What is the difference between CRM and database marketing in practice as
opposed to theory? For example, many "loyalty scheme" programs are claimed to form part of a
"relationship" yet, if we are honest, they are simply discount schemes.
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CRM should be process-centric as well as customer-centric, involving everything a company
does, or can do, to create value (as the customer perceives it). The fact that many executives, and
vendors in the CRM field, still narrowly define Customer Relationship Management exclusively around
the development and management of customer data helps us understand why so many CRM
programs fail to meet objectives. Database marketing/management isn't CRM and CRM isn't
database marketing/management. Database marketing can, and should, be considered one component of
CRM.
Loyalty/frequency marketing, especially programs which offer discount pricing and little more, are often seen by customers as expected or one-dimensional. They provide 'benefits' - cookie-cutter components - which, in many cases, have been provided by the slick program developers, with little or no input from the customers themselves. These programs fail, in other words, to offer value that would strategically, and positively, differentiate them from those of competitors. Loyalty/frequency marketing isn't CRM and CRM isn't loyalty/frequency marketing. If developed on a process-centric and customer-centric basis, loyalty/frequency marketing programs can be an effective element of an equally effective CRM program. The blissful marriage of the two, however, is quite rare.
Loyalty/frequency marketing, especially programs which offer discount pricing and little more, are often seen by customers as expected or one-dimensional. They provide 'benefits' - cookie-cutter components - which, in many cases, have been provided by the slick program developers, with little or no input from the customers themselves. These programs fail, in other words, to offer value that would strategically, and positively, differentiate them from those of competitors. Loyalty/frequency marketing isn't CRM and CRM isn't loyalty/frequency marketing. If developed on a process-centric and customer-centric basis, loyalty/frequency marketing programs can be an effective element of an equally effective CRM program. The blissful marriage of the two, however, is quite rare.
This was first published in March 2002
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