Protect Your Present Business

CMR is so sexy that it can take everyone’s attention away from business as usual. One of the first things to confirm, at the start, is that the things that are driving the business today will continue to get attention and the funding they deserve. If database marketing has been driving the business, don’t ease off on that as you start your journey into CMR. Fine tune it, as required, to see that it doesn’t interfere in the customer’s acceptance of your new strategies, but don’t lose its driving force. If CRM has been your strength, add on but don’t reduce your CRM investments. Protect what you have.

Our consulting company, Seklemian/Newell is in the process of helping a large retail client company move from database marketing through CRM to CMR. We started by separating the challenge into three activities:

• the current database marketing

• the proposed CRM

• the ultimate CMR

For the existing database activities we established plans and reserved funding to assure continuation of the database marketing activities that were driving important parts of the business. We would take small risks within the pilot projects, but would be careful to maintain most of the driving force of the existing database marketing.

For the new CRM initiative we designed a pilot, carefully selecting a region that could be isolated for the test. Within that region we looked for the company’s most enthusiastic personnel at management and front-line level to lead the pilot. Further refining the process, we selected representative customer segments and control groups within the pilot region.

One of the objectives was to move customers from discount shopping to higher margin sales. Studies of the customer transaction files showed that customers who shopped in the major sale events—after being targeted in our database marketing activity—did not shop in the same pattern later in the same month. Our hypothesis was that if we sent these customers details of new merchandise and other information with special relevance for them instead of just sale notices, we could interest them in shopping at full price. To meet our objective we had to eliminate the test customers from one of the database marketing sale mailings, a calculated risk.

We moved into the CMR phase of the initiative with the same careful controls. Again we isolated a test group of customers and control group to try to learn what difference it would make if we could really build a relationship that would put more power in the hands of the customer.

Early results show the CRM activities are keeping customers at the same or better spending levels at higher margins; preliminary CMR findings show we are increasing the quality of the dialog with these customers. As the selected customers share more personal information with us, we are beginning to see increased cross-sell and customer retention.

It is imperative in any test to be certain that every action of the test and every aspect of the test base can be replicated in the rollout. In a small test you can do a lot of one-on-one training to get sales associates or other front-line employees to change work habits. If you won’t have the time or the manpower to do exactly the same training for the thousands of employees that will be involved in the rollout, you won’t see the same results. For the test project use only tools that will be workable on the larger scale. Seklemian/Newell once saw a retailer test a customer relationship program using a store in a tourist resort market in high season. After a successful test, they rolled it out only to learn that the experience with the resort market’s tourist customers was not applicable to their broad customer base.

The message for anyone starting the CMR journey remains: Don’t try to boil the ocean. Think big but start small. Your start must be a testing or pilot stage. This stage is all about finding what is going to work. The pilot stage gives your team time to learn, minimizes up-front investment and risk, and builds credibility for the CMR concept. Once you have tested economically the hypothesis that CMR can add depth to the customer relationship and profit to the company, it becomes a simple matter to scale it to broader goals.

As Herb Kelleher, former chairman of Southwest Airlines, is reported to have said, “Think small and act small, and we’ll get bigger. Think big and act big, and we’ll get smaller.”