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
Does this mean that the next generation of marketers will be computer
geeks? No, but it does imply radical changes for the marketing
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
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
’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
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
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
Relationship marketing, Ransom is quick to point out, is a broad
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
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
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
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
’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
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
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.’