We’re in the Age of CRM, so what’s next?

I recently spent the day at the Institute of Direct & Digital Marketing, teaching marketers from the NHS, entertainment, travel, financial services and education sectors about eCRM. The format of the day's course deliberately – because of the variety of industries – avoids detailed best practise, as one size clearly cannot fit all. The focus is on the framework. More particularly on three frameworks: customer journey planning; capability assessment and prioritisation; and business case development. This is well-trod ground for me, I've been teaching this course for around ten years, and I lecture on this to Hult International Business School's Masters Degree Program.

One thing that I've observed over the last few years of teaching eCRM masterclasses is that the recession which started in 2008 kicked eCRM – and CRM – way up the agenda. Provable marketing has taken over. And the clients we've worked with who started out at the geeky end of things are now the marketing directors, precisely because they have been able to demonstrate the commercial results and advantages of rigorous marketing strategies.

During this revolution, creativity seems to have taken a back seat to data, segmentation, analytics, infrastructure and million pound notes. Retention programmes must resonate with a brand's consumers and customers. They have to sing in harmony, and where possible enhance and amplify, the creative direction set out for the brand.

This creative direction, the tone of voice, look and feel and integrity of vision and values, is the context and instruction for how all communications must work. By focusing on the practical, technical, commercial and process aspects of marketing it's a shameful reality that occasionally these things get lost in the drive for results and ROI. Creative thinking provides the glue for all of marketing. Over the last few years, as CRM has blossomed, the most successful programmes have been produced by clients and agencies that have deep creative capability - not as lead, that's for the brand agency, but as interpreters. Why? Because interpreting brand values for the kinds of channel eCRM now makes use of – social media, email, mobile, direct – takes clever interpretive abilities that are execution-oriented. The great creatives take the grand work of the advertising partner and deliver it to individuals on the ground, during the customer journey, matching it to the consumer's transient need states as they travel along the relationship with the brand.

CRM is established as an equal partner to advertising, where it has effectively become the engine room of marketing thinking. It took eleven years. It's time marketers looked up and worked out what the Next Big Thing is.

I don't think it will be any surprise that it's already shaping up to be about partnering, collaborating with and accompanying customers for their entire lifetime, in every channel, in ways that are relevant and – critically – appropriate. CRM implies retention, data, direct, pushing customers along the journey we have defined for them. The new approach requires creative engagement enacted by the brand following the customer, not the other way round.

It requires multichannel or omnichannel thinking, holistic relationship building. It's called Total Customer Engagement and it's been here already for a few years. It is the next big wave. When you've got eCRM or CRM sorted (and you will need to have it nailed down before you can start) you can take a few short steps to transform it into the next big driver of your business as the economy dusts itself off.

Identifying and prioritising quick wins in email marketing and eCRM

In a recession the pressure on marketers can be intense - more bang is needed for less buck, and every penny has to be justified. Boards and Finance Directors are constrained by a natural conservatism, based on the desire in the uncertain financial climate to de-risk as much of the business as possible.

On the other hand, there's an imperative towards cheaper, more auditable marketing channels. In theory, digital presents the greatest opportunity. For example, if your company traditionally uses direct mail to communicate with your customers, there are instant savings to be made simply by switching from post to email: if you're sending 100,000 mailers out, with each costing 50p in print and postage, then the switch to email will save you an instant £40,000, and probably £45,000 the second time you do it.

But, and it's a big but, if you don't know where to start, then making this kind of switch can be fraught with costly mistakes and a fair amount of fumbling. Making decisions about what to do requires intelligence, experience and a clear view of what the expected returns are likely to be, and that's difficult for most marketers new to channels like eCRM (Email Customer Relationship Marketing). Whilst the conversion from postal to digital seems like a no-brainer, in practice, your brand and your customers may not be suited to email at all, and you may have a major flop on your hands if you make the switch without some testing. ECRM, which provides marketers with - in theory - total tracking from customer to email sent, response behaviour and eventual value, lends itself perfectly to testing and experimentation.

If you want to find out the answer to a yes/no question and you want to test it before you make a decision based on the answer, then you will need a minimum of 383 people in order to get an answer you can be 95% confident, with plus or minus 5% accuracy, reflects your entire database. So if you want to test whether you'll get the same response rate to an email version of your campaign versus your DM campaign, send the email version to 383 people in your database selected at random. If you run segmented campaigns, do the comparison between 383 people in each segment and your control. Only once you've got the answer should you roll out the change across the whole customer base... but by then you will have numbers you can show to the budget holders, which justify the change based on cost savings and minimised risk.

There are of course a number of different things you can tweak to great effect. For example, you could spend money on:

• Improving segmentation
• Improving open rates
• Improving the effectiveness of calls to action
• Switching people from call centre sales to web sales
• Expanding your database.

All of these are potentially valid ways to increase the value you get from your eCRM activities. In some instances the value can be enormous. Say you're sending a million emails a month, and getting 2,142 orders worth £50 each. Increasing your open rate from 15% to 16.5% and your click-through rate from 15% to 18.75% will take your annual revenue from nearly £1.3 million to nearly £1.8 million - an increase of around 38%. That half a million in incremental revenue is enormous - provided it costs less than the profit margin on it to make the changes required. Again, it really comes down to how you decide what to focus your energies and investment on.

In my experience, working with brands like Tesco Kitchens, Harveys, Laithwaites Wines and Sony, there are always a number of different changes you can effect. As you can probably tell, I'm a stickler for the numbers; I always want to know what levers I can pull, and what effects that will have on the revenue. Given a variety of possible improvements, all of which will come at some cost, then you clearly need to know what to focus on first. Once we have identified what these opportunities are for a given company, we will always try and attach some numbers to them, and I believe that when you are planning what you do during 2012, when your focus should be on lowering risk and increasing the returns you get from marketing, this is a critical first step.

And in uncertain, recessionary times like these, having confidence in your marketing plan is what differentiates you from your competition.