The Changing Face of Marketing: Understand how Customer Managed Interactions Fits Alongside CRM and is Changing how we Engage Consumers 

The Changing Face of Marketing: Understand how Customer Managed Interactions Fits Alongside CRM and is Changing how we Engage Consumers 

The face of marketing is changing, forever, and it is important for all marketers to be aware of the trends behind this change so that they are prepared to engage consumers in the future.   Over the last few decades companies, both large and small, throughout nearly all industries have learned to survive and thrive on the collection, aggregation, analysis, ownership, and use of consumer information in order to develop profiles of each and every individual they interact with or want to.  The individual bits of consumer information that make up these profiles are comprised of many elements; such as, demographic data, transactional history, consumer stated preference and most recently digital search queries, social media attributions, and real-time behavioral interactions.  They may also be derived through extremely accurate consumer need assessments based on predictive analytics modeling techniques of syndicated consumer data (see sidebar on Understanding Consumer Information).   

Today, marketers manage consumer information in Customer Relationship Management (CRM) systems.  These systems help marketers improve their sales and the engagement they have with consumers since CRM based marketing has been shown to help marketers build lists and improve consumer segmentation analysis, stimulate offline and online engagement through targeted advertising as well as increase the relevance of their consumer communications and related consumer engagement programs. All of these efforts increase the marketer’s ability to effectively engage a consumer at every stage of the customer lifecycle, including branding, awareness generating, lead prospecting, acquisition, loyalty, retention, care, and social media enablement programs.

A new marketing model, referred to as Customer Managed Interactions (CMI), has emerged over the last few years and is challenging existing CRM marketing practices.    In the CMI model, unlike CRM, consumers own, manage and control the collection and dissemination of their personal information, rather than the marketer; this is especially true for information which is most pertinent towards the understanding of a consumer’s immediate and current needs, namely consumer stated preferences, intent, and real-time behavior.   CMI growth is being stimulated by the fact that today’s consumers are increasingly connected and developing an understanding that their personal information has value, that it is an asset that it is theirs to control, manage and monetize rather than the marketers.  These connections have stimulated the growth of consumer information at an exponential rate.  For example, consumer use of person to person engagements like social media services (Facebook for example) and consumer use of mobile devices, tablet computers and related connected devices like game terminals, eBook, wireless connected cars, household appliances and more have created a new frontier of consumer engagement where the consumer is increasingly in control of the timing, place, and mode of engagement.

It is expected that CMI-enabled marketing will forever change how marketers engage consumers, however, for this change to take effect it will take some time.  More likely than not neither CRM or CMI marketing models will replace one or the other, rather they will both continue to evolve and co-exist until one day they come together into a unified practice of marketing.  In this article in order to help marketers understand this impending trend, I explore the changing face of marketing as driven by the poles of CRM and CMI and what this unified practice might look like.   I first review the history of customer relationship management (CRM) and introduce CMI.  I then review and provide examples of the connected consumer and how this new era of consumer engagement is speeding up the creation of consumer information and the evolution of CMI.   I then conclude by hypothesizing how the two seemingly disparate views of consumer information management, CRM and CMI, will eventually come together into a unified practice of marketing for the benefit of marketers and consumers alike through the lens of a simple analogy, “the meeting of waters.”

Understanding CRM and the Changing Paradigm

The concept of customer relationship marketing can be tied back to the marketing literature as far back as the 1960s when Theodore Levitt first proclaimed in his article Marketing Myopia that marketers should be more customer-centric and less focused on the transaction.  However, it was not until 1983 that relationship marketing was named, Leonard Barry coined the term relationship marketing and proposed the idea that organizations, especially within the context of services marketing, needed a new system to attract, maintain and enhance their relationship with customers.

Relationship marketing is based on the foundation of consumer information collection analysis.  The idea is simple, the more information gathered and analyzed about a consumer the better chance an organization has in understanding and fulfilling a consumer’s needs.   Over time, companies have learned to covet consumer information. They perceive it to be a strategic asset.   In fact, it was recognized early as 1990 the effective management of customer information and relationship marketing could significantly benefit an organization’s bottom line.   In 1990 Reichheld & Sasser found that with a 5% reduction in customer defection (i.e. developing customer loyalty through relationship management) an organization could increase profits by 25%~85% depending on the industry and that organizations could generate higher gross profit from repeat customers as from new customers.   It was also recognized at this time that one day marketers would be in a position to tailor their communications directly to a single individual rather than to the masses via the practice of one-to-one marketing.   One-to-one marketing practices and concepts were refined throughout the 1990s.  For instance, in 1993 Don Peppers and Martha Rogers produced the concept of one-to-one marketing and they envisioned a time when marketers would have the tools and practices to understand their consumer well enough to engage them on an individual basis in a relevant manner.  And, in 1997 Seth Godin expanded on these ideas and introduced the concept of permission-based marketing, noting that in order to engage a consumer on a one-to-one basis it was important to build trust with a consumer prior to engaging him with marketing messages.  And, the way to build trust is through obtaining a consumer’s permission prior to initiating communication with them.

And so it was, throughout the 1900s and into the 2000s the industry saw significant advancements in technology (the internet, databases, statistical modeling and data mining, etc.) in which these advancements propelled the practice of CRM marketing forward. Businesses took advantage of these advancements to develop new innovative solutions and business models; including software as a service solution like Salesforce.com, enterprise CRM solutions from companies Sybase, Oracle or SAP, or even standalone solutions like Outlook and Act.  Each one of these offerings emerged to help marketers collected and utilized consumer information in order to further the organization’s ability to effectively communicate with their customers.

Since Barry’s first writings in 1983, CRM has matured and over the years CRM marketing has grown into a multi-billion dollar global industry.  As noted, the primary paradigm of customer information management today is customer relationship management, with the term CRM being loosely used here to define all marketing practices, such as segmentation marketing, target marketing, direct marketing, loyalty and retention marketing, one-to-one marketing, personalization marketing, email marketing, mobile CRM marketing, permission-based marketing, location-based marketing, database marketing, and many more, that leverage consumer information acquired and owned by marketers to engage consumers. 

While CRM has generated many rewards for marketers and consumers alike it has also generated nearly as many questions.   Those that question and challenge existing CRM models often remark that the vast majority of CRM deployments fail, that many organizations are not equipped to manage the disparities between the various systems and rapid changes in the CRM market, that legal and financial liabilities are not accurately estimated, that the data in CRM systems are systematically out of date and inaccurate and that average consumer response rates to marketing programs are low, only two to three percent, thus demonstrating that relevance is not necessarily gained through CRM use. 

In addition to these observations, other concerns have been raised with new CRM practices, like behavioral targeting and advertising. These solutions monitor and track a consumer’s live search queries, the context and content of web pages and emails being actively read, games being played and music being listed to, even a consumer’s physical location may be tracked and used in order to adjust marketing and engagement messages in real-time to improve message relevancy.  These solutions have been shown to increase the relevance of marketing advertisements and messages served and to generate higher response rates and improved rates of brand awareness, purchase intent, brand favorability, etc., over traditional forms of marketing and CRM; however, they too come with a cost.  These new practices, combined with the old, have raised consumer privacy concerns, with many consumers finding overly relevant messages “creepy” and “scary,” and in handful of instances pushed marketers and politicians to make public apologies for their use of these services due to consumer backlash once consumers understood how their information was sourced and used.   They have also created new liabilities for marketers, such as class action lawsuits based on consumer information unexpectedly leaking from the CRM system or when permission and data are misused or captured in deceptive ways, such as SPAM.   They have also drawn the attention of regulators who are now looking into the possibility of creating new regulation around exactly how and when the consumer information is acquired, stored, managed and used. For example, in late 2010 the U.S. Federal Trade Commission (FTC) proposed Do Not Track legislation, which would require online services to give consumers the ability to turn off all behavioral and related tracking.  And, in the European Union (EU), around the same time of the FTC, EU regulators proposed the right to be forgotten legislation, which if enacted could compel marketers to delete all data held by marketers on a consumer at a consumer’s request

Today, marketers are reacting to consumers concerns and the potential of regulation in a number of ways.  Many are focusing on the modification of current marketing and consumer information administration practices, including the creation of new opt-in proposition models (like mobile carrier solutions offered by Alcatel-Lucent or Out There Media) and the imposition of industry self-regulatory guidelines and principals, like the Mobile Marketing Association’s Consumer Best Practices, Direct Marketing Associations Ethical Guidelines, The Self-Regulatory Program for Online Advertising (http://www.aboutads.info/) and Truste’s TRUSTed Ads program to name a few.  Others, on the other hand, are innovating new models, like CMI, where consumers own and control their personal information and broker it out to the market through an intermediary, rather than the information being owned and controlled by marketers as it is in the CRM model. 

The Birth of Customer Managed Interactions

In the face of these arguments against modern-day CRM, CMI marketing practices are beginning to emerge.  However, the concept of CMI is not new, in fact, CMI ideas were first presented with early CRM programs, like one-to-one marketing.  Peppers & Rogers in 1993 along with the introduction of one-to-one marketing concepts recognized that more and more consumer data would be collected and that there would come a time when consumers would want to control how their information was used, they called this information control system a privacy buffer.   Later, in 1997 Hagel & Rayport took the concept even further an argued that consumers would one day recognize the value of their personal information and look to own and monetize it themselves.   They predicted that systems would be developed that would allow consumers to collect and manage their own information, what is today referred as a personal data store, and that consumers would then disseminate and monetize this information through a new market player called an information intermediary.   The role of the information intermediary would not be to own the consumer information, but rather act as a broker between the consumer and marketer.  Consumers would express their need through the intermediary and the market would respond. In this model, the consumer retains ownership of their information, receives relevant offers based on the fact that the information being shared with the market is an accurate representation of the consumer’s needs, preferences and intent, and the marketer benefits from reduced liability and overhead since the marketer is only dealing with qualified customers.

The following figure provides a framework and illustrates how consumers and marketers can interact through a CMI-enabled marketplace.  In this marketplace, consumers store their personal information in a personal data store (PDS).  The PDS is hosted or accessed by an information intermediary which in term, with consumer consent, shares the consumer information either with brands that have been identified that can fulfill the consumers needs or with third-party marketers and advertisers that are willing to provide equity to the consumer in return for the consumer sharing their personal information (equity can take the form of money, rewards, rebates, coupons, vouchers, etc.).  The third-party marketer and advertiser will then use a companies CRM data, combine it with the consumer’s PDS data in order to develop a real-time, clear picture of the consumer so that the consumer will receive relevant marketing either directly through the information intermediary or through traditional and digital marketing channels like retail, the web, mobile applications,

and related public digital displays.  The key to the CMI model is that at any time the consumer can revoke consent and stop sharing their information with all or individual parties within the marketplace.

It is still early days, however, new systems are emerging to provide consumers with the power to collect manage and control the follow of their personal information.  Today’s social networks are just a start.  Many argue that today’s social media services, Facebook, for example, are prime examples of CMI in action; however, they really are not, given that the fact that the customer does not actually own their information and that the social media service is often free to resell it or use it for the purpose of deciding which offers the consumer is to receive.  The consumer is really not in control.  The best sources of thought around emerging CMI models can be found in the works of John Deighton, Alan Mitchel, Mark Watson, Kathryn Brohman, Gabriele Piccoli, Doc Searls, and others.    In fact, the community at ProjectVRM (http://blogs.law.harvard.edu/vrm/) is a leading source of CMI thought leadership (Note, VRM, or Vendor Relationship Management is the commercial term for CMI, where the term CMI tends to be used by academics).   In these early days, there is still much to learn and it is important to fully understand the mindshare of each player, i.e. are they CRM-centric or CMI-centric.

There are a number of companies releasing early models based on the CMI concept; such as Qustodian (http://uk.qustodian.com/), Blue Calypso (www.bluecalypso.com), Mydex (www.mydex.org), Personal (www.personal.com), Mint (www.mint.com), MoneyStrands (www.moneystrands.com), Google Health (www.google.com/health/), Microsoft Health Vault (http://www.healthvault.com/personal/index.aspx), TripIt (www.tripit.com) and others.  However, there are many other companies that are using the language CMI, i.e. “you can control” your data, but what in fact they are doing is collecting consumer data to have it later be resold for marketing and market research purposes.  

The Connected Consumer

In addition to the inherent conflicts between consumers and marketers in CRM systems and how consumer information is owned and managed as discussed above, a number of other trends are leading to the growth of CMI; that is, the maturation of the Internet, mobile phones, social media and cloud computing solutions.  These solutions have given rise to the age of the connected consumer and these connections are creating more engagements and more consumer information that has been ever seen before.    

Consumers are connected.  They are connected to each other, to organizations to machines.  Moreover, machines are connected to other machines and working on behalf of the consumer.   Within each and every one of these connections, both online and offline, consumer information is being created, collected, saved and exchanged at unprecedented amounts.  In fact, according to industry leaders, more information is created every 2 days than from the dawn of civilization up to 2003 combined.    Today,

  • nearly 25% of the global pollution uses the Internet, and in most developed countries this number exceeds 75%
  • there are 5.3 billion mobile connections, over 54% of the global population, 3.57 billion people, carry and use a mobile device of some kind, and within the next few years more people will access the Internet via a mobile device than any other means
  • 6.1 trillion text messages where exchange around the globe in 2010, nearly 6 billion text messages are exchanged every day in the United States
  • 500 million people are active Facebook users, with each having an average of 130 friends and spending an average of 700 billion minutes on Facebook and sharing over 30 billion pieces of information each and every month
  • 175 million Twitter users are creating 95 million tweets per day
  • Loyalty programs, programs offered by retailer that reward shoppers for frequent purchasing, and by offering locally relevant marketing and merchandising are on the rise
  • Smartmeter installations are on the rise, a smartmeter is a meter that monitors utility consumption (e.g. electricity, water) within a household and makes this data accessible via the Internet
  • Sensors are being placed in plants, so that the plant can tweet us when it needs to be watered, in carpets so that they can tell you when they need to be cleaned, in pills so that they may transmit through a Band-Aid and to the phone biometric readings as the pill travels through our bodies; moreover, in some parts of the world we’ll even find sensors on produce and a wide range of consumer goods.  For example in the case of produce, with a wave of the phone over a head of lettuce at the supermarket a discerning shopper can now know immediately what farm the produce came from, the route it took to get to the store and how long it has been sitting on the shelf

The above online and offline activities are just small subsets of what is happening as vast amounts of consumer information is generated from each every consumer engagement.   In the age of the connected consumer, we are entering an era where brands are looking to control even more of the consumer experience than what they do today.  Eric Schmidt, Google’s former CEO, reportedly calls this personalized search.  In this age, Schmidt proposes that next-generation mobile devices may be capable of tracking an individual’s actions, movements and purchase and over time learn their interest and preferences. Later, using location and similar tracking tools, organizations like Google can alert an individual not just based on their stated or shared preferences but on system inferred and predicted preferences.  In other words, it is predicted that next generation CRM services may learn what an individual wants before the individual even knows he or she wants it.  While may sound appealing for some, others like Eli Pariser point out the high probability that our world interactions will become extremely limited given that our view of the online world, i.e. the world of the connected consumer, will be controlled only by what markets perceive to understand about a consumer.

Only a consumer can understand his or her own needs and it will take a CMI marketplace to provide the necessary protection to the consumer and so that the consumer will have engagements based on their preferences and needs today and not their tracked interactions of yesterday, as is the case with CRM based consumer engagement models.

What’s Next? The Meeting of Waters

CRM will not go be going away. Companies will always be in a position and have the needs, to maintain and manage a profile of their consumers.  Over time, however, as CMI systems emerge and are adopted by consumers the information in the consumer’s personal data store will be more relevant to the consumer’s current need than that hosted by an organization in their CRM system.   Both models will co-exist.

To understand what this co-existence looks like, one simply needs to look to nature.   One of the most unusual sights and impressive natural phenomenon’s in South America is the junction of the Amazon River and its Rio Negro tributary, also known as the “meeting of waters.” The two rivers, the coffee-colored Amazon and the inky Rio Negro, actually do not merge immediately upon meeting due to the fact that they are flowing at different speeds, temperatures, and densities; rather, they co-exist side by side in the same riverbed for nearly four miles before finally merging and becoming one river that has taken on elements of both rivers.  This is what is happening with CRM and CMI models,  for example:

  • Traditional and digital CRM marketing practices are blending and the common thread across both is consumer information, but the tools to view and manage consumer information are vastly different, especially as the consumer takes control
  • We use different materials, strategies, and tactics to create and execute CRM and CMI programsThere is a different time expectation in terms of engagement between the two practices
  • We measure them and the results for consumer engagement differently
  • Consumers and marketers alike may have an expectation of immediacy, contextual relevance, and interactive engagement between CRM and CMI

This phenomenon is a good analogy for what’s happening in marketing today, where traditional media and digital marketing practices (i.e. CRM) have met with the emerging CMI marketing practices.   And, like the Amazon and Rio Negro at their initial juncture, CRM and CMI marketing domains have met, but haven’t yet immediately merged since they are clearly and fundamentally different as described above.  The two rivers of marketing, CRM and CMI, will eventually merge and become one; however, that time is not yet upon us, which for most marketers it is a good thing.  Marketers have time to recognize that CMI is coming and prepare for it.    Much work is needed, investments in new infrastructure, policies on collecting and managing data, research on the equity exchange and motivations for both marketers and consumers and so much more.   We’re entering a new age of marketing.  It should be nothing but exciting.

Understanding Customer Information

Today, marketers are able to directly capture, track and store nearly every online and offline interaction they have with their prospects and customers.   This information takes both the form of personally identifiable information (PII) and on-personally identifiable information (Non-PII). PII refers to information that can be directly attributed to a specific individual, such as someone’s name, address, social security number, etc., and Non-PII is consumer data that can not necessarily be directly attributed to a single individual.

Both PII and Non-PII are captured by marketers in every possible way. Today marketers are able to measure, track and capture nearly every click, search, post, tweet, status update, “like” and “thumbs up,” check-in, completed form, swiped credit card, loyalty program opt-in, product scan and inquiry, customer support interaction and purchase they have with people or that people share on and offline.   Moreover, by working with organizations that specialize in the collection and aggregation of on and offline customer information organizations can further augment the information they collect on existing and potential customers.  Collectively, all this information gets rolled up into customer relationship management systems can be organized into one of five forms:

  • Demographic, such as age, gender, marital status, occupation, nationality, income, and education levels
  • Psychographic, qualitative information used to measure an individual’s lifestyle, such as frequent behaviors (e.g. travel), interests and believes (i.e. attitudes), values and opinions, purchase motivations and personality
  • Preference, individual volunteered information, including tastes in music, food, entertainment, etc.
  • Behavioral and Location, includes tracked consumer activities while online, such as web searches, pages visited, items download and increasingly in includes offline behavior as well as consumers participate in a marketers loyalty programs and use their mobile phones to interact with traditional media and retail displays; for example, the scanning of a UPC code with a smartphone to review product details and to look for near-by competitive offers
  • Syndicated, consumer purchasing data compiled from individually scanned consumer transactions from thousands of purchase locations. The data is collected by market research firms, cleansed, and put into aggregate to protect the privacy of individuals. It’s then used by markers to better understand the purchasing behavior of their target audience

Beyond simple data collection, aggregation and analysis of customer information, many advances in customer information have made it possible for companies to also employ customer information in real-time for immediate affect.  For example,

  • Amazon uses this information to provide visitors to its website with recommendations of additional products and services it determines to be contextually relevant to the customer’s current and previous activities on the web site. 
  • Netflix uses this information, along with the customer’s provided profile upon registration, to provide real-time movie recognition.
  • Pandora uses this and similar information, combined with music semantics (i.e. common theme, style, etc.) to recommend music selections.
  • Google and other leading mobile providers may use consumer information, like an individual’s current location, to refine search results.  For example, a Google search return locally relevant results when consumers perform a search via their mobile phone, including a list of the closest retailers meeting the search criteria along with a phone number, address, distance and directions from the individual’s current location

One final note on consumer information, it is important for marketers to continue to monitor what constitutes PII and Non-PII, and in what context, since the lines are blurring dramatically as more consumers get connected and new consumer information analysis tools emerge. For instance, recently in California state hearing, in the context of retail purchases with credit cards, ZIP codes are now considered PII.  In addition, some have found that in some instances analyses of what was thought to anonymously search queries can actually lead to the identification of an individual consumer.  Consumer information is the asset that will drive the future of our economy and it must be treated with great respect and used appropriately.


Managing Partner at | Website

Michael Becker is an intentionally recognized identity & personal information management solutions strategic advisor, speaker, entrepreneur, and academic. He advises companies on personal information economy business strategy, product development, business development, and sales & marketing strategies. He also represents them at leading trade groups, including the Mobile Ecosystem Forum. Michael is an advisor to Assurant, Predii, Privowny, and Phoji. He is the co-author of Mobile Marketing for Dummies and a number of other books and articles related to mobile marketing, identity, and personal information management. He is on the faculty of marketing of the Association of National Advertisers and National University. A serial entrepreneur, Michael founded Identity Praxis, co-founded mCordis and The Connected Marketer Institute, was a founding member of the Mobile Marketing Association (MMA), and was on the MMA board of directors for ten years and was MMA’s North American Managing Director for three years. In 2004, Michael co-founded iLoop Mobile, a leading messaging solutions provider. In 2014, Michael was awarded the 2014 Marketing EDGE Edward Mayer Education Leadership Award for his commitment to marketing education.

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