Thursday, August 11, 2005

Customer Relationship Management and You

In my last post, I disclosed that I am a recovering member of a no good race (marketing). As part of my Twelve Steps to recovery, it is incumbent upon me to unload my burdens by sharing my knowledge of the mysteries of marketing with you, the marketing target.

To clarify, I formerly specialized in an area known as "Customer Relationship Management." CRM, as it is known in industry jargon, utilizes customer databases to monitor and analyze customer behavior with an eye toward deepening relationships with customers and making marketing spending more efficient. The classic example is any sort of loyalty program like AMEX's Rewards program or any of the frequent flyer programs. In exchange for your personal information (which makes you trackable), you the customer derive some benefit (points, miles, free shipping, etc). As a result, the brand can monitor your behavior, discern your preferences and append demographic or psychographic data to your profile. This allows an Amazon, for example, to recommend follow-on purchases which are most relevant to you. It's good for you because it is convenient or you're able to claim that free flight to Baghdad. It's good for the brand because it isn't wasting precious advertising dollars on those customers least likely to purchase.

And ultimately, whether you know it or not, this is why everyone is so hyped about the Internet. The promise of e-commerce is that online customers are more easily trackable. Based upon your clickstream data, it is possible for marketers to see precisely where you are in the purchase cycle and to serve pop-ups or search-based ads at the exact moment that you are most likely to click. Moreover, the cost of serving up such advertising is miniscule when compared to high-overhead, inefficient advertising units in print or on TV. So while there are positives for you, the targets, the real benefits are derived by advertisers looking to lower marketing spending.

As part of this effort, marketers are leveraging technology to lower overhead elsewhere in their value chains. One area of particular interest is Customer Service. Service is essentially a cost center and companies are doing everything they can to minimize their expenditures on it. One way they are attempting to do this is through offshore outsourcing. The next time you call AOL and speak to "Jack Wilson" it is more likely that his real name is Rajiv Patel and he is based on the outskirts of Dehli. Another way that companies attempt to lower service overhead is by using intelligent call centers which leverage databases and IVR (Interactive Voice Response units--the familiar "Press 1 for English") to route calls to the right agents and minimize service rep talk time.

And yet another way that companies try to reduce their service costs is by encouraging you to interact with them via the channel that is cheapest for them, if perhaps least helpful to you. That channel is the Internet. It's far cheaper for a company to handle your question, complaint, comment via the Web than it is for them to pay someone sitting in a call center to help you. As a result, we have seen the rise of peer-to-peer message boards to effectively allow companies to outsource their customer support to the customers themselves. Why should Sony tell you how to hook up your DVD player when some geek in Des Moines will spend an hour on a message board proving his mettle as master-hooker-upper?

Similarly, we are increasingly finding that the familiar option of calling an 800 number for support is disappearing before our eyes. In the last couple of years, I have been enraged on several occassions by companies either hiding or simply not providing customer support numbers. Sometimes, I need to speak to a person. Sometimes, I don't have the time to surf a website to find what I'm looking for. Sometimes, my Internet is down. The Slate's Timothy Noah explores this issue in a couple of pretty funny posts relating to Apple's iTunes. The bottom line:

There is no Loch Ness Monster. Walt Disney has not been cryogenically preserved. And, apparently, there is no customer service number for iTunes.

The previous fair value of exchange calculus (I provide my personal information and purchase a product in exchange for a quality product and helpful support) is now undergoing yet another paradigm shift in which the ledger seems increasingly unbalanced to me. Today, it is incumbent upon me as a consumer to provide not only my personal data and purchase the product, I must also seek out and provide my own service and support. In exchange, the company will do me the honor of supplying its magnificent product and possibly exposing my personal data to criminal predators. The race to the bottom will be won by whomever can offload the most responsibility while simultaneously garnering the most benefit. This is why I am a recovering marketer.

1 comment:

abigail said...

Very nice work on your blog, It was fun to read! I am still not done reading everything, but I bookmarked you! I really like reading about call centers and even created a call centers blog of my own if you are interested!

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