How is CRM really different from databbase marketing? Or is it? 2. What is meant in the case that CRM can create a "360 degree view" of customers? 3. the title of one of the sources to this case is "Carmakers learn to mine databases" Are the authors referring to data mining? If so, how are companies using it, according to this case? 4. does data warehousing have a role to play at Mercedes and Ford? If so, what is it? 5. It was noted in the case that "Advertising agences are skepticfal about CRM since they stand to lose some direct-mail billings." should they be skeptical? How will they possibly lose direct-mail billings? (See below case study)
Automakers Mine Customers through Databases
The wheels are turning once again in the automotive industry. The industry is embracing a highly evolved form of database marketing called customer relationship management (CRM). It tantalizes businesses with the promise of flawlessly connecting their Web, email, call center, and other customer-facing operations. The result is a smooth interface with customers and a "360 degree view" of them. CRM can take advantage of advances in software technology to use information accumulated about a consumer to create a more effective direct-marketing effort, according to Jeff
Bickerstaff, business director of SilverCube, an e-commerce consultancy group.
Although CRM has been around for several years, the auto industry is late in grasping it when compared with marketers such as banks, telecommunications, and catalog retailers. The basic idea behind CRM is to keep in touch with your owners and prospects, understand their lifestyles and hobbies, and know their vehicle needs. The marketer will benefit by generating consumer brand loyalty. Auto manufacturers are shuffling to unify their customer information from different parts of their organizations into a single database.
Mary Doris-Smith, executive vice president of CRM business development at InterOne Marketing Group, claims that it is about five times more expensive to attract buye4rs to a brand than it is to keep the ones a company already has. Bicke4rstaff claims "Everyone in the industry is saying it makes sense, but there's no model yet to say it works." Mercedes-Benz USA was a CRM pioneer. Ken Enders, vice president of marketing, said that in the early 1990s, the company realized that owner data was "the brain trust of the company." So the database was moved inside the company, providing the seed for a structure to manage customer details.
The initial CRM-related effort at Mercedes was its Client Assistance Center, a 24-hour-a-day toll-free customer service operation. In 1999, the company opened "Personal Information Centers," a service that offers owners individual Web sites to communicate with the company. The company that advertises DaimlerChrysler's products produces 1,300 different product brochures across all models. If a prospect expresses interest in performance and handling of the Chrysler Concorde sedan, for example, four spaces in the car's mailing can be customized with that data. Enders realizes that his competitors are jumping on the RM bandwagon, "CRM is a buzzword and you see everyone using it, but I'm not sure everyone is living it." Enders admits that CRM is easier for a small-volume company like Mercedes to implement, which has about 1.5 million consumers who have expressed interest in the brand on its database.
Advertising agencies, however, are skeptical about CRM since they stand to lose some direct-mail billings. An ad agency will usually send 3 million to 4 million direct-mail units to launch a particular vehicle. But with CRM' better customer data, the list can be reduced to 1 million to get the same number of respondents. Ad agencies also could be threatened by the Web aspect of CRM, says Geoff Smyth, CEO of Ford Motor Company's Ford-Teletech customer relationship management joint venture in Denver. According to Smyth, ad agencies "can morph" to provide CRM services and execute strategies that result in closer relationships with clients. And that seems to be what they are doing. Ross Roy Communications changed its name to InterOne to stress its main CRM emphasis Wunderman Cato Johnson,, whose clients include Ford's Lincoln and Mercury brands, changed to Impiric to resposition itself as a CRM business. After 18 months of setting up the4 infrastructure, InterOne launched a major program. Mailings are sent to customers after they ask for information about the marketer's products or services. It also produces a Dodge owner's magazine that dealers can order. The publication, which includes stories about its products, is customized with dealership information and specials on service deals. It also contains a business reply card to update owner data. Don Sparkman, vice president of Ford's marketing and sales, summed CRM up this way: "We want to make millions of customers feel special."
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