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Marketing News South Africa

The dangers of relationship marketing

It would be laughable if it wasn't so serious. Here we have our biggest provider of electricity, Eskom, embarking on a multi-million rand campaign to persuade as many South Africans as possible to hand in their electric stoves and hotplates in exchange for gas models. This has to be the wierdest relationship marketing exercise in the history of marketing.

But, talking of relationship marketing, it is inevitable that every now and then a company decides to go "back to basics" in terms of their marketing strategy and even more inevitably this usually involves a discussion on how dealing directly with each individual customer is the best form of marketing. And because there is no way most companies can talk to all of their customers, the discussion then moves on to "relationship marketing" as the next best thing to the impractical face-to-face option.

There are, however, two hidden dangers that can make a relationship marketing exercise come back and smack you in the face with an intensity varying from wet fish to napalm.

Respecting privacy

The first is gathering information about a customer willy-nilly without giving any thought to respecting privacy. The second is not collecting enough information and heading into a relationship half cocked.

But first, the issue of respecting the value of privacy. An expert on the subject is American customer service guru Don Peppers, whom I met when he visited South Africa some years ago. This is what he has to say:

"Be careful with your customers' private stuff. If you don't safeguard personal information - which is the foundation of a customer relationship -- you will undermine your attempts to build loyalty.

"A recent survey," he said, "reports that Americans are concerned about how their personal information is being used. Consumers, in short, are weighing the advantages of new interactive selling models with worries about how their personal information is being used.

"Consider these facts: Four out of ten respondents, about 78 million Americans, believe they have been victims of consumer privacy invasions. Eight in ten American adults (158 million) feel they have lost control over how companies collect and use their personal data.

Customised service

"Yet at the same time, American consumers say they want customised service. A majority of customers surveyed said they want banks, credit card firms, retailers and telephone companies to inform them about products and services that might be of interest to them according to their profiles.

"Public approval rises to more than 80% if they are told how personal information will be used and given the chance to opt-out. Bottom line: one-to-one marketing is a two-way street, and consumers must be given some control in the relationship.

Three points

"Here are three points to consider: Itemise the kind of information collected about individual customers. Specify how the company will use personal information. If your policy is to use this kind of information within the company on a need-to-know basis, explain this policy explicitly.

"Make whatever commitments you can with respect to how individual customer information will never be used.

"It's simple, really. If you hope to gain an advantage by giving a customer personalised service that he or she can't find somewhere else, you have to safeguard personal information. Consumer data is a valuable commodity, and it may be tempting to sell it for a short-term profit - but doing so will only hurt your long-term strategy for building loyalty."

Second danger

There you have it - the pick of Peppers' pointers on personalised pitching. Now for that second danger. Not accumulating enough information.

For example, like most hacks I am the target, or customer if you like, for hordes of PR people trying to get free publicity for their clients. Like other marketers they try to build up relationships and understand their customers' needs and wants. And often come horribly unstuck.

Like the invitation I got some time ago. In the envelope was a cigar and a request that I join a group of people for dinner in one of these new cigar club restaurants. Having very reluctantly given up smoking a while before that, the last thing I needed then was that kind of temptation.

Should the PR company concerned have made it its business to find out, before sending out the invitation, whether I was a smoker or not? I believe it was imperative.

In my case it might not have been all that serious. But imagine sending a present of a bottle of whisky to a recently rehabilitated alcoholic or giving a line of credit to an obsessive gambler ?

Quick sale

That's the problem with one-to-one marketing. If you don't know enough about your customer, he or she will pick up very quickly that all you are after is a quick sale and that you are making overtures at their wallets an absolutely nothing else. Which is both patronising and insulting.

Relationship marketing is incredibly powerful. Trouble is, like all powerful things it has the capacity to blow up in your face if you don't use it properly.

About Chris Moerdyk

Apart from being a corporate marketing analyst, advisor and media commentator, Chris Moerdyk is a former chairman of Bizcommunity. He was head of strategic planning and public affairs for BMW South Africa and spent 16 years in the creative and client service departments of ad agencies, ending up as resident director of Lindsay Smithers-FCB in KwaZulu-Natal. Email Chris on moc.liamg@ckydreom and follow him on Twitter at @chrismoerdyk.
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