You can see that this framework distinguishes between customer retention and cus-
tomer extension. Retention involves keeping the most valuable customers by selecting
relevant customers for retention, understanding their loyalty factors that keep them
buying and then developing strategies that encourage loyalty and cement the relation-
ship. Customer extension is about developing customers to try a broader range of
products to convert the most growable customers into the most valuable customers. You
will also see that there are common features to each area – balancing cost and quality of
service through the channels used according to the anticipated value of customers.
Peppers and Rogers (1997) recommend the following stages to achieve these goals,
which they popularise as the 5 Is (as distinct from the 4 Ps):
Identification. It is necessary to learn the characteristics of customers in as much detail
as possible to be able to conduct the dialogue. In a business-to-business context, this
means understanding those involved in the buying decision.
Individualisation. Individualising means tailoring the company’s approach to each cus-
tomer, offering a benefit to the customer based on the identification of customer
needs. The effort expended on each customer should be consistent with the value of
that customer to the organisation.
Interaction. Continued dialogue is necessary to understand both the customer’s needs
and the customer’s strategic value. The interactions need to be recorded to facilitate
the learning relationship.
Integration. Integration of the relationship and knowledge of the customer must
extend throughout all parts of the company.
Integrity. Since all relationships are built on trust it is essential not to lose the trust of
the customer. Efforts to learn from the customer should not be seen as intrusive,
and privacy should be maintained. (See Chapter 3 for coverage of privacy issues
related to e-CRM.)Permission marketing
Permission marketingis a significant concept that underpins online CRM throughout
management of the customer lifecycle. ‘Permission marketing’ is a term coined by Seth
Godin. It is best characterised with just three (or four) words:
Permission marketing is ...
anticipated, relevant and personal [and timely].Godin (1999) notes that while research used to show we were bombarded by 500 mar-
keting messages a day, with the advent of the web and digital TV this has now increased
to over 3000 a day! From the marketing organisation’s viewpoint, this leads to a dilution
in the effectiveness of the messages – how can the communications of any one company
stand out? From the customer’s viewpoint, time is seemingly in ever-shorter supply, cus-
tomers are losing patience and expect reward for their attention, time and information.
Godin refers to the traditional approach as ‘interruption marketing’. Permission market-
ing is about seeking the customer’s permission before engaging them in a relationship
and providing something in exchange. The classic exchange is based on information or
entertainment – a B2B site can offer a free report in exchange for a customer sharing
their e-mail address which will be used to maintain a dialogue; a B2C site can offer a
screensaver in exchange.
From a practical e-commerce perspective, we can think of a customer agreeing to
engage in a relationship when they check a box on a web form to indicate that they agreeCHAPTER 6· RELATIONSHIP MARKETING USING THE INTERNET
Permission
marketing
Customers agree (opt-
in) to be involved in an
organisation’s
marketing activities,
usually as a result of an
incentive.
Interruption
marketing
Marketing
communications that
disrupt customers’
activities.