Overcoming the paradox of continuous relationship marketing

Overcoming the paradox of continuous relationship marketing

Continuous relationship marketing presupposes a relationship with customers. Some customers do want relationships with vendors. But do they really want relationships with all their vendors, much less a significant number of would-be vendors? The power of CRM has led many firms to employ this approach, ratcheting up the volume of communications with customers and non-customers, most of whom are looking to simplify their lives. When response rates of 2-5% are pretty good, this means we're wasting people's time 95-98% of the time.

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There's no doubt that Continuous Relationship Marketing (CRM) can help firms achieve competitive advantage. It also allows them to attract better customers and manage those relationships for value. But doing so is difficult. It requires a new set of analytical skills for most firms. A business process orientation to customer acquisition and management, and the use of modern information technology, effectively integrated with existing infrastructure. More and more firms are attempting to meet these challenges, many to significant effect. In doing so, they are creating the next major marketing challenge and the opportunity for a new kind of business.

In many ways, the Internet is only making matters worse by offering a low-cost, near-immediate means for soliciting customers. As the cost per contact falls, the breakeven response rate falls. Indeed, as costs approach zero, volumes will tend towards infinity, at least in theory. Ask anyone who is an active online user, and they will tell you that this is more than the theory; it's an accelerating threat to privacy. But from any firm's standpoint, marketing activity on the Internet makes sense of its fertile ground to identify valuable prospects. Observe existing customer preferences, and to act on them in a relatively low-cost way.

At the same time, the number and depth of databases that aggregate customer profiles in the real world are overgrowing, enabling a growing number of firms to pursue relationships with customers. In short, electronic networks are enabling the systematic aggregation of customer information at the same time as they provide a new channel for reaching them. But what about customers? Do they really want all of these people to be pursuing relationships with them? We suspect the answer may be no.

The Internet creates a context and a business opportunity for a resolution to this problem. Specifically, a new type of information intermediary or infomediary is emerging that will aggregate customer information and use it to negotiate with vendors on the customers' behalf. In the not-too-distant future, companies playing an infomediary role will become the custodians, agents, and brokers of customer information. Also marketing it to businesses (and providing them access to it) on consumers' behalf while protecting their privacy at the same time.

Also Read: Relationships and the single customer