From CRM to Customer Experience: A Personal Voyage Back in Time and How Technology Is Helping Marketers Live Up To Old Promises

I recently moved back to London after twenty-one years of working and living in Asia. This major milestone gave me pause. I began to reflect on how much marketing has evolved over that period.

It seems to me that marketing has returned to old philosophies and frameworks.

Phillip Kotler defined marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit”. It’s a simple definition. I love marketing in the many forms that it takes. I love the many creative and strategic ways marketers create to deliver value to people.

I was absorbed thinking about how marketing theory and practice has changed since I began working and especially the impact of technology.

The story begins in the early 1990s. I was a few years out of college and embarking on a career in marketing.

I began my career in Database Marketing for telecommunications companies in the UK, most notably British Telecom and Cable and Wireless Communications (the company Mercury became). It makes me feel old as I recall a sizeable portion of telco revenue came from Fax. Remember fax? And spam faxes from office supplies retailers, and nearby restaurants?

Database Marketing was the new kid on the block. It morphed into or was superseded by, depending on your point of view, Customer Relationship Management, or CRM.

This was at a time when businesses often had records on paper, apocryphally kept in shoeboxes under the desk (although it was surprising how often this was literally true!)

When the Television Commercial Was The Undisputed "King"

Like many people, I loved the ads of the 90s. Bob Hoskins and It's Good to Talk. The Dancing Man for Guinness. Nicole, from the Renault Clio ads! And, at the time an unknown, Anthony Head, in the Nescafe ads. He would later find fame on TV in Buffy the Vampire Slayer.

For many consumers, TV commercials were all about headlines, jingles and sometimes celebrities. Creating a watercooler conversation. Many ads were loved, many were hated. As it seemed to me, CRM got treated like an adopted child.

Looking back, much of the CRM vision that we wanted to achieve, technology has evolved to enable us to actually make reality

The Single View of the Customer

Without wanting to delve into a deep description of CRM, the most important and powerful concept that CRM popularised, I think, was “The single view of the customer”. Sometimes also referred to as a 360 view.

Today this may seem trivial, but back then the power of data was like a wild new frontier. The concept of the singular customer view fell away in popularity as the hype cycle died down, I think, but it has definitely made a comeback.

The power of the data was the stories that were there to be discovered. Different stories about the relationship with an individual person.

This resulted in something new for organizations that would impact their marketing strategy. As an organization, you see one person who has made multiple transactions, rather than what may seem to be different customers. For example, you might identify that a customer who once bought toothpaste at a supermarket is the exact same person who bought shaving cream a month later. Or a Credit Card customer who also has a mortgage with your bank.

Perhaps a more modern example of problems that a single view of the customer solves would be the situation of a customer who buys a product online but cannot return it to the retailer's high street store.

As a result, the idea of one-to-one marketing and creating “joined-up” experiences, based on previous interactions and current context, generated more and more noise and hype.

I recall at an interview I was asked how long I thought it would take to build a CRM system. I answered “one to two years”. And that was pretty accurate in those days.

I loved CRM – from the vision to the planning and implementation. One of the aspects of my job I loved that was central to CRM was Name and Address processing.

The single view of the customer comprised of personally identifiable data such as name and contact details held in one single record and assigned a unique key in a relational database (sometimes a hierarchical database, but I mostly worked with relational databases).

Name and address processing cleaned and standardized the data followed by deduplication to create one record per individual, creating the most accurate, recent and complete single record. We didn’t have terms such as “deterministic” and “probabilistic” back then, but deduplication may involve exact matches or fuzzy logic.

Linked to the individual record, via the unique customer key, was all the related transaction, campaign, customer service, media, history, and behaviour data

So you know the full relationship with that individual: product or service purchase history for an individual, which campaigns they've been targeted with and which they have responded to, which media they were targeted with, full customer service history.

Business data had more complexity. Many companies had multiple locations that had to be linked together by data from Companies House. Plus there was often more than one person involved in many purchase decisions. But the principle remained the same.

The single view of the customer was then enhanced with demographic, firmographic, geographic data and psychographic data as well as recording their full detailed history of permission to be communicated with.

You may get the sense that bringing all this data together was time-consuming and at times very difficult!

Yet, the benefits of this approach have become commonly understood by most marketers today, even though they may not have been in the 1990s: targeting and segmentation, attribution and optimization of marketing spend, personalization, modeling of the most valuable customers to find similar prospects and predictive modeling for churn and product purchase behaviour

Overall, the vision was that businesses would be able to create better, connected, contextual and personalized customer experiences.

The single view of the customer brought to life the concept that not all consumers are alike and became the basis for the evolution in data-driven marketing with the promise of being able to implement more effective and efficient marketing communications.

…marketers of mass consumer products ranging from cars to coffee are turning from the TV box to the mailbox. Package goods companies…. Are relying more on targeted media

Business Week, September 23, 1991

A New Vision

The vision of CRM was bigger. It was to return to a time before the era of mass production when merchants and traders knew their customers far more intimately.

Marketing guru, Philip Kotler, defined for us the different eras in the evolution of marketing. The first era he termed the “Production Era”, triggered by the Industrial Revolution.

However, for centuries before the Industrial Revolution, people sold their products in local markets. Sometimes this is called the Trade Era. Their business was built on trust. They knew their customers intimately. They could customize products, delivery, and payment to suit the requirements of their customers in order to keep customers loyal.

They could pay personal attention to customers, understand their tastes and preferences, and build a relationship of rapport and trust. And their customers trusted the merchants and traders. Reputation and word of mouth would help the best to rise above the rest. Having the best product, trust and knowing your customers gave you a competitive edge. It not only drives higher profits but made your business more resilient when the market was poor.

Scale was difficult, however.

Each stage in the evolution of marketing grew out of the deficiencies and problems of the previous stage, driven by the need for competitive advantage.

The Production Era: With the industrial revolution came mass production. The efficiency of mass production increased product availability and affordability. Scale was now easy. But it was one size fits all. Distribution became the biggest concern. Ford was one of the first companies to use this strategy to beat the competition. Eventually, other brands followed suit and competition increased and drove the development of the next era.

The Product Era. Post the industrial revolution, organizations realised that people were willing to pay more for something that was “ new and improved”. Again, once the first brands found success with this strategy, others followed them. The flaw in this ethos was that companies would add new features assuming that people will want to buy. However, they did not consider the needs and wants of the consumer.

“Managers are sometimes caught in a love affair with their products. They might commit the better mouse-trap fallacy, believing a better product will by itself lead people to beat a path to their door”

Philip Kotler

The Selling Era. The next era was focused on aggressive sales promotion. They had the products, the manufacturing systems in place and had mastered their distribution channels – now they needed to build sales volume. Kotler referred to this as businesses "selling what they make, rather than making what the market wants to buy."

Actually, we still do this. It was "product-before-people". Organizations with the biggest share of voice won. As with the previous eras, companies would follow the success of the first brands to find success with this strategy.

The Marketing Era. Then brands began to focus on consumer needs and build products based on meeting those needs. Market research took off. Businesses evolved from “filling a hole in the factory” to “filling a hole in the market” as Kotler remarked. They would identify competitive marketing strategies to be successful. It was about the consumer before products. Making products people wanted. The idea of brand equity grew. Customer intimacy mattered once again.

The Relationship Era. In the last stage of evolution in Kotler’s construction, marketing becomes integrated with every aspect of the company, to be able to quickly respond to threats and opportunities in the market. Kotler termed the final era as the Holistic Era. But I think the Relationship Era reflects how technology helps us to become more intimate with customers.

Technology is key to this cycle of evolution. It can re-vitalize the pre-industrial ethos. Knowledge, trust, and relationships come to the fore once again. Integrating marketing into every part of the business is fundamental to being able to discharge this principle in a systemized way.

Technology Drives a Radical Rethinking of Marketing.

The vision of Database Marketing and CRM was to return to pre-industrial levels of customer intimacy and loyalty. Which becomes re-born, but this time at scale. Knowledge, trust, and relationships come to the fore once again. Integrating marketing into every part of the business is fundamental to being able to discharge this principle in a systemized way. 

[Database Marketing] means rediscovering how to talk to individuals in a way that many in a new generation of marketers have never learned….And as in any good relationship it means learning to listen as well as talk – turning the usual advertising monologue into a dialogue, finding new ways to hear what your customers are trying to tell you, and responding to them

Stan Rapp and Tom Collins, The Great Marketing Turnaround, 1990

This was a new marketing philosophy that involved organizational and cultural change. Looking back a great deal of my job involved internal evangelism of this vision.

Something that has been consistent all my career has been driving or acting as a catalyst for organizational change to achieve a new vision. The technological capabilities may have evolved. But the vision stays true.

It wasn’t just about new ways of broadcasting to customers using new technologies. (Too many businesses still do this). It was always more than personalization. This was a radical rethinking of marketing.

Marketing effectiveness takes priority over efficiency.

You have to engage people, treating them as if you know them, building trust and relationships. This means fundamental changes in organizational structure, culture, and go-to-market strategy.  

Re-engineering your go-to-market strategy involves identifying your entire addressable market. Managing the entire customer lifespan from an initial unknown suspect, all the way to loyal customer, reducing the number of (valuable) customers you lose and winning back those that you have lost to competitors.

This is an end-end customer journey of joined-up experiences, that need to bring to life the brand strategy, such as what the brand stands for, what it promises and it’s personality.

The Era of Customer Experience

The customer experience helps you to manage micro-moments of transition, transaction and transformation. Moments of truth. And making the experience of shopping, buying and owning, exquisite. It is a long term strategy with big bold objectives and is “always-on”. As opposed to campaign driven, short-term, tactical objectives with start and end dates.

The term “Customer Experience” became more ubiquitous in the advertising lexicon.

The vision was to move away from pushy, interruptive sales messages focused on greater efficiency for driving business results, towards customer-first, seamless, invisible, contextual, personalized, meaningful, valuable, transparent, human, empathetic, conversational marketing designed to build greater effectiveness.

As CRM became popular, many organizations implemented incentive programs based on points, similar to Airmiles. To the CRM “purist” this was akin to bribing people.

HBR recently reported that this strategy is having less and less impact on customer loyalty.

71% of consumers now claim that loyalty incentive-programs don’t make them loyal at all. Instead, in this new era of digital-based competition and customer control, people are increasingly buying because of a brand’s relevance to their needs in the moment.

Harvard Business Review March 21st, 2018

However, implementing CRM successfully was difficult. The data required came from many different parts of the business with different gatekeepers and stakeholders.

The scope that CRM was supposed to represent in those early days got diluted as tech companies positioned themselves as owning CRM and it became more about contact management, call centers, points-based loyalty programs, customer service, and email marketing. With the advent of digital marketing, CRM became associated with offline marketing and sales process automation

By 2001 50% of CRM projects had failed.

The Customer Data Platform

The charge that CRM over-promised and under-delivered has a lot of truth. Looking back, we never actually had the technology to truly deliver that vision.

Today the marketing vision hasn’t changed. It’s still about one-to-one marketing. What has changed is the digital technology to get the vision closer to reality.

Not to say that technology has all the answers. But, today, cloud, mobile and web technology, marketing automation, machine learning, the internet of things are making this vision possible in ways we could never have anticipated twenty-five years ago.

A new category of marketing and sales database is shooting up the hype cycle at the moment – The Customer Data Platform or CDP. Compared to the old CRM days, CDP’s are built for marketing and more flexible. The term CDP was coined in 2013.

CDPs came about to solve the problem for marketers (and others) to combine data from all sources into easily accessible customer profiles for accurate targeting and consistent, satisfying customer experiences.

It recognizes that increasing numbers of marketers became disillusioned with the difficulties of implementing CRM and achieving the outcomes CRM promises. Although some of the problems begin with organizations using CRM to increase sales efficiency rather than customer engagement and loyalty.

(Sales-led organizations, in particular, ask the relevant question if you are not driving sales than what are you spending money and time on? It’s beyond the scope of this blog post to answer that in-depth – except to say that sales-driven programs target a small group of customers that are ready to buy now, which means you are likely wasting a lot of money and time targeting people who are not ready to buy. Sales programs should exist as one holistic part of your entire customer experience program, which makes your sales effort more effective and efficient)

A customer data platform is a marketer-managed system that creates a persistent, unified customer database that is accessible to other systems.

David Raab

Compared to CRM with varied stakeholders from many parts of the company,  a CDP is much more focused on identity management, which is required for people-based marketing.

Compared to a CRM system, a CDP is designed to ingest large volumes of data from a variety of sources. Internal or external, structured or unstructured, batch or streaming. They are built with the marketing function in mind, making the data useful to the marketer and easily connects with common marketing systems for input and output. CDP’s also have a real-time capability which CRM systems do not.

Though CDP’s and CRM systems have some overlap, they are designed to solve different business problems. For example, a CDP is better at supporting new and emerging customer experience channels

In addition, unlike a DMP, which targets anonymous segments and categories with ads, (and the data typically expires when the cookie expires) a CDP holds a persistent profile of identifiable customers, which can be used for more than advertising.

The Future of Marketing

The future of marketing is about being relevant to an individual’s needs, at a given point in time and given context. Rules-based targeting is less effective than real-time, algorithm-led targeting. The four P’s by themselves are insufficient. Organizations relying too heavily on the four P’s tend to target archetypes that may be difficult to target in real life. In addition,  people’s needs are contextual and time-bound.

But today’s technology allows you to make complex targeting decisions in the time it takes for a server to send content to a mobile phone.

Great customer experience involves personalization that is invisible to the consumer. In the days of CRM personalization was about how you addressed the recipient of a direct mailer or email. It was about targeting different products and offers.

Communication was asynchronous.

Today, we can use data science and machine learning to understand the customer synchronously, seamlessly, in-the-moment, enhancing the customer experience rather than interrupting it. The insights to perform this level of personalization is not just through filling in registration forms, customer surveys, and progressive profiling but by observing behaviour and making “intuitive” decisions about what they need and will respond to.

The customer experience becomes an exchange of value. As an opportunity to find out more about somebody, as well as deepening the relationship. It’s about removing friction and allowing conversations to be dropped and picked up later without missing a beat.

Mass personalization, once a pipedream, is being surpassed. Today brands are able to customise the products themselves, not just communications. Products like Nike By You (previously called NikeID) allows customers to personalise and design their merchandise

Advances in flexible manufacturing and 3D printing are reducing the cost of mass customization of products but require a radical rethinking of supply chains and operations.

It means putting the customer first. Which in turn means measuring the things that matter to them, rather than you. Cart abandonment and conversion metrics matter, but it should not be at the cost of interacting meaningfully with customers. Enabling mass personalization requires a multitude of technological tools to collect, analyse and act on data. These include CRM systems, website data, and loyalty data.

With the increased connectivity and proliferation of devices, people’s expectations of brands have changed. Speed and convenience are becoming hygiene factors. It’s even entered our lexicon when we talk about “Uberization”. 

Businesses must re-think the value they can demonstrate to people across their products and services, and all customer interactions across devices, platforms, and content.

WeChat is a good example. As I noted in my blog post on WeChat based on an article from Y Combinator, their mantra is “Always be adding value”. WeChat’s strategy is to measure how many times they’ve made a difference to their users based on how they’ve interacted. They don’t look at stickiness or other inwardly looking metrics.

Today, Artificial Intelligence gives us the ability to test and optimize micro-interactions at a scale that was never possible before.

The consumer experience is developing into a fierce battleground. To win requires the alignment of talent, processes and technology, all aimed at anticipating and proactively delivering products and services that meet or exceed the consumer expectations. There is no template for this.

You must think like your customer. Take an outside-in approach and be responsive to the ways your customers want to interact with your company. The customer journey is complex and it does not fit into a nice neat process. Rather than thinking about what you want them to do, take a leaf out of WeChat’s playbook. Think about how to add value, at all the points of contact desired by the people you want to do business with. And then anticipate what the next interaction will be.

Technology is key, but the lesson is don’t be led by it – be led by your customers

Yet, according to Forrester, Customer Experiences have been stagnating

Our 2018 Customer Experience Index (CX Index?) results show another year of flat results as CX teams fail to champion the organizational change needed to pursue more than cosmetic see-fix remedies

Forrester

Organizations are still struggling with some of the issues they faced twenty-five years ago. Poor data quality. Organizational silos. Fragmented legacy systems.

Businesses still cannot identify who in the business should “own” the customer experience. Whilst the CEO should be the main sponsor, businesses need to decide who will drive the vision and implementation on a day-to-day basis. And in fact, businesses need to think more broadly than that. They need to think about all stakeholders, including employees, partners, customers, and community.

So whilst we focus on the basics, we need to remember what we’re trying to achieve and why it’s important.

Final Thoughts

This is a great time to be doing what we do. Technology is evolving all the time. And so are customer expectations.

Research from Econsultancy shows 93% believe that customers increasingly want to buy experiences, not just products. Customers expect marketing to do more than just sell to them and they expect more from brands than just a product.

As a result, some brands are investing in experiential marketing with technologies like AR and VR to create novel digital experiences. Others focus well-designed and visually appealing website interface

The opportunity and vision are to be able to leverage technology to recreate a time when businesses knew their customers and their customers trusted businesses. Maybe not perfectly, yet. But at a scale that merchants and traders before the industrial revolution could never have dreamed of.

But this was the dream in the early days of CRM.