Live from the Gartner CRM Summit: In A B2B2C Relationship, Everybody Needs Somebody
A simple definition of customer relationship management might be "a continuous loop between the customer and the marketer in which, through interaction, the marketer better meets the customer' s needs, and the customer rewards the marketer with ever-increasing loyalty." This is fine when there is one marketer and one end-user. In the business-to-business-to-consumer (B-to-B-to-C) arena, however, the definition goes haywire, because questions such as "Who owns the consumer?" and "Who is the customer?" muddy the waters.
B-to-B-to-C marketing involves an intermediary between the initial producer of the good or service, and the ultimate consumer. Examples include insurance, which is issued by an underwriter and often sold by an agent, or a packaged good, which is distributed by a manufacturer but ultimately sold by a retailer.
According to Dale Hagemeyer, a principal analyst at Gartner, a true partnership between any manufacturer (a term Hagemeyer used as a catch-all for any insurer, provider or issuer), channel partner (his term for the agent, retailer, catalog or Web site that sells the item, yet is not part of the manufacturer) and consumer includes a benefit for all three parties. One example of this is Maytag.com, which allows consumers to choose the features they want in durable goods. These are then shipped to the retailers, which also function as services centers and — should the durable goods prove to be not so durable — return centers.
Is this a win-win-win situation for all parties involved? You bet. Maytag gets customers more involved with the company' s product suite, so they are more loyal (not to mention wholesaling more units). Retailers sell more product as well — and they do so without requiring sales staff on the floor.
The retailers are also tapping into an audience they might not have otherwise captured: Hagemeyer estimates that half of the orders generated through the Web site are done outside of normal business hours.
But the Maytag example is a rarity among manufacturer/channel partner/consumer situations. What stops it from being a more-common experience is either conflicting interests on one part of the business side, or territorial warfare.
Regarding the "Who owns the customer?" question, Hagemeyer offered the example of an automobile dealer who offers a variety of makes and models. Ford wants to see all of a dealer' s customers drive away in a Taurus or a Buick or any car of the customer' s choosing — provided it' s a Ford. But the dealership' s need is simpler: The dealer is happy as long as the car being driven away was formerly parked on his lot.
In the pharmaceutical industry, the direct-to-consumer advertising trend has upset the classic physician dynamic, in which the doctor diagnoses a malady and prescribes a cure.
For data sharing between these three groups to be effective, any CRM structure — and this included both technology and technique — has to satisfy the needs of each group. The manufacturers seek effective promotions, long-term value and loyalty from both the channel partners and ultimately the consumers. The channel partners want to optimize the products they offer, providing the greatest number of desired items in a limited amount of space, whether physical floor space or catalog pages or main Web pages.
And the consumers (remember the consumers?) are looking for variety, convenience, and a satisfying purchasing experience.
What does this mean for implementing CRM? First, basing the needs of a system on the gaps between the manufacturer and the channel partner. This means includes the business opportunities, such as decreasing the cost to acquire a new customer or cost per lead, increasing order size or revenue per new customer, or recognizing the cross-sell rate and acting to improve it.
Strategic thinking at this point incorporates customer intimacy, operational efficiency and tradeoff of resources. In terms of a selecting a CRM technology vendor, it also involves making sure a new system incorporates both transactional and analytic functions.
An ideal vendor has the global market penetration to follow a manufacturer or channel partner as new markets open, as well has having knowledge of the industry manufacturer or channel partner is in. Those investigating vendors should be prepared to push most vendors to bundle the exact offerings they want: CRM may be quite mature in many industries, but holistic B to B to C isn't, according to Hagemeyer.
"Think of it as your next competitive advantage," he said.
Finally, Hagemeyer cautions that if the decision is made to go with an external service provider, which actually contracts non-employees to do the grunt work as opposed to an application service provider, which provides software capabilities, companies must be especially thorough in their evaluations. "You will spend three times as much on services as what you will spend on software ASPs," he said.
Finally, he urged moderation in implementation, building in small successes and demonstrable ROI along the way. "Pace and prioritize yourself. Big bang implementations are riskier than your career can handle," he said.
Hagemeyer spoke during Gartner' s CRM Summit, which runs through Wednesday.
