Mass marketing is clearly at a crossroads, as companies recoil from the inefficiencies they perceive in conventional media spending. Merrill Lynch & Company is predicting a 4 percent decline in U.S. television advertising spending this year, following a similar fall last year. Seeking greater accountability and returns, many firms are investing in customer relationship management (CRM) systems. Analysts predict that global spending on CRM systems will total between $20 billion and $45 billion in 2002.
But marketing executives are beginning to discover that CRM system implementation — in which simple database consolidation can run from $20 million to $30 million — is not an easy fix to the problem of communicating to, wooing, and retaining customers.
In the auto industry, the reason for CRM systems’ ineffectiveness should be obvious. On average, interaction between an auto company and a customer occurs 1.2 times per year. That simply does not provide enough data to answer such crucial questions as, Which people should get what offer on which product at what time?
To gain the information necessary to embrace the customer, relationship programs must be based on two principles:
- First, they cannot wait until the first purchase is consummated to begin to understand consumer interests, concerns, desires, and habits. The key to unlocking value is to recognize that different customers follow different purchase paths. Effective CRM systems must dive deep into the purchase decision before the purchase is made. Call this purchase-cycle intimacy.
- Second, because different customers follow different ownership paths, effective CRM systems must link deeply and broadly to the individual’s ownership experience — the consumer’s relationship with the car throughout the ownership cycle.
Acting on these two principles requires companies to bring otherwise separate technology programs together in complementary ways. For example, Internet-enabled communication systems make it increasingly possible to capture valuable insights about consumers in the middle of the purchase process. Interactive kiosks in dealerships — or in alternative sales venues, such as malls — are proving to be excellent tools to begin to engage consumers in dialogue.
Online activity at home or in the office represents another vital opportunity to achieve purchase-cycle intimacy. The bursting of the e-commerce bubble should not obscure the fact that some 70 percent of consumers in the U.S. use the Internet at some point during the automotive purchase process.
Now consider what happens to a company’s ability to achieve and use purchase-cycle intimacy when these tailored consumer engagements move from the Internet into home entertainment centers. With personal video recorders (PVRs) like TiVo being built into set-top boxes — Forrester Research Inc. predicts more than half of U.S. households will have interactive TV capability by 2005 — assisted sales processes will occur in the lean-back comfort of the family-room sofa. Even with privacy protections in place, the data flowing back to manufacturers and dealers will enable them to tailor follow-up campaigns that effectively bridge the gap between marketing and sales. The ability to develop incentive packages tailored to the way different sets of customers go through the purchase cycle and to get customized packages in front of receptive audiences is vastly preferable to slapping a $2,000 incentive on a vehicle and offering that same package to everybody.
Advanced automotive marketers are already experimenting with cross-platform marketing, using PVRs as the central control device. Toyota helped launch the Lexus ES-300 earlier this year with a TiVo cross-promotion sweepstakes that uploaded commercials into the box; invited sampling of other commercials programmed into NBC network shows; and asked viewers to register for the contest on the Web. Imagine the opportunities when these platforms — television, PVRs, and the Web, and entertainment, brand advertising, and interactive direct marketing — converge on a single screen.