Remember when businesses were bought and sold on their "goodwill" value? When the business owner had such a good relationship with customers that they could be sold along with the business as a going concern? The days of the customer relationship have been making a steady comeback.
In recent years, the likes of Unilever, Kimberley-Clark, Save & Prosper and Allied Domecq have rediscovered the healthy bottom-line addition a good relationship with customers can bring.
This rediscovered skill is called Customer Relationship Management, or CRM. The object of CRM is to transform production led businesses into consumer focused entities that can assign balance sheet value to their customer databases. A by-product of the 80’s and 90’s phenomenon of direct marketing, CRM has added new vigour to many mature markets and reinforced the value of customers to the long-term viability of many businesses. Through the capitalisation of consumer databases, large scale capture and management of marketing data has allowed consumers to influence more of the commercial operations of FMCG, Finance, Retail, and Leisure companies in the UK and US.
The emergence of CRM has fuelled the growth of a new breed of data consultancies and data providers. Market leader Consodata is one exponent of the CRM approach and is the driving force behind many of Europe’s most innovative CRM programmes. Consodata has managed the development and implementation of CRM for most of the leading FMCG companies engaged in the area. Tim Virdee of Consodata UK explains. "With market fragmentation, marketeers are losing control of their consumers. Fragmented media, and innovations such as the internet and WAP technology increases the challenge of maintaining a coherent dialogue with consumers. Those who establish and maintain a strong relationship will continue to enjoy a lifetime of loyalty for both parties. Those who don’t establish this dialogue will see share and profit eroded consistently."
Of course it’s not all bad news. Whilst large players like Norwich Union, Cadbury-Schweppes, and Procter and Gamble show the way, smaller players can learn and innovate. The good news is that a carefully planned CRM programme can yield substantial results, simply because a small proportion of customers will represent a large proportion of the profitable business. By identifying, managing and nurturing these customers, businesses are reinforcing market share and sales volume. By asking consumers questions on what and why they buy and by tracking sales behaviour, your business will become "consumer-centric". The next step is to identify your competitors’ customers on a massive scale, and convert them.
The cost of acquiring the personal and purchase information for each new consumer is offset against their lifetime value to your business. Data acquisition and management then pays for itself, and adds immediate value to your balance sheet.
