting

up Tesco’s loyalty card database, and Kim Conchie, managing director of

Brass Tacks Publishing and chairman of the Association of Publishing

Agencies, the trade body for customer magazine producers. Lightly

keeping the group discussion on track was Gary Ransom, senior

vice-president of Forum Europe, the international consultancy

specialising in helping companies develop a customer-focused

culture.



Relationship marketing, Ransom is quick to point out, is a broad

concept.



In the UK, there is a tendency more and more to assume it means simply

loyalty schemes - a technique better described by the US term ’frequency

programmes’, according to Perkins.



’The whole issue is really about what it costs to get a customer, and

therefore what it is worth to keep one,’ says Ransom.



These arguments may be well understood now, but that does not mean the

lessons are being applied properly. As Ransom explains, Forum did some

work for Citibank - ’a very aggressive organisation, so proud of the

fact that they were increasing their customer base by 18% a year. But

when we did some analysis, we found they were simultaneously losing

15%.’



Conchie can match that. A bank he worked with was developing a customer

database with 22 fields of information. The first issue of the bank’s

customer magazine included a detailed questionnaire to help furnish this

data, and pulled in 38,000 responses.



’They were thrilled, until they decided they couldn’t afford to key in

the data,’ he says. ’It makes you despair. What were all those meetings

for?’



Stop and listen



In fact, there are a number of problem areas which are holding back

relationship marketing, according to the panellists. They include the

fact that what is meant to be a dialogue with customers is all too often

one-way, as with the bank above, which was happy to ask the questions

but wasn’t very interested in the answers.



Yet this is an age in which customers demand a say. One reason why 0800

numbers are so popular with consumers, according to Bigg, is that they

enable them to call a company when they want to, at any time of day or

night. By the same token, outbound calls from companies are not popular,

because that takes control out of the hands of the consumers.



If loyalty/frequency programmes were just about gaining, and holding on

to, market share, there would be anxieties there, too. Recent research

for Carlson - reviewed in Marketing on October 22 and due to be

presented in more detail at Marketing 97 - suggests that consumers see

loyalty cards as a game. They’re happy to play your game until a better

one comes along.



But the deeper significance of these schemes is the increased

understanding of customer behaviour which companies such as Tesco,

Safeway and British Airways are able to extract.



They are improving their products as a result of what their databases

tell them, which in turn should lead to true loyalty.



Knowing it all



’BA wants to collect information at every point,’ says Perkins. ’This is

not just ’how many flights?’ or ’which hotels?’, but ’did we damage your

luggage, and if so, did you complain and what did we do about it?’.



’We ran a campaign in the US called ’Walk on Water’, because we had

observed that many people were only travelling one way across the

Atlantic with BA. So we asked them in a light-hearted way whether they

had rowed or walked back. We got a 50% response rate - but we could not

have done that if we had not had a relationship for some time with these

people.’



The biggest issue to be resolved, however, is the internal culture of

marketing organisations. One aspect is the speed with which marketers

move around; they may change their job every two years.



A spectacular ad campaign in that period can carry them into their next

appointment, while it could take that long just to build a database.



’So the real pay-off may come after they have left,’ observes

Ransom.



’I think this says that relationship marketing is a priority that goes

beyond the marketing department. The managing director or chief

executive has to get hold of this.’



New set of values



Compounding the difficulties arising from staff turnover, according to

DunnHumby’s Nigel Gatehouse, is that in many companies, life has

revolved around last month’s sales and market share data for 20 years or

more.



Remuneration and bonuses are related to these historic figures, so that

when outside consultants come along and suggest a new set of measures,

everyone is uncomfortable about them.



’But I hear more and more about companies moving towards what are called

’balanced score cards’,’ says Ransom. ’If it’s known that information

indicating that customers are becoming unhappy will eventually show up

in the results six months down the road, wouldn’t you prefer to have

that information now?’



It is computer power that has made possible the advances seen so far in

relationship marketing - even if there is still a long way to go.

Technology will continue to develop, but our panellists warn against

relying on it too heavily.



A Safeway scheme, drawing an individual customer’s attention to special

offers that might appeal to them on the basis of information on a swipe

card is ’heading in the wrong direction because people know it is

computer-driven’, claims Conchie.



’There is a danger in getting too excited about the technology, because

customers will reject it,’ says Bigg. ’People will remain important.

Customers will say they don’t have a relationship with their bank - but

they’ll add that the girl who helped them with their mortgage was

terrific.



Making it personal



’Firms which have really good personal touches will win - companies like

Land’s End, which, love it or hate it, comes across as being very real.

Companies such as Carphone Warehouse and Pret A Manger have actually

grown out of having a commonsense understanding of what we are talking

about. Bigger companies have difficulty with it.’



’The best marketers,’ says Gatehouse, ’have always believed that the

only way to win is to have a proposition that is better than the

competition. Technology has changed the game - that is the new element.

But I don’t think the fundamental truths of marketing are going to

change. What you have are new tools, and what that will do is flush out

those who can’t adapt.’



The one thing that is surely true, concludes Perkins, is that in ten

years time, differentiated brands will still be winning. ’But they will

be winning using the kind of approaches we have been talking about.’



Discussion

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