Data deluge: Getting CRM basics right

Regional - "Would you like to become a member?" chant the cashiers and shop staff as you frantically bought your Christmas gifts last year.

As you turn over your personal data, a deal is made - 10% off your next visit, free gifts on your birthday, free snacks for your dog, and so on. You shove your shiny new card in your wallet (right next to your IKEA, Starbucks and Topshop cards) ... and you're thinking of just how much you could save if you spent more at this great shop.

In an age where data privacy is fast becoming a sensitive issue, these loyalty programmes are becoming a key to obtaining precious consumer data.

Heather Kirshman, manager of retail marketing for CRM for adidas in Southeast Asia, estimates in general most customers are members of at least 12 to 20 different loyalty programmes.

Brands offer discounts and rewards galore to consumers in return for their personal information, which ideally helps them to link customers to their purchase behaviour. This helps them gain business efficiencies and they apply this customer intelligence to marketing and operations.

An IDC report estimates that spend on CRM software will reach US$1,489 billion by 2014, underscoring the importance of the strategy for keeping consumers and raising the bottom-line. And this is not without good reason. Besides having data, good loyalty or customer relationship management initiatives help brands identify their biggest and most consistent spenders.

For sports brand adidas, the most direct way it reaches out to its consumers is through its loyalty programme 3Stripes(pictured). With a minimum spend of SG$250, consumers become members discounts, exclusive invites to events or sales and more.

"Having this base has helped push our sales and drive repeat visits. Our members consistently spend over 30% more than our average shopper," says adidas' Kirshman.

NTUC FairPrice's director of brand and marketing, Christina Lim, echoes similar results from investments in CRM strategies. "We have noticed that members of our various loyalty programmes do spend two to three times more with us," Lim says.

Data protection: Tread carefully

But while data is a potential goldmine for brands, it is also a minefield to tiptoe around. Late last year, the Australian Communications and Media Authority (ACMA) slapped Tiger Airways with an A$110,000 fine after the airline was found guilty of spamming its customers with emails.

The decision was made after Tiger Airways continued to send emails to customers despite requests to be removed from its mailing list. The carrier also received numerous warnings from ACMA which, ACMA says, it ignored.

Tiger Airways said it had reviewed and redesigned its processes, but many said the poor marketing move had damaged its reputation. Paul Hourihane, CEO of Go React, says the behaviour smacked of the 1990s and should not have taken place in this day and age.

Given recent data legislation in Singapore and well established existing data laws in Australia and other markets, best practice has to be adopted straight away, said Hourihane, who added that a clear and concise data and privacy policy link on all e-communications, strict adherence to that policy in terms of unsubscribes, and actual permission to market being recorded for the record, was a must.

But while Tiger Airways' mistake was a costly and painfully public one, it was not an unusual one.

Cameron Richards, chief executive officer of CRM company CPR Vision, says companies often focus too much on technology and strategy, and not enough on what is at the core of CRM - the customer.

One mistake brands make is spending money on media and then paying for research to find out about who their customers are, while their CRM department is sitting on a wealth of valuable data of who, where, what and when customers are buying, adds Richards.

As for data privacy fiascos such as the one Tiger Airways was unfortunate enough to make, brands Marketing spoke to said they were treating the issue with care because the topic was increasingly becoming more prominent, even with governing authorities. In the past two years, data protection laws have been coming up all over the region.

Just in Singapore, local authorities erected the Do-Not-Call registry, allowing consumers to enter their phone numbers onto a list that marketers may not reach with mobile marketing messages. Offenders can be fined up to SG$1 million.

For Hong Kong, such laws took place last year, as the government sought to criminalise the disclosure or "selling" of personal data for direct marketing purposes without consent. The penalty is a fine of HK$1 million and five years in prison.

Malaysia's Personal Data Protection Act also came into force last year, with similar aims.

For the full story, read Marketing Magazine Singapore's January issue.