Loyalty.com: Customer Relationship Management in the New Era of Internet Marketing

Citation

Lloyd, S.M. (2001), "Loyalty.com: Customer Relationship Management in the New Era of Internet Marketing", Journal of Consumer Marketing, Vol. 18 No. 4, pp. 368-376. https://doi.org/10.1108/jcm.2001.18.4.368.1

Are you prepared for marketing in the twenty‐first century? Take this “quickie quiz” to find out:

1. 1.

   (1) What do Hallmark Cards, RadioShack, Southwest Airlines, and Boots the Chemists have in common?

2. 2.

   (2) What is “the process of modifying customer behavior over time by strengthening the bond between the customer and the company” called? (Definition from p. 230)

3. 3.

   (3) What was the secret to IBM’s phenomenal success in the early days of micro‐computers, mini‐computers, and PCs that is even more applicable today?

Give up? Ironically, the answer to all three questions is exactly the same customer relationship management (or CRM), the latest buzz‐phrase to take the marketing world by storm. As discussed by Frederick Newell in this comprehensive and wide‐ranging book, CRM is focused not around frequent shopper cards or the accumulation of redeemable “points,” but rather, on the identification and delivery of value to each individual customer. CRM, by virtue of its emphasis on the customer as an active participant in marketing efforts (not just a passive recipient), goes beyond the plain‐vanilla relationship marketing and loyalty programs popular in the 1980s and 1990s. Hallmark, RadioShack, SWA, and Boots are contemporary leaders in CRM, offering exemplary programs that are discussed in some depth in the latter part of the book. Similarly, IBM was a pioneer, although, of course, its classic sales and marketing approaches were not actually called customer relationship management.

In discussing what this book is, it is equally important to state what it is not. First, if you’re looking for a comprehensive reference on Internet and electronic marketing, do not buy Loyalty.com!Despite the word “Internet” prominently displayed in the title, this book is not about electronic marketing, per se. In fact, e‐mail marketing is not formally introduced until chapter 12, and Internet marketing first appears in chapter 17 (at roughly the halfway point in the book). Moreover, only a handful of the 31 chapters in Loyalty.com are devoted wholly to electronic issues. Primarily, Newell’s focus is on the complexities of integrating electronic marketing initiatives with more traditional direct marketing efforts, such as database marketing, telemarketing, and customer service. And in an era of electronic wizardry and the desire for quick, high‐tech fixes to marketing woes, he emphasizes this important point again and again: “As we said at the start, the magic bullet for CRM is the gestalt – technology in all the forms that we know today plus those just on the horizon” (p. 163). Second, if you’re looking for a book that provides step‐by‐step, “how‐to” instructions for setting up a CRM system, Loyalty.com will be of little help. This book is broad and strategic in nature, rather than detailed and tactical. Its overarching goal is to motivate marketers to think “outside the box” by posing provocative questions that encourage creativity. Thus, the focus of Loyalty.com is on inspiration, not perspiration. While the chapters introduce exciting ideas, they often stop well short of explaining exactly how to implement them.

Loyalty.com is organized into four parts, each composed of about eight short, pithy chapters. Part one defines CRM, providing an historical and conceptual overview of this strategic initiative, and discussing its evolution from relationship marketing and one‐to‐one marketing. Part two discusses each of the tools and techniques associated with customer relationship management, including databases, e‐mail, the Internet, telemarketing, digital printing, and data mining. Although mini‐case studies are sprinkled liberally throughout the book to illustrate key aspects and practices of CRM, part three is devoted almost exclusively to case studies. Finally, part four emphasizes strategic issues, such as the role of products (“… consumers increasingly want what products do, rather than what they are” (p. 269)), the importance of dialog with the customer, and the critical nature of privacy concerns.

Loyalty.com is a relatively quick and easy read. While it is possible to dip in at any point, the chapters are best read (or browsed) sequentially since concepts presented in earlier chapters are later integrated with one another. In particular, the chapters in parts one and two should be read first, since they provide a foundation and context for the case studies and strategic issues presented later. The chapters are “bite‐sized,” ranging from about nine to 15 pages in length, making them eminently suitable for those “quick‐read” moments at lunch, on the commuter train, or at the dentist’s office. Each chapter has a clever title that helps draw the reader into the text. For example, consider the following: Chapter 2: The ears of the hippopotamus; Chapter 5: If nominated, I will not run; if elected, I will not serve; Chapter 14: Things Gutenberg never dreamed of; and Chapter 23: If you care enough. And many have memorable openings which are likely to resonate with readers, and thus, underscore the key message of the chapter. For example, Chapter 6, which focuses on identifying the “best” (or most profitable) customers, opens with the 1998 saga of home‐run hitters Sammy Sosa and Mark McGwire. This vignette makes the point that such flashy ball players are not necessarily more profitable than those like Larry Walker, who post consistently high batting averages or otherwise excel at less exciting, less intense aspects of the game.

Overall, Loyalty.com is written in a breezy, “pearls of wisdom” style. Throughout each chapter are buried numerous small “ah‐hah’s!” that scream for a highlighter pen. For instance, a few of the nuggets I noted include “… people spend their time and money first on what they need and second on what they value” (p. 34), “… you’re not going to manage customer relationships with every customer … the important questions are which ones and how many – two different questions” (p. 39), and “… corporations need to start thinking of their promotional information as a tangible asset that needs to be captured and managed” (p. 135). In addition to such sound bites embedded in the text, each of the four parts of the book concludes with a “quick tips” section (organized by chapter) that lays out key lessons learned. This can be a useful reference, but should not be used as a “Cliff’s notes” to avoid reading the book – they provide some of the substance, but none of the sizzle that brings the lessons to life.

As a final note, Loyalty.com can largely be characterized as a large‐scale literature review. Although Newell makes it clear that some of the material was obtained through his own consulting experience as well as interviews with business professionals and other experts, many of his examples, quotations, and CRM results appear to be drawn from secondary sources. While this does not necessarily lessen the value of the book, it is an important point of which readers should be aware, since it could impact how you read and interpret it, as well as what you choose to take away.

In summary, Loyalty.com has much to recommend it when it falls into the right hands. It is aimed at marketing, strategy, or brand managers and executives (as well as other creative self‐starters) interested in energizing and re‐focusing their firm’s marketing efforts. Those seeking provocative insights on integrating new and old technologies as they turn the corner into the twenty‐first century will not be disappointed.