The Hindu Business Line : `Creativity is crucial to CRM'

He calls himself a `one-message man' as he's been saying nothing but that since he came to India about three weeks ago. About how CRM (customer relationship management) should be humanised, and how practitioners should look for quick wins rather than misguidedly pour heart and soul into a grand design and end up poorer and none the wiser. John Goodman, President, Asia/Pacific, OgilvyOne Worldwide, has been in direct marketing throughout his career and with O&M Direct since 1989, except for a five-year stint in Prague, where he ran O&M's new advertising agency in the Czech Republic. Catalyst met Goodman (who occasionally moonlights as a reggae deejay and which he would rather do full time were it practical) who was at Chennai to talk on the changes CRM and loyalty marketing was undergoing, and what his prescription for a practical CRM programme was.

You have been saying in this trip to India that most CRM programmes fail. Coming from a CRM guru like you, that sounds rather iconoclastic. Why do you say that?

Over 70 per cent of CRM programmes fail. There is too much emphasis on technology, and too little on communication. People want to do big things very quickly. Such `solutions' have crippled organisations which have bitten off more than they could chew. I believe they should do small things slowly. Look for quick wins.

Quick wins?

Yes. Sinking money into a five-year plan which most probably won't pay is very frustrating. Tracking progress over that long a time-frame becomes unwieldy. And these grand solutions are probably out of date at the end of this period! So go in for a CRM project of six months, or one year, and build from there.

Also, most organisations tend to try and get all their departments involved in a CRM programme. It's a nice idea in theory, but typically, most organisations are built to resist change. Concentrate on one department, show everyone the change that's taking place, and then you will be successful involving the others; it's an evolutionary process. The CEO's involvement is very necessary, he can make changes which make a difference.

What is your prescription, then, for a good CRM programme?

It should be led by communication, not by technology. But everywhere, CRM is sold as a technical solution. The companies that created CRM technology spent a lot on advertising it, but it is not a software solution, it shouldn't be. That's like giving someone the keys to a Ferrari they cannot drive - it ends in disaster. You have companies selling their products with lines like `Global CRM in 90 days' - that's unbelievable.

Creativity is crucial to CRM. A CRM project's success is a measure of its ability to create an emotional link with the consumer. He/she doesn't see any of the software going into it. Ultimately, it's only the communication, its quality, that is visible. Like what OgilvyOne, Chennai, did for cell phone service provider Hutch, delivering their daily newspaper to a target audience greeting them individually by name. (In fact, Goodman says the Hutch project which targeted high-value customers is one of OgilvyOne's successes. Another was the American Express project which sought to manage customer lifestyle and attrition.)

Earlier, local businesses made closer ties with customers possible, their nature made for easier interaction. But today's large businesses' need for a cost-effective, centralised technology that aims to serve customers better has put paid to that.

In such businesses, it pays to focus on your best customer. I agree with that finding you read about everywhere - that 20 per cent of your customers give you 80 per cent of the business. If you find that it's costing you more to keep your customers than the revenue they are bringing in, you have to decide on whether it's worth it.

HSBC drew a lot of ire when it began charging account-holders who maintained only the minimum balance but that was the right thing to do.

So what happens to these customers? Do you let them go?

Well, there are ways of serving them without spending too much on them. Internet banking is one.

What do you think of the CRM scene in India?

There are less heavy investments here - business here is learning from others' mistakes. Indian businesses are not rushing into it.

The human capital that India has is perfect for CRM - there are superb technical and creative skills and different communication vehicles. It's a question of bringing them together effectively.

What about other countries in the Asia/Pacific region?

Well, there's always the temptation to compare India with China, given the similarity in the level of development. Both countries are moving from customer acquisition mode to customer development mode.

What are OgilvyOne's initiatives in the field?

We have developed our own software solution to help manage data in different languages. We are also developing an audit product to discover how CRM programmes are faring, against benchmarks.

How has OgilvyOne India fared?

Very well. It is three times bigger than it was four years ago. We've revived the Chennai office, and I'm quite happy with the start we have made here.

How do CRM and advertising compare with each other?

CRM can prove RoI better than most other forms of communication. In advertising or public relations, proving RoI is quite difficult as the mass market is becoming more and more difficult to track with media getting more and more fragmented.

Then why do people prefer advertising?

It is a very, very successful way of building emotional brand equity, but it's not the only way. I must mention here that promotions destroy brands, loyalty gets eroded. Look at Japan - support for trade promotions there is often twice the amount spent on brand advertising - it's astronomical, and purely aimed at keeping the status quo. Promotions are like a drug, people get used to them and cannot get off.

What do you think of direct marketing in India?

It's used very tactically, as a one-off, but it should be an ongoing process. And then Indian companies don't measure what they learn and don't put it into practice.

Why?

I don't know, it puzzles me. Maybe because it's quite new. They should work with someone who knows what they are doing.

Is the money spent on CRM growing?

Each of the world's largest 3,500 companies is going to spend around $50-130 million on CRM over the next three years. Most of this money is going into software. We should get it right.

Picture by Shaju John

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