Summary

1 The three areas of relationship marketing, direct marketing and database marketing have converged to create a powerful new marketing paradigm known as 'customer relationship management'.

2 Relationship marketing theory provides the conceptual underpinning of one-to-one marketing and customer relationship management since it emphasises enhanced customer service through customer knowledge.

3 The objective of customer relationship management (CRM) is to increase customer loyalty in order to increase profitability over customers' lifetime value (LTV). It is aimed at improving all aspects of the level of customer service.

4 CRM tactics can be based around the acquisition, retention, extension model of the ideal relationship between company and customer. Marketers can use 'sense and respond' techniques such as RFM analysis to target customers for retention and extension.

5 Direct marketing provides the tactics that deliver the marketing communications (and sometimes the product itself) to the individual customer. This approach is evolving rapidly with the advent of the Internet, the rise of call centres and advances in logistics.

6 Database marketing provides the technological enabler, allowing vast amounts of data to be stored and accessed in ways that create business opportunities.

7 Online relationship marketing is effective since it provides an interactive, multimedia environment in which the customer opts in to the relationship.

8 Steps in implementing one-to-one on the Internet are:

• Step 1. Attract customers to site.

• Step 2a. Incentivise in order to gain contact and profile information.

• Step 2b. Capture customer information to maintain the relationship and profile the customer.

• Step 3. Maintain dialogue through using online communications to achieve repeat site visits.

• Step 4. Maintain dialogue consistent with customer's profile using direct mail.

9 Personalisation technologies enable customised e-mails to be sent to each individual (or related groups) and customised web content to be displayed or distributed using push technology.

10 Integration with databases is important for profiling the customer and recording the relationship.

11 Virtual communities have an important role to play in fostering relationships.

12 Marketers must be aware of the risk of infringing customer privacy since this is damaging to the relationship. Providing customers with the option to opt in and opt out of marketing communications is a legal requirement in many countries.

13 Internet-based one-to-one marketing needs to be integrated with traditional communications by mail and phone as described in Chapter 8.

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