What is Marketing 2.0?

Marketers will have noticed that Web 2.0 is spawning dialogue in Marketing circles online, and that some people now refer to Marketing 2.0 as a distinct field of business practice and theory. It is perhaps natural that a great deal of what is written about Marketing 2.0 is by authors of blogs and online collaborations. Many are practising marketers rather than academics, but their dialog on the topic is credibly educated and, in the very dynamic area of online behaviour and marketing trends, perhaps more current than much academic publishing.

The dialog about Marketing 2.0 appears somewhat fractured and incoherent; basic assumptions in this area appear to vary among specific interest groups and industries.

One specific presumption and focus is on SaaS and the internet becoming a computing platform, and in this context marketing 2.0 becomes a variant of marketing that is specific to the IT and software business. As the Director of Marketing at Sage Software and Sun Microsystems Emmanuel Obaida has combined a business interest in SaaS and observations about media usage shifts in his prominent blogging (Obadia, 2007).

Another group’s focus is concerned with online marketing specifically. Distinguished from broader web 2.0 influenced thinking that directs CRM 2.0 to consider releasing control of dialog and relationships to consumers, these writers focus on online marketing and limit the context of marketing practice to one where the internet is the primary if not sole channel of marketing communication. Writers like Neil Patel, and Cameron Olthuis (focussing on online marketing services relative to their own online marketing practice) and Darryl Siry (focussing on web 2.0’s importance with specialty in specialty automotive marketing for Tesla Motors) specialised in tracking the latest shifts in online behaviour and online tools at a level of scrutiny that is in lead of popular internet usage, aiming to interpret the direction of flow of the rapidly-evolving medium relative to an informed practice of marketing (Patel, Saleem, Olthuis, & Fujiu, 2008; Siry, 2008). Writers at Beeline Labs’ collaborative blog and online community aim broadly to explore how the social web is becoming a part of fundamental marketing practice. The complexity of this field pulls their writing across social media and networking, software, online marketing practice and the evolution of broader marketing theory. The complexity is aimed, though, at distilling complex changes down to a comprehensible understanding of marketing in the web 2.0 era.

“A good marketer today must spend an extraordinary amount of time reading news and blogs, actively participating in the venues and mediums that your customers are engaging in and communicating through” (Siry, 2008).

Marketing 2.0 also embraces Web 2.0 practices like democratic outcomes and 2-way online exchange. As with CRM, Marketing 2.0 stresses that control shifts into the hands of consumers.

“CMR (customer management of relationships) will require modifying your traditional marketing efforts. It will demand more than promotions and advertising, and will require new tools for customer communication. A challenge for some companies will be getting a CMR strategy in line with the need to grow customer value when the advertising agencies (and their media planners) are more interested in customer acquisition and giving the brand image a makeover. Instead of fighting against CMR projects that appear to threaten their power base, marketing directors will have to recognize the transferability of their skills to CMR and learn to use these tools for more profitable media investments. Your strategy will have to include training programs to teach all personnel the objective of passing control of the relationship to the customer and the effective use of CMR tools.” (Newell, 2003)

The buzz about marketing 2.0 has quieted dramatically over the past two years. In part this owes, I suggest, to the futility of re-naming a field of business just because a tide of change (in this case web 2.0) has emerged in the external environment. But also it owes to the diversity of possible definitions for Marketing 2.0.

Compared to CRM and its spawn CRM 2.0, the broadness of the field of Marketing appears to create a diverse range of interpretations of what ‘Marketing 2.0’ might refer to. Unlike the community’s development of CRM 2.0, with Marketing 2.0 it is difficult to find coherent lessons or even a coherent identity, except what we might have predicted having examined Web 2.0 and CRM 2.0: Consistent ideas within Marketing 2.0 are basic hallmarks of Web 2.0 thinking:

    a) Organisation-wide, silo-breaking orientation to consumers is necessary, and

    b) Control of communication, strategy and the ultimate success of businesses all lies in the hands of consumers.

(I think many exceptions exist for idea (a), and I’m not so nihilistic as to completely accept idea (b), but both are valid syntheses of many people’s recent writing on Marketing 2.0 and contemporary IMC alike.)

This post is part of a developing series:

1. Web 2.0 Marketing: Consumers’ online behaviours boost brand engagement
2. Does the 2.0 revolution warrant renaming business functions?
3. Definitions and critical success factors for CRM
4. Is CRM 2.0 something new?
   
5. What is Marketing 2.0? (You are here)

References:

Newell, F. (2003). Why CRM Doesn’t Work : How to Win by Letting Customers Manage the Relationship. Bloomberg Press

Obadia, E. (2007, 23 June 2007). We’re moving from Desktop to Webtop. Marketing 2.0

Patel, N., Saleem, M., Olthuis, C., & Fujiu, R. (2008). Pronet Advertising.

Siry, D. (2008). Marketing 2.0.

Is CRM 2.0 something new?

CRM has been regarded overall as a movement that is tremendously powerful—but predominantly unsuccessful.

No significant flaws have been revealed in the concepts underlying CRM, but rather the ability or willingness of leaders and organisations to successfully undertake CRM has been found lacking. Many authors regard CRM as, simply, a good set of tools and concepts whose application has been conducted poorly by a preponderance of businesses (White, 2003; Xu, Yen, Lin, & Chou, 2002).

“50 percent of leading brands’ heaviest buyers one year are typically not in that same group the following year, with a significant number of them leaving the brand altogether. This reveals a stunning opportunity to do a better job of raising customer commitment levels beyond those being achieved currently” (Rapacz & Reilly, 2008).

Frederick Newell is one author who is deeply critical of CRM’s track record, and quite early in the emergence of web 2.0 he proposed another re-badging of the field:

CMR (Customer Management of Relationships).

“In the world of CMR the power of defining the relationship transfers to the customer. Customers will engage in different types of dialog with suppliers, often being the ones to initiate the search for a solution. The concepts of self-service give the customer more control; the seller no longer mandates the process. There will still be targeting, but the customer may choose the target firm. In this topsy-turvy CMR world, the customer will tell us what she is interested in and not interested in, what kind of information she wants, what level of service she wants to receive, and how she wants us to communicate with her—where, when, and how often” (Newell, 2003).

Newell, and the earliest web-savvy consumers, were onto something. CMR is a concept that reappears throughout contemporary discussions of CRM 2.0.

Marketing and CRM authors have recently begun to acknowledge that the relationship is not only controlled by the consumer, but relate the quality and responsiveness of these relationships, including businesses’ consideration of customers’ needs and behaviours, to brand experience. It is noted that even for businesses pursuing sales or marketing perspectives on their business, ultimately it is customers who manage relationships, and that non-responsive or exploitive approaches to CRM can blind managers to this fact (which we might say would inherently represent a lack of consumer orientation, which we will discuss in a later section of this paper) (Ford & Nicks, 2003).

Ford proposes an integrated framework for uniting brand experience, creation/exploitation of customer relationships, and incorporating customers’ and companies’ perspectives.

“power lies with the customer and it is only by looking at markets through their eyes that businesses will succeed in building relationships” (Ford & Nicks, 2003).

Even this point, though, like the earlier dialog about relational strategies supplanting transactional strategies, becomes only a partial step to the end that is called up in the age of the social web. CRM (and IMC) perspectives on relational strategies focussed on collecting a broad range of consumer information in order to strategise and improve targeting. Discussions of this concept by authors such as Zahay retain the notion that consumer information is collected as a function of CRM in order to adjust the ways that businesses command and control their marketing efforts to maximise returns (Zahay, Peltier, Schultz, & Griffin, 2004). The further step implicit in CRM 2.0 is that control over a business’s purpose and function is largely handed over to the consumer.

The online wiki collaboration created by Paul Greenberg toward the development of the fourth edition of his book CRM at the Speed of Light, rather than helping to advance a distinct new practice, may serve to highlight some of the futility of re-naming the field. After extensive tabling and before-and-after comparisons, each of Greenberg’s points comes back to the same fundamental Web 2.0 ideas: Customers are given control of conversations, and their inputs are acted upon.

“CRM 2.0 is a business philosophy and strategy that fosters mutually beneficial conversations with customers through technology platforms, business rules, business processes, and social characteristics. It is the company’s response to the customer’s ownership of the conversation” (Greenberg, 2008).

Is CRM 2.0 anything new?

With CRM having a strong background in championing customer relationships, breaking of internal silos and overall consumer orientation, CRM stood in relatively strong stead as we shifted into the era of the social web.

Accounting for a new emphasis on consumer orientation and consumer control of communication, is CRM 2.0 a worthwhile re-naming of the field?

I suggest this is only the case if real orientation to consumers—and the adoption of an organisation-spanning mission to act on that orientation—are issues that fall solely within the domain of CRM. None of the literature or commentary appears to provide a reason that this might be so. CRM is a useful and necessary function, and its relevance is increased where businesses are conducted online, but the fundamental lessons and theory of CRM are really lessons for executive-level management. Every ‘foot soldier’ in an organisation needn’t be a CRM (or IMC) guru in order for the business to have a practical orientation toward its consumers—a general acceptance by executives and managers will lead to the right people gaining those skills and attitudes.

This post is part of a developing series:

1. Web 2.0 Marketing: Consumers’ online behaviours boost brand engagement
2. Does the 2.0 revolution warrant renaming business functions?
3. Definitions and critical success factors for CRM
4. Is CRM 2.0 something new? (You are here)
5. What is Marketing 2.0?

References

Ford, K., & Nicks, G. (2003). CRM And New Marketing: How Do We Capture The Customer Experience? Paper presented at the Market Research Society Annual Conference.

Greenberg, P. (2008). Authoring Wiki for “CRM at the Speed of Light, 4th Edition”. http://crmsol.pbwiki.com

Newell, F. (2003). Why CRM Doesn’t Work : How to Win by Letting Customers Manage the Relationship: Bloomberg Press

Rapacz, D., & Reilly, M. (2008). The New View of Relationship Marketing: Better integration to deepen brand commitment. Journal of Integrated Marketing Communications (2008), 19-25.

White, R. (2003). Customer Relationship Management. WARC Best Practice, September 2003.

Xu, Y., Yen, D. C., Lin, B., & Chou, D. C. (2002). Adopting customer relationship management technology. Industrial Management and Data Systems, 102(8/9), 442.

Zahay, D., Peltier, J., Schultz, D. E., & Griffin, A. (2004). The role of transactional versus relational data in IMC programs: Bringing customer data together. Journal of Advertising Research, 44(1), 3-18.

Definitions and critical success factors for CRM

The building-blocks of successful CRM resonate throughout marketing and management

Broadly, organisations have long been geared toward customers in terms of setting growth strategies, marketing and sales strategies, product development and internal budgeting. But organisations were prevailingly centred upon the product or services they sold (Peppers & Rogers, 2004). Customer Relationship Management is a field that exploded in the late 1990s when businesses realised the potential of internal networks and the internet for tracking transactions of all types toward managing long-term customer relationships—to maximise customer satisfaction and engagement and, ultimately, the overall ROI for a CRM initiative ^{(see note 1 at bottom)} (Bligh & Turk, 2004).

The CRM literature is vast, spanning a range of approaches and interpretations delineated among business sectors and among camps with distinct definitions of CRM itself.

The most obvious division in the literature is the distinction between CRM as a broader concept describing organisation-wide customer orientation and CRM as a more isolated field comprising CRM technology (referred to by some authors as “CRM IS” (meaning CRM information systems) or as “eCRM” by (Lin, Lin, Huang, & Kuo, 2006)).

In a non-IT context it is be easiest (and most consistent with the origin and two decades of literature) to discuss CRM as a strategic business practice enabled by technology, with customer orientation being taken (as is predominantly the case) as a necessary precondition for successful CRM technology implementation, as we will discuss in more detail below.

Since early in the explosion of CRM, and throughout the years that have followed, lists of necessary preconditions or critical success factors for a CRM undertaking have been identified and discussed by a great range of authors in academia, business and the business media. Assessing these comprehensively would fill several books; however a more brief review does begin to reveal consistencies. The most repeated—and yet neglected—of these are reduced to a fundamental three by Phillip Bligh:

1. “CRM is not just a technology initiative; it must be approached strategically.

2. “Insight into customers and demand trends should drive CRM agendas.

3. “CRM must be implemented with an enterprise-wide perspective” (three points quoted from Bligh & Turk, 2004).

An additional necessity, repeated often and with greater urgency in the literature from recent years, is outlined well by Don Peppers:

4. “Establish one-to-one learning relationships: using data about customers, predict what each one needs next, treat them uniquely and increase mutual value with the customer” (Peppers & Rogers, 2004).

Point number one, above, points to the most common source of failure in CRM identified by businesses and the business literature. Countless business leaders have pursued the implementation of CRM in a shallow, arm’s length fashion—considering CRM to be an off-the-shelf ‘product’ that a company needs simply to install and turn on. This fails to recognise that CRM is a business function involving information that is received from customers, and more importantly it is also an orientation toward those customers with the aim of acting upon the information collected.

“[A] source of confusion related to CRM is the meaning of the term customer relationship management. Customer relationship management is actually a business transformation, not just a change in technology” (Marchand, 2006).

Point number two, above, highlights a need to move beyond a marketing perspective when engaging in meaningful CRM.

“Many marketers still think CRM is just an advanced stage of database marketing—using your customer database to find which customers would be the right ones for a specific product offering. They don’t yet understand that relationship building must start with an understanding of the customer’s needs” (Newell, 2003).

Points number two and four are explicitly linked to the necessity for pursuing relational strategies rather than transactional strategies. Relational strategies take into account lifetime cost and value with respect to the total of all interactions and transactions, whereas transactional strategy is focussed on the value of a current or next transaction (Peppers & Rogers, 2004).

“By focussing on the Customer we mean that a company’s managers and sales people should direct and orient their activities at the customer before, during and after sales. The relationship term is a way of moving companies away from having a purely “transactional” contact with customers to building broader and deeper relations that create high customer loyalty. And at the same time, create higher revenues from the lifetime relationship with the customer” (Marchand, 2006).

Point number three is perhaps the most repeated recommendation in the CRM literature. Authors point out that separate, often ‘siloed’ or even competing internal divisions such as marketing, advertising, sales, customer service, fulfilment—and even executive offices—must be united in their commitment to CRM. CRM changes the way information moves through organisations, and how information is acted upon. If this is not the case, even where every employee is sitting in front of a CRM terminal, CRM is not actually taking place. (Valentine, 2005; Xu, Yen, Lin, & Chou, 2002)

“Customer strategy helps avoid the silo effect that exists among departments in many organisations… [encouraging] department managers and employees to think first about customers and second about departmental policies.

“In many organisations, departments become fiefdoms and lose sight of their mission to support the delivery of value to customers. By contrast, high performance firms breach the walls between departments” (Bligh & Turk, 2004).

Breaching silos to create a horizontal, customer-driven organisation is a change for staff that is functional and communications-oriented (both internally and externally). But it is also a cultural shift that must be embraced by managers and executives and that must unite an organisation in defining its purpose.

CRM guides organisations to make customer relationships their primary function and to permanently overcome any thinking that makes internal structure and function appear significant by comparison.

“Customer strategy must drive customer-related policy; existing departmental rules are secondary in importance”(Bligh & Turk, 2004).

“…companies must develop a mindset and culture of customer centricity in their own people, in their products/services, their channel use and their interactions with customers. The management challenge when bringing CRM into a company is both people oriented and information based. To execute CRM effectively requires a cultural shift…” (Marchand, 2006).

But this cultural shift is not an easy one to effect throughout a large group of departments and people, and this is why enterprise-wide change—the most often cited necessity for CRM—is also the least often achieved.

“Employees’ resistance is one of the major risks associated with CRM implementation. In most companies, CRM efforts often never get off the ground because they encounter such stiff resistance from IT. In some of those failed efforts, CRM is proclaimed a new cultural initiative. Similar to TQM in the 1980s, it sounds great in theory. But what happens in practice is that management encounters so much resistance to implementing CRM as a large change management initiative that it just fizzles out” (Xu et al., 2002).

Point number four ventures right into the changes Web 2.0 is bringing to business and shines some light on the significance lurking here, but stops a half-step short of the true ethos, and the potential, of Web 2.0.

Where did this bring us?

People interested in IMC and marketing generally will be familiar with the themes and the CSFs for CRM. They are reflected in modern definitions of IMC and are ever-present in dialogues about web 2.0-era marketing.

Does CRM 2.0 move significantly beyond these?

Notes

[1]  It is important to note that the relationship between CRM and ROI has been a rocky one, at best, largely due to problems described above. Most studies report that fewer than 20% of new CRM implementations lead to positive returns, that even among those organisation that report positive results roughly half are unable to provide credible business data to assess their CRM, and that over 10% of projects never even reach a ‘live’ state. (Almquist, Heaton, & Hall, 2002; Bligh & Turk, 2004; Hansotia, 2002; Nairn, 2002)

This post is part of a developing series:

1. Web 2.0 Marketing: Consumers’ online behaviours boost brand engagement
2. Does the 2.0 revolution warrant renaming business functions?
3. Definitions and critical success factors for CRM (you are here)
4. Is CRM 2.0 something new?
5. What is Marketing 2.0?

References

Almquist, E., Heaton, C., & Hall, N. (2002). Making CRM make money. Marketing Management, 11(3), 16. (also published here)

Bligh, P., & Turk, D. (2004). CRM Unplugged : releasing CRM’s strategic value. Hoboken: John Wiley & Sons, Inc.

Hansotia, B. (2002). Gearing up for CRM: Antecedents to successful implementation. Journal of Database Marketing, 10(2), 121.

Lin, C., Lin, K., Huang, Y.-A., & Kuo, W.-L. (2006). Evaluation of Electronic Customer Relationship Management: The Critical Success Factors. The Business Review, 6(2), 206-212.

Marchand, D. (2006). Customer Relationship Management Challenging the Myth: Focus on people, not the technology. Perspectives for Managers, 131, 1-4.

Nairn, A. (2002). CRM: Helpful or full of hype? Journal of Database Marketing, 9(4), 376.

Newell, F. (2003). Why CRM Doesn’t Work : How to Win by Letting Customers Manage the Relationship: Bloomberg Press

Peppers, D., & Rogers, M. (2004). Managing Customer Relationships: A strategic framework. Hoboken: John Wiley & Sons, Inc.

Valentine, L. (2005). Rethinking CRM to make it pay. ABA Banking Journal, 97(5), 62-62.

Xu, Y., Yen, D. C., Lin, B., & Chou, D. C. (2002).

Adopting customer relationship management technology

. Industrial Management and Data Systems, 102(8/9), 442.

Does the 2.0 revolution warrant renaming business functions?

Does the business world need Marketing 2.0, CRM 2.0, and even IMC 2.0—or just ‘Customers 2.0’?

Recent changes in internet functionality and consumer online behaviour, originally described as a far-reaching change in internet communications and colloquially titled “web 2.0” by Tim O’Reilly, involve (in part) a shift from an internet serving as a largely broadcast-structured one-directional medium to an internet where users contribute and collaborate extensively. The most apparent, current hallmarks of this shift include the exploding popularity of online networking, blogs, social communities and a general increase in the level of interactivity available online. Many successful commercial websites have embraced the trend by encouraging customers to contribute content in blogs, reviews, forums and other online facilities. Video games have evolved to include team collaboration and real-time communication among any number of remotely-located players.

Web 2.0 pundits suggest that this shift in online behaviour indicates a crucial new direction in consumer behaviour that entails a pervasive and growing expectation on the part of consumers that they should be able to engage with and contribute to whatever communities or entities they make contact with online.

That this appears to be borne out by the very nature of many online success stories—businesses such as Flickr, Facebook and Amazon—has led some in the business community to consider 2.0 trends as a pivotal shift that calls for a redesign or redefinition of business functions such as customer relationship management (CRM), public relations (PR) and marketing.

The lessons that are extracted from these changes, however, reflect in many respects established theory and practice in each field. In fact, lessons for business that are being touted as changes necessitated by the advent of web 2.0 echo some of the key lessons highlighted in the field of CRM for many, many years. The past two decades’ literature on the design, implementation and conduct of CRM overlaps extensively with ‘2.0’ ideas, and these overlapping indications appear to revolve somewhat upon consumer orientation.

Web 2.0 is described by some as a revolution that necessitates a significant redesign of communication with commercially important audiences. This has led some writers to suggest that new fields of thought and practice, with new titles such as ‘Marketing 2.0’, ‘CRM 2.0’ and ‘PR 2.0’, should be adopted to denote the differences to traditional practice.

Is a shift in the field of IMC toward a new era of ‘IMC 2.0’ called for, or would this essentially be giving a new name to pre-existing best theory and best practice in marketing communications?

In my next several posts I will review CRM, CRM 2.0, Marketing 2.0 and the current state of IMC—let’s see if this leads us toward IMC 2.0…

This post is part of a developing series:

1. Web 2.0 Marketing: Consumers’ online behaviours boost brand engagement
2. Does the 2.0 revolution warrant renaming business functions? (you are here)
3. Definitions and critical success factors for CRM
4. Is CRM 2.0 something new?
   
5. What is Marketing 2.0?