Addressing customer myopia: Strategic interactive ... · unsuccessful.2 A report by Gartner ... In the case of dry cleaning how ... Getting customer relationship management right

combination of traditional marketingprinciples with CRM methods andtechnology to build relationships andacquire new customers.

In companies where heavily sales-ledapproaches had resulted in mindlesscustomer acquisition, regardless ofinherent profitability, CRM has promisedbusiness growth. In these companiesexisting customers, with lower coststructures, had been neglected with theconsequent loss of potential profit. Thepromise of CRM was that it improvedlifetime value by adding relationship andservice marketing concepts to databasemarketing. This allowed the building ofsuccessful retention approaches. Variousexamples were given which showed the

INTRODUCTIONTraditional marketing planning andacquisition marketing has been criticisedas being product or sales focused andcustomer retention and relationships havebeen seen as the drivers for profitablegrowth. Now is the time to questionwhether excessive attention to theexisting customer base is the optimumway to ensure long-term profitablegrowth.

This paper looks at the synthesis ofcustomer relationship management(CRM) and traditional marketingplanning approaches with interactivemarketing as the catalyst to provide ameaningful business future for long-termplayers. Interactive marketing is the

� Henry Stewart Publications 1350-2328 (2002) Vol. 9, 3, 207–218 Journal of Database Marketing 207

Addressing customer myopia:Strategic interactive marketingplanning in a volatile businessenvironmentReceived (in revised form): 23rd October, 2001

Terry Kendrickis a strategic marketing planning and information consultant who since 1984 has worked on consultancy projects for over 50organisations in 17 countries. Projects have ranged from facilitating marketing plans and developing key account managementprocesses to the analysis of customer attractiveness and profitability issues in specific companies.

Keith Fletcheris Professor of Management at the University of East Anglia and was founding Dean of the School of Management. He haslectured extensively overseas and is Chair of the East of England network for Interactive Marketing. He gained his doctoratein consumer decision making and his research interests include consumer behaviour, strategy formulation and implementation,and CRM.

Abstract This paper introduces and examines the concept of customer myopia, whichis the over-reliance on the existing customer base rather than studying the wholemarket of potential and future customers. Eight assumptions are studied which illustratecustomer myopia and the argument for a strategic perspective is put. How toimplement strategic interactive marketing planning (SIMP) is explained in nine stages,within two phases.

Terry Kendrick14 Kingsley Road, Norwich,Norfolk NR1 3RB, UK.

Tel: �44 (0)1603 628818;Fax: �44 (0)1603 628818;e-mail: [email protected]

loyalty approaches will need to bebalanced with more traditional customeracquisition approaches to take intoaccount the volatile customer base andchanging business environment.Unfortunately, this does not seem to behappening and integrated marketingstrategy is not being implemented.

Strategic interactive marketingplanning, bringing together the best ofthese approaches, looks likely to gainincreasing importance in the next fewyears as companies recognise that toensure they maximise profitability a newsynthesis of business approaches andmodels is required.

CUSTOMER MYOPIAIn certain circumstances marketconditions could lead a business tocustomer myopia. Customer myopia isdefined as a short-sighted over-relianceon the existing customer base rather thanstudying the whole market of potentialand future customers. Companies mustalways remain alert to where their futureprofits will come from, and not simplyassume today’s profitable customer willprovide profitable business in three tofive years’ time. Levitt introduced theidea of marketing myopia6 to explain theshort-sighted focus on the product, ratherthan the benefits the product gave. Hewarned that focusing on present productsrather than benefits to the customermeant that future innovative productsfrom competitors were ignored, as theydid not fit the mindset of the business.

Many of the dangers Levitthighlighted have now been recognisedby companies, and CRM has encouragedthe move away from the product focusto the customer. CRM also has somedangers however. By focusing toonarrowly on the nature of existingcustomers, the opportunities from futurecustomers may well be ignored.

major impact this could have onlonger-term profitability.1

It is, however, clear that theevangelical fervour of some CRMproponents has not always delivered theexpected returns and the AlexanderGroup suggest that 60–80 per cent ofCRM projects are deemed to beunsuccessful.2 A report by Gartnersuggests that more than half of allcompanies implementing CRM initiativestoday will view those plans as failures by2006. Gartner attributes these failures toa range of problems, including poorchannel integration and the absence of atrue process redesign.3 It is possible,however, that another contributory and,indeed, unifying factor could be the driftaway from sustained clear thinking —strategic marketing planning — a processwhich requires a clear linking of strategicgaps, market analysis and integratedapplications.4,5

This paper highlights a number of thekey questionable assumptions thatunderpin some CRM thinking andplanning. It resolves these issues byintroducing the concept of strategicinteractive marketing planning, asynthesis of CRM and traditionalmarketing planning.

The authors’ belief is that CRM is anexcellent core strategy for those fewcompanies that already have the bestcustomers in their industry (and wherethese customers are likely to be the bestcustomers in the industry in the future),and where both partners, company andcustomer, are likely to want to enter intoa relationship.

Where a company has only a smallportion of ‘best industry customers’ in itsportfolio a mixture of alternativeapproaches will be needed. Similarly,where buyers are switchers and do notwant to enter relationships thenreputation and brand building may berequired through mass marketing. CRM

208 Journal of Database Marketing Vol. 9, 3, 207–218 � Henry Stewart Publications 1350-2328 (2002)

Kendrick and Fletcher

assumptions which are, to say the veryleast, questionable. By looking at theseassumptions customer myopia can beillustrated.

Assumption 1. The remaining share ofcustomer spend is significant and worthhaving. In the example above what is the‘dry-cleaning-bill-not-already-achieved’?If a business already has the easy 80 percent of a customer’s total potential spend,will investing in winning the finalnotional 20 per cent really provide soundgrowth? When contrasted with the easy80 per cent of a new customer’s potentialspend which is the better investment? Ofan existing customer’s five dry cleaningpurchases per year the initial four may beprofitably won but the final one may, fora number of reasons, be less easy toachieve.

Assumption 2. The lifetime values ofcustomers are worth having and investing in.In addition to the potentially modestlevel of customer value to be won,businesses need to take account of thereal lifetime of their customers. If peoplemove home on average every sevenyears then it is unlikely, for the drycleaning example, that, on moving, thesame outlet will be used, or evennecessarily the same chain. Location andconvenience are more likely choicecriteria resulting in short life times formost customers. In many markets withchanging and temporary needsrecognising the potential new customer ismore important than stopping the exit ofthe old.

Assumption 3. Customers care about andare involved with products. Where productsare distress or low-involvement purchasesthen loyalty and relationship issues arenot likely to apply in choosing an outlet.In the case of dry cleaning howimportant a decision is it? While manycompanies believe their products orservices should be seen as important,high-involvement products, often this is

Customer myopia will manifest itselfin an over focus on retention andrelationship marketing. To achieve thisthe concentration is on datawarehousing, collecting data from moreand more contact points in the hope ofdifferentiating actual customers. Patternsin the existing customer base will bestudied, and product and service offeringscustomised, without questioning whetherthe existing customer base is the rightone for the future.

Sources of future profits in a futurebusiness environment may besignificantly different to the existingmarket conditions. By analysing existingcustomers too closely aspects of thechanging environment, such as newmarkets, may well be missed. Peppersand Rogers give the example of IBM,who by staying too close to itsmainframe customers missed the earlywave of PC growth by not conceivinghow the new market would revolutioniseits own business. Other leadingcompanies may well be falling into asimilar trap.

Despite this, an example of thiscustomer myopia is actually given byPeppers and Rogers when theychampion a dry cleaning company. Thedry cleaning company is quoted assaying:

‘Instead of trying to get as many dry cleaningcustomers in town as possible, we will try toget more business from each of the customerswe already have. We’ll make sure to get allthe dry cleaning repairs and alterations,speciality cleaning and so forth for each ofthem forever, as well as win direct referralbusiness’.7

Now, while it is clearly a good idea for abusiness to sell more of what it doesalready to those customers it alreadyknows well, the fervour of the quoteddry cleaning company is based on


Strategic interactive marketing planning in a volatile business environment

company to develop its existing customerbase, except on the grounds that thoseare the only customers they have? It isclearly theoretically possible for acompany to discover that its customerbase is simply those customers thatcompetitors do not want. The authors’consulting experience suggests that this isnot just theoretical but can havefrightening resonance when companiesare confronted with this possibility.

Assumption 6. With better information inits customer information file a business canunderstand its customers better. CRMsystems are always based upon a verylimited amount of information about themarketplace and customers. A companywill never have perfect information aboutits customers allowing a truly one-to-onerelationship. Customers lie, change overtime, and will not be pigeonholed intosegments. Companies analyse very few oftheir customer data, some analystssuggesting that most companies actuallyanalyse less than half of the data theycollect.

Assumption 7. Given information oncustomers, knowing what to do with it will beeasy. Even when attempts are made toanalyse data, conclusions do not comeeasily. Should it be concluded that 80per cent of customers would choose thebusiness next time just because theirtear-off slip says they will? Disciples ofCRM and one-to-one marketing cansometimes exhibit excessive faith instatistical techniques. They showsymptoms of customer myopia, deludingthemselves into believing that they havea greater influence over customers’buying patterns than in reality they have.Modelling such behaviour is too timeconsuming and its predictive value isquestionable.

Assumption 8. The future will be similarto today. Focusing on existing customersassumes that if a particular type ofcustomer is profitable today then they

not the case. It may, as the mantra goes,cost more to win a new customer thanto keep an existing customer but churnmay be a natural market dynamic noteasily influenced by CRM tools andtechniques. Some customers can bedeveloped and some cannot.

Assumption 4. Getting customerrelationship management right leads to loyaltywhich should ensure that competitors will notget another business’s customers. This may bea necessary (and even that isquestionable) but it is certainly not asufficient condition to ensure continuingsales. The word ‘loyalty’, when basedupon behaviour, becomes little morethan propensity to not change and twoor three purchases allocate a customer tothe ‘loyal’ bracket.8,9 Under such rules,however, customers are loyal to Tesco,Sainsbury, Iceland and the local cornershop. Such a definition of loyaltybecomes meaningless — logicians mightcall it the ‘death of a thousand loyalties’.Customer loyalty is nothing more thanthe fact that they have passed that wayand wanted something and have donethis on more than one occasion. Loyaltyis something supporters have to a footballteam. It does not matter how often theteam loses the supporters will return andare loyal. How many will return to theirfavourite dry cleaning shop if the serviceis consistently poor and the product doesnot deliver?

In addition, customers are not alwayspersuaded by reason and the best offerdoes not always win. Satisfied customersdefect, given the right incentive, orsimply want a change of supplier. Forthe dry cleaner in the example to talkabout getting business ‘forever’ ispatently unrealistic.

Assumption 5. Present customers are thebest customers. A recent market entrantmay ‘buy’ itself a significant customerbase, high on numbers, low onprofitability. Is it right for such a



Customers are not distributed equally byprofitability throughout the industry insome mystical way. Some competitorshave better customer portfolios thanothers do. If a business has a poorportfolio then it should get newcustomers. A customer retention strategyfor a company with an unprofitableportfolio, which has no realistic way ofbeing turned around in the next threeyears, is clearly not operating on a soundbusiness model.

THE SOLUTION: STRATEGICPERSPECTIVE ON CRMEffective CRM processes ensure thatelements of relationship and servicemarketing such as technology, tools,processes and people are front of mindthroughout the marketing planningprocess. These elements, however, needdirection to ensure that the outcomes ofthe improved information flows, such asimproved service and greater efficiency,are translated into meaningful strategicthrusts.10–12 This direction can be lost ifCRM develops management processesthat are separate from strategic marketingplanning.

An essential difference exists, however,in CRM planning between two types ofcompany in relationship to the barrierslikely to inhibit successful adoption andimplementation of CRM.13,14 A keymarket for many IT consultants is thosecompanies which are considering themove to CRM, but do not have thecustomer information or technologywhich would allow them to take the firststep. For these businesses, before theycan accept adoption of CRM processes,a business case will need to be createdthat justifies the major technologicalinvestment required to build thecustomer information file and managethe customer interactions. For thesecompanies the degree of organisational

will continue to be so. Is this true? Largecustomers may be profitable today butthe future profitable customers may notbe the same as at present. CRM doesnot always highlight what is possiblewithin a marketplace even when it canhighlight what is possible within theexisting customer base. Some mightargue that there is no need to look veryfar beyond the existing customer base ifthe returns from that are sufficient tosatisfy shareholders. Caution is, however,urged here. To exist happily on a fullydeveloped existing customer base mayallow competitors to exploit other areasof the market with the consequentexperience allowing them to becomesignificant competitors in the business’score customer market.

Undoubtedly, CRM approaches are animportant part of good business practicebut, as these assumptions and tendenciesabove show, there is great potential forcustomer myopia. There are clearlybusinesses where most effort should bespent on existing customers and in thesemarkets many benefits can be achieved.A balance to retention over acquisitionshould be continued where:

— the market is mature with littlegrowth

— the business has a set of some of themost profitable customers in theindustry

— competitors cannot easily copy andbetter the business’s best offers

— customers have high involvement anddesire added value

— the product/service features needregular maintenance, there is a highpurchase frequency or there are highswitching costs.

If, however, the business has some of theworst customers in the industry as itsportfolio, or they will become so in thefuture, then this does not make sense.



and ambition (both in terms of generalmission, vision, values and financialobjectives and shareholder requirements).Once identified and agreed this istypically followed by a situational analysisor marketing audit, leading to a summaryin a SWOT analysis. Out of theseanalytical stages the marketing objectivesand strategy are determined, based onthe factors previously noted as relevantto the company. When proposedstrategies are agreed to be strong enoughto deliver the level of corporate ambitionand corporate financial objectives theseare then implemented through a detailedaction plan.

During implementation the wholeprocess is monitored to ensure that theactions are implemented and that thechosen strategies are indeed deliveringthe marketing and financial objectivesand ambition set out by the company inthe early stages of the planning process.

Utilising this planning approach, asoutlined in McDonald’s well-knownten-stage process,21 may, despite itspotential for including many interactivemarketing elements, lead to aprocess-driven, fill-in-the-box marketingplanning process. Used in anunsophisticated way both marketingplanning and CRM approaches have thepotential to deflect attention away fromgood marketing management incompanies.

A close CRM-driven analysis of thecurrent customer base is crucial toeffective business planning but for soundbusiness planning this should also be inthe context of a wider marketingplanning process which integrates allelements.

In reality, both marketing planning andCRM approaches are complementary,even if they are often seen as separateinitiatives within companies. Frequently,company organisation structures do notreflect the degree of alignment required

change required can be substantial and adanger is that the software choice andinstallation distorts the purpose of theexercise. The difficulty for many of thesecompanies is that having implementedthe system they often do not know whatto do with it. Some useful guidelineshave been produced which attempt toovercome these problems.15–17

Other businesses may have taken thefirst steps to implement a process, andmay already have identified customers,but have not a sophisticated CRMsystem, or have not found CRMapplications successful. A subset of thisgroup would be business-to-businesscompanies and small to medium sizeenterprises (SMEs)18 who because of theirsmaller customer base may already bepractising key account management forsome customers but are having difficultyintegrating the two differing frameworks.The important factors which need to beconsidered for the adopter companies arefundamentally different from thoseneeded in the later implementationstages19 and this needs to be consideredin the strategic planning process.

Sophisticated CRM adoption,particularly for the first group, has theclear potential to deflect attention awayfrom the changing business environment.This may lead to the appropriatecustomer base being ignored in three tofive years’ time. To make CRMapplications work the CRM processneeds to be driven from the outside in,understanding customers’ needs butensuring strategic processes and CRMapplication functionality are aligned.20

The CRM processes in themselves willnot drive growth objectives, and theseneed to be implemented into an overallframework that manages all aspects of thechange process.

The context for any traditionalstrategic marketing planning process isthe identification of corporate objectives



an interactive action plan and concludingwith a statement of planning and CRMmilestones and implementing monitoringprocedures.

In more detail these phases and stagesinvolve addressing the following keyquestions.

Phase 1: ‘Where’s the bestbusiness?’

Stage 1: Agreeing business ambitionand corporate objectives

Without a clear idea of level of ambitionand corporate objectives there is nocontext for developing marketingplanning and CRM approaches. Strongambition will often require a balancetowards innovative rather thancontinuous improvement approacheswhile modest ambition will suggestpriority be given to continuousimprovement rather than innovation.The level of ambition will help makethe decision in the later stages of theprocess as to the relative balance ofcustomer retention/acquisition andone-to-one/mass marketing.

This stage is about being reasonableand challenging and sets the context forthe amount and type of business that thestrategic interactive marketing planshould chase and, throughimplementation, win. The future isunlikely to be similar to today and thereshould be a feedback loop to enable laterunderstandings to influence this ambition.Discussion in this stage will focus onquestions such as:

— what is the business idea(vision/mission/values)

— how will the business know if it issucceeding

— what will be the financial and othermeasures (such as market share) whichcan be monitored to judge progress?

for effective business growth anddevelopment.22,23 In the authors’consulting and related activities it is notunusual to see CRM and strategicmarketing planning projects led bydifferent teams and an internal rivalry candevelop which is not to the benefit ofthe business. In one major financialservices company, for instance, traditionalmarketing activity is organised aroundproduct lines and CRM activities areorganised around customer groupingsadministered in a separate building.

Given this need to align CRM andmarketing planning approaches theauthors advocate strategic interactivemarketing planning (SIMP) as aresponse.

The following outline process offers anapproach to undertaking CRM within awider business and marketing planningcontext. It ensures that a business ormarketing planning process is alwaysconsidering the importance of customerretention and management, while at thesame time protecting CRM practitionersfrom customer myopia.

HOW TO DEVELOP THE STRATEGICINTERACTIVE MARKETINGPLANNING (SIMP) STAGESSIMP is best thought of as nine stages,within two phases. Phase One isessentially based around the question‘Where’s the best business?’ The stagesare based on agreeing corporate ambitionand objectives, analysing the existingcustomer base, analysing the potentialcustomer base, concluding with anassessment of the business’ readiness foreffective marketing planning and CRM.

Phase Two is essentially based aroundthe subsequent question ‘How will wewin it?’ The process has stages based onan implementation gap analysis, planningand CRM objectives, developing aninteractive marketing strategy, formulating



— how likely is it that these customerswill be with the business in three tofive years’ time and what will they beworth to it (lifetime values)

— how confident is the business that itcan deflect competitive threats(competitive analysis)

— what will it take for the business toretain and develop its customers’business with it over the planningperiod (customer experiencemanagement)

— which customers are likely to respondbest to a relationship approach, whichto a transactional approach?

Stage 3: Analysing the potentialcustomer base

The analysis of present customers andcompetitive threats will allow a muchclearer understanding of the nature ofnew markets which might be availableto the business by identifying unfulfilledopportunities. Are present customers thebest customers, will the new customerslook like the old, and have the sameneeds, or will a new set of salescriteria be needed? This stage developsa high level plan of marketopportunities for replacement businessor growth. Key questions for this stageare:

— in addition to existing customerswhat customers are out there to bewon

— what levels of investment arerequired to win them

— will investment levels allowone-to-one marketing or will asegmentation approach supported bymass marketing be the mostappropriate way forward

— who ‘owns’ these customers atpresent, and how will they reactwhen the business makes a play forthem?

Stage 2: Analysing the existingcustomer base

This analysis should assess thecontribution of the current customer baseto the longer-term future in the three tofive year ambitions of the business. Theanalysis of existing customers will allowcompanies to determine thecharacteristics of their ‘best’ customers,compared to their ‘worst’,24 and todetermine the ability to change thebuying patterns of existing customers.This may well involve an analysis of thecustomer involvement to see which, ifany, of the business’s customers careabout and are involved with its products.A critical element of this stage is toconsider the likelihood that these ‘best’customers might be seduced bycompetitors, and the critical elementsthat make them have a commitment andloyalty to the business. The assumptionthat if a business gets customerrelationship management right thencompetitors will not get its customers’business should be tested. Key questionsfor this stage are:

— is the remaining share of customerspend significant and worth having

— are the lifetime values of customersworth having and investing in

— where are the business’s mostprofitable customers both now and inthe longer-term planning horizon(customer profitability analysis)

— can customer differences be analysedand capitalised on (segmentation)

— how much might the business expectthem to contribute towards itslonger-term ambitions (customerprofitability analysis)

— where might their custom be in thefuture and what does that mean forthe target business’s chances ofretaining their custom (key accountmanagement and accountmanagement)



ensures that company structures reflectthe degree of alignment required foreffective business growth anddevelopment. Various CRMbenchmarking tools exist which canhelp companies understand theircapabilities in these areas. These toolsinclude CMAT by QCi, the AMSiCVM Gap scorecard and Hewson’sBenchmarking Group. A summary ofthe type of issues to be discussed is:

— technology issues: present state ofcustomer information system

— information issues: customer data andmodelling capabilities

— process issues: degree of customerservice focus in key touchpoints

— communication issues: customercontact channels

— measurement issues: performancemeasures

— people and organisation issues:management and employee flexibility.

Stage 6: Planning and CRM objectives

As argued above both marketingplanning and CRM approaches arecomplementary, even if they are oftenseen as separate initiatives withincompanies. This stage ensures they areintegrated successfully. The assumption ofCRM is that given information aboutcustomers knowing what to do with itwill be easy. This is seldom the case and‘analysis paralysis’ seems to have hit somefirms with large customer databases. Instages 3 and 4 judgments will have beenmade, in principle, on the relativeimportance of types of business (existingor new customers) which are expected todeliver the corporate objectives. Giventhese corporate objectives:

— how much of this requirement willbe met by mass, segmented orone-to-one approaches

Stage 4: Strategic gap analysis

This stage assesses the position of thebusiness to meet opportunities identifiedin previous stages. Key strategic questionsinclude:

— does the business understand themarket environment both now andany changes that might occur duringthe coming years

— is the business confident that it cansurvive volatile market conditionsgiven the range of potential scenariosthat might occur

— given satisfactory answers to thesequestions what are the business’sstrengths, competencies andweaknesses

— has the business sufficient customerinformation to develop sound strategies

— does the business provide a single faceto the customer

— are the business’s processes product orcustomer driven

— has the business a robustunderstanding of competitors andtheir place in its market both nowand in the future?

Phase 2: How will the business winit?

Stage 5: Implementation gap analysis

This stage investigates the barriers orconstraints to implementing existing ornew strategies. What is stopping abusiness getting there now? EstablishedCRM players may well have many ofthe people, processes, tools andcustomer information already in place.Other companies may well have tofocus on improving in some areasbefore marketing applications can besuccessful. As argued earlier, a stagesmodel suggests that differing problemswill be faced depending on the presentstage of development.25 This stage



— how will distribution channels,including the Internet, best supportbusiness development?

Stage 8: The interactive action plan

A well-developed strategy to integratetraditional marketing planning massmarketing and CRM approaches willrequire a robust action implementationplan. Key questions this stage will answerinclude:

— what needs to be done to deliver thestrategies

— when should these things be done— who should be responsible for

ensuring they are done— are the actions consistent with the

strategies— is there enough action to implement

the strategies far enough during theplanning period

— what feedback mechanisms are thereto manage the process

— has enough resource been allocated toimplement the strategies in theintended way?

Stage 9: Milestones and monitoring

The move to implement CRM may needa major process of change management asprocesses and information flows aremodified. Alternatively, for somebusinesses, key account managementprinciples can be extended to include thewider marketplace. A process ofmentoring is necessary during theimplementation stage to ensure theintegration process is monitored andessential objectives achieved. This stagemay well last the entire life of the businessstrategy to ensure no bottlenecks orbarriers divert the initial business strategy.

The key milestones are identified tocheck that strategy deployment iseffective and implementation monitored.

— where is there scope for relationshipdevelopment, and which segments aresimply transactional

— will growth be from existingcustomers either by increasingretention, upselling or cross-selling

— how much of the business’s profitobjectives will be met by newcustomers or segments

— over what time period is the businessintending to grow these markets, orupgrade these customers

— how will the business measure successin its marketing strategies

— are the business’s objectivescomplementary or isolated

— what changes is the businessinvesting in based on the findings ofstage 5?

Stage 7: Interactive marketing strategy

This stage determines and designs theinteractive marketing strategy to meetthe objectives from the previous stage. Itmakes decisions on the best way todeliver the overall planning and CRMobjectives. Key questions in this stageare:

— how will one-to-one CRM and massmarketing approaches be combined todeliver the objectives

— how will customers be identified andtargeted

— how will customer upgrading beachieved

— what marketing communications willneed to be produced andimplemented

— what contact strategies are required— is the current product range

appropriate or will investment innew products and services berequired

— what customisation is required— what principles will support pricing

decisions



value’, Harvard Business School Press, Boston,p. 322.

2 Stifler, J. (2001) ‘What others have learned whileimplementing CRM’, CRMguru.com.

3 Gartner press release, 10th September, 2001.http://www.gartner.com/5_about/press_releases/2001/pr20010912b.html.

4 Fletcher, K. and Wright, W. (1997) ‘Strategic andorganisational determinates of information systemsophistication: An analysis of the uptake ofdatabase marketing in the financial servicesindustry’, European Journal of Information Systems,Vol. 6, pp. 141–154.

5 Galliers, R. (1991) ‘Strategic informationsystems planning: Myths, reality and guidelinesfor successful implementation’, European Journalof Information Systems, Vol. 1, No. 1,pp. 55–64.

6 Levitt, T. (1960) ‘Marketing myopia’, HarvardBusiness Review, July/August, pp. 45–56.

7 Peppers, D. and Rogers, M. (1993) ‘The one toone future’, Currency Doubleday.

8 Hart, S. et al., (1999) ‘Are loyalty schemes amanifestation of relationship marketing?’, Journalof Marketing Management, Vol. 15, No. 6,pp. 541–562.

9 O’Brien, L. and Jones, C. (1995) ‘Do rewardsreally create loyalty’, Harvard Business Review, Vol.73, May/June, pp. 75–82.

10 Goldsmith, N. (1991) ‘Linking IT planning tobusiness strategy’, Long Range Planning, Vol. 24,No. 6, pp. 67–77.

11 Ward, J. (1987) ‘Integrating information systemsinto business strategies, Long Range Planning, Vol.20, No. 3, pp. 19–29.

12 Wiseman, C. and Macmillan, I. C. (1984)‘Creating competitive weapons from informationsystems’, Journal of Business Strategy, Vol. 5, No. 2,pp. 42–49.

13 Fletcher, K. and Wright, G. (1995)‘Organisational, strategic and technical barriers tosuccessful implementation of database marketing’,International Journal of Information Management, Vol.15, No. 2, pp. 115–126.

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15 Seybold, P. and Marshak, R. (1998)‘Customers.com Handbook: An executive guideand technology roadmap for your customer.cominitiatives’, www. customers.com, 85 DevonshireStreet, Boston MA 02109 USA.

16 Peppers, D., Rogers, M. and Dorf, B. (1999)‘The one to one fieldbook: The complete toolkitfor implementing a one-to-one program’,Currency, Doubleday.

17 Catalyst (2001) ‘The catalyst CRM methodology:An overview’, European Centre for CustomerStrategies (ECCS), www.eccs.uk.com.

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CONCLUSIONSThere are circumstances where relationshipmarketing and retention alone will notdeliver a long-term stable business. Thereis thus an urgent need to place CRM inthe context of the wider world to avoidcustomer myopia. CRM is a valuablebusiness initiative, but only within thecontext of a wider marketing planningstrategy. Companies need to know:

— given the current volatility, they cansurvive given a wide range ofalternative scenarios

— within these scenarios they understandmarketplace conditions and drivers,have structured around key segmentsand formulated strategies (which canbe changed as circumstances change),supported by detailed action,contingency and resource plans(marketing planning)

— within the existing and developingcustomer base they understand theirportfolios and where their profitscome from. Furthermore, theyunderstand how to keep their mostvalued customers and how to developother customers into more valuablecustomers (CRM).

To undertake CRM without this structureis to miss the point. If a business has tencustomers and seven of them are in afast-declining segment of the market,which may vanish in five years’ time, itwould be foolish to concentrate on these,regardless of how profitable they are today.A detailed assessment of lifetime valuesshould clearly indicate the impending crisisbut no CRM approach will identify howto change. Only marketing planning, inthe context of scenario planning in difficulttimes, can offer that.

References1 Reichheld, F. F. (1996) ‘The loyalty effect: the

hidden force behind growth, profits and lasting



23 MacDonald, H. (1991) ‘Business strategydevelopment, alignment and redesign’, inScott Morton, M. S. (ed.) ‘The corporationof the 1990s’, Oxford University Press,NY.

24 Chalder, M., Gamble, P. and Stone, M. (2000)‘Managing good and bad customers in practice’,Journal of Database Marketing, Vol. 7, No. 4, pp.356–380.

25 Nolan, R. (1979) ‘Managing the crises in dataprocessing’, Harvard Business Review, March/April,pp. 115–126.

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19 Gartner (2001) op. cit.20 Stifler (2001) op. cit.21 McDonald, M. (1999) ‘Marketing plans: How to

prepare them: How to measure them’,Heinemann, Oxford.

22 Chan, Y. E., Huff, S. L. and Copland, D. G.(1997) ‘Business strategic orientation, informationsystems strategic orientation, and strategicalignment’, Information Systems Research, (ISR) Vol.8, No. 2, p. 125.



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Addressing customer myopia: Strategic interactive ... · unsuccessful.2 A report by Gartner ... In the case of dry cleaning how ... Getting customer relationship management right