A Good Relationship Captures Customers

Sydney Morning Herald

Tuesday May 12, 1998

Kirsty Needham

THE software vendor SAS Institute has caught on to the mantra of the modern marketer - customer relationship management (CRM) - and is pushing the technology to achieve CRM as "the next big thing".

Dr Martha Rogers, an American academic and author, coined the term "one-to-one marketing" five years ago, outlining a vision whereby technology would make it possible for a marketer to collect detailed information about a customer's buying habits, and then use it to build loyalty or offer an individualised service.

Rogers gives the example of a grocery delivery service that predicts when you will run out of blackcurrant jam and orders it for you. Another is a US truck tyre retreads company that gained a competitive edge, not by cost-cutting and investing in advertising, but by putting micro chips in the rubber and making it more valuable for customers to come back and receive a diagnostic service.

Although the concept has recently come under fire from Wired magazine for being more difficult to achieve than many companies had realised, and Rogers admits that most are implementing it in piecemeal fashion, she says the message had sunk in.

And for the IT industry, the research company IDC has predicted "customer management applications" will be a $US9 billion market by 2002.

With these figures in sight, the first CRM alliance between a big software company, marketing technology specialists and business consultants was announced recently by the SAS Institute in New York.

For SAS, better known for pushing its data warehousing product, the CRM program marks a strategic shift to address executives and business analysts in marketing departments, rather than just IT.

An example is the UK food retailer Tesco, famed among marketers for its loyalty programs. The "data-mining" software behind it was built by SAS.

Data mining is an analysis tool that looks for patterns in a database to identify groups of customers who, for example, might spend heavily through mail order catalogues, or to predict models of behaviour. The marketer can then target these people with an offer.

SAS has aligned with companies that specialise in software that co-ordinates direct mail and telemarketing programs. Called campaign management software, it times mail-outs to trigger points such as customers' bank balances reaching a certain level, making them a potential target for another product offered by the bank.

While the processes of data mining and campaign management were often used by marketers, the companies said this was the first time they were being offered as an integrated package.

SAS has also enlisted the expertise of business consultants such as Deloitte & Touche, KPMG Peat Marwick and Price Waterhouse.

SAS's CRM program manager, Ellen Joyner, says the company hopes to become a big player in the business market through the relationships it already has with many top 500 corporations. She says that while CRM programs have in many cases been outsourced to specialists, SAS's program will encourage large corporations to bring the function in-house.

In an indication of the "hot" status of CRM for IT vendors, both campaign management companies, Prime Response and Exchange Applications, said they would announce further alliances with other companies in coming weeks.