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Consumer Relationship

Marketing, 2004

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CRM is a database-enabled marketing tactic that creates a direct relationship between the brand and the consumer.

What is CRM?What is CRM?

SYNONYMS

One-to-one, Direct-to-consumer, Personal marketing

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ACQUISITION Attract permission-marketing sign-ups Intersect with the target where they live For packaged goods clients, DM and IVR are difficult to

pay out: Web is most efficient

CRM StrategiesCRM Strategies

RETENTION Keep consumers excited about using your brand Reinforce ongoing product benefits and new programs Launch new products to an interested constituency Encourage continuity and stocking

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Forrester CPG Conference

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CRM Acquisition and Retention CRM Acquisition and Retention ModelModel

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1965

Number of 60 second TV spots

to reach 80% of 18-49 US audience

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2002

Number of 60 second TV spots to reach 80% of 18-49 US audience

117

"In 1965, 80 percent of 18- to 49-year-olds in the U.S. could be reached with three 60-second TV

spots. In 2002, it required 117 prime-time commercials to produce the same result,"

Jim Stengel P&G Global marketing officer, 2004

Mass Marketing Under SiegeMass Marketing Under Siege

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Technologies

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Evolution from a single-to-many communication model (network TV) to a many-to-many communication model (Web and other digital platforms).

Hundreds of millions of consumers on a global basis are communicating with each other using technologies that didn’t exist 10 years ago.

Real-time

Gaming

IMVideo

Addressable TVMMS

BloggingMP3s

Communication is EvolvingCommunication is Evolving

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0

100,000

200,000

300,000

400,000

500,000

600,000

UniqueGrossReloadsPosts times 100

Stats: Boingboing.net

2000 2001 2002 2003 2004

Explosive Growth in BloggingExplosive Growth in Blogging

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Consumers

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I’m not anyone’s “sticky eyeball…”

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Only 14% of people believe information passed to them by government and advertising.

90% of people believe information passed to them by friends and family. 80% of all consumer decisions are influenced by word-of mouth marketing. (Dichter) 89% of consumers now recommend products or services they like to others. (Henley

Centre) Word-of-mouth is 9X as effective as ADVERTISING in converting unfavorable or

neutral pre-dispositions into positive attitudes. (Day) Word-of-mouth is 4X as effective as personal selling in influencing consumers to switch

brands. (Lazarfeld)

The consumer's new role: "from isolated to connected, from unaware to informed, from passive to active."

"The Future of Competition: Co-Creating Unique Value with Customers," authors C.K. Prahalad and Venkat Ramaswamy

The Consumer in ControlThe Consumer in Control

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In an information-glutted society:

People are trusting the “broadcasters” less, and they are trusting “re-broadcasters” more.

Personal recommendations and network reputation is becoming more

important (eg: eBay)

Push technology such as Google News Alerts and RSS newsreaders will become even more important as information overload increases.

The rapid emergence of online newsbots, blogs, and personalized news feeds have all contributed to the development of the Web as a massive, centralized, efficient database for distributing and collecting news.

Community Communication Community Communication ExpandingExpanding

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CPG Response

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TV

OtherTV

CRM

POP

PRPromo

“Nestles’ budgets are 60:40 in favour of above the line and it is hard to convince the operating units

that there should be no line. TV is still the majority of our spend, which, frankly, is a frustration.”

Frank Cella, CMO, Nestle, 2002

In 2000, Kimberly Clark, shifted spending to a 50:50 split between TV

and relationship marketing on Huggies.

Traditional Today

How Are Marketers Reacting?How Are Marketers Reacting?

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CPGs now understand:

It’s no longer marketing *to* a consumer:

You must market *with* a consumer

The New Packaged Goods The New Packaged Goods PerspectivePerspective

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Brand Focus

Consumer Focus

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CPGs are beginning to measure their success by the “total share of cupboard” for a household or consumer, on a corporate basis, balanced for ROI.

These consumer relationships are beginning to be considered “corporate assets”.

The key issue: Identify high value (high consumption) households, and significantly impact sales within those households.

Consumer MeasuresConsumer Measures

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CPG

The New CPGThe New CPG

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CPG companies now focusing on services in addition to products

How can a CPG deliver greater value to its consumer outside of basic product benefits?

How can a CPG become more entrenched with a consumer on an emotional level?

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Procter & Gamble Home Made SimpleP&G Golden Household project targeted at

30% of US HH with 50% P&G consumptionKey metric is share of consumer’s shopping

basket vs. brand share

Kraft Kitchens#1 CPG destination in December

(Nielsen Net)#10 in the online home and shopping

category (Nielsen Net)

Others IncludeHome Basics (Unilever)Parent Stages (Kimberly Clark)Very Best Baby (Nestle)

CPG Portals Growing RapidlyCPG Portals Growing Rapidly

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Viral WOM CommunitiesViral WOM Communities

P&G Tremor Trendsetters > Early Adopters > Teen

Connectors 300,000 Teen Connectors in program Now approaching other CPGs

Informative Viral marketing programs with:

Lego Mercedes P&G Pfizer HP

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Database Growth Iams has aggregated 40MM US pet names

(Donnelly) and 3MM in Japan P&G aggregating 385MM names in Europe

Extensive Internet Programs Popular because low cost of re-contact and

high target reach 12% of P&G customers connect with

company online (Forrester)

P&G centralises European database to

build CRM

LONDON - Consumer goods giant Procter &

Gamble is to centralise its consumer database

across 16 markets in Europe as part of a strategy to

improve its relationships with customers.

It will house details of 385m consumers in Western

Europe across Belgium, the Netherlands, UK,

Ireland, France, Germany, Austria, Switzerland,

Spain, Portugal, Italy, Greece, Norway, Sweden,

Finland and Denmark. …

Massive DatabasesMassive Databases

Acquisition by Harvesting Online Publishers…

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Publishers

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Being disintermediated by CPGs, who are harvesting their readership

Being disintermediated by readers, who are turning to each other for information

Implications for Online Implications for Online PublishersPublishers

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CRM AcquisitionCRM Acquisition

CPA-based Psychographically targeted Focus on heavy users: Better data Partnership programs that reward heavy brand users

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Viral WOMViral WOM

Create your own viral networks: Develop a CPA-based access model for marketers

Segment and differentiate your customer group based on demonstrated interests

Let your readers contribute content to the network Create psychographic targeting pods

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InterestingNETInterestingNET

• Combines blogging and social networking• Leads to “social networking with a purpose”: You meet

people you share interests with• Extends the community, and extends the discussion• Enables true psychographic product and message

targeting…

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1. The global communication model is changing from “broadcast” to “re-broadcast”.

2. This change is being driven by new consumer-to-consumer media tools that didn’t exist a decade ago.

3. Consumers are evolving: They’re more in control and they’re expanding their relationship networks.

4. CPGs are responding to these changes by becoming content providers and creating their own viral networks.

5. Online publishers are being harvested by the CPGs, and need to respond by creating greater affinity with their readers.

SummarySummary

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