New York June 27, 2001 A mid-sized company can increase revenues up to 56 percent over an eight-year period by implementing electronic customer relationship management (e-CRM), according to a new report released this week by industry analysis firm Datamonitor.
In the report, titled "Understanding the World of the Jetsons: The New Age of Building Customer Relationships," the authors assert that applying e-commerce technologies can aid manufacturers in targeting customers, integrating channels and maximizing marketing opportunities without relying on the retailer.
The report was based in part on interviews with consumer packaged goods (CPG) companies, retailers, e-CRM software vendors and industry trade groups in the United States and Europe.
London-headquartered Datamonitor notes in the report that while consumer goods manufacturers want to own their customer relationships building strong brands, ensuring flawless delivery and providing superior customer service many significant customer-facing activities occur at the retailer level.
But new e-commerce and Web-based CRM technologies can allow consumer goods companies to take control of customer relationships. Manufacturers can use these new tools to increase their contacts with customers and to get the most out of their relationships with customers, while simultaneously increasing their marketing and advertising effectiveness.
This is an undiscovered country for many manufacturers, according to Janae Lepir, consumer markets analyst with Datamonitor. "Since direct consumer contact has never been a core function for consumer goods manufacturers, harnessing new e-commerce and e-CRM technologies was not a priority until very recently," Lepir says. "A rising tech-savvy population and the need to revitalize a stagnating industry have led these companies to step up their use of these new technologies."
Datamonitor says that in order to achieve a comprehensive view of their customers, consumer packaged goods manufacturers need to integrate data from multiple channels using new interactive mediums (including interactive television, or iTV), develop strategies to target the wireless consumer and leverage existing B2B linkages with supply chain partners.
While retailers can be extremely sensitive about sharing data, the report's authors assert that improved technology and increased competition will spur retailers to work more closely with their supply chain partners to drive revenue and preserve profits.
The authors conclude that, in this environment, success for manufacturers will require an integrated cross-channel strategy, including online and off, that presents consumers with a consistent face, regardless of access channel. But using new technologies and devices demands an understanding of the potential, as well as the limitations, of each. For instance, wireless access protocol (WAP) the standard for delivering information through wireless devices such as cell phones or personal data assistants like a Palm Pilot will be one of the best technologies for time-sensitive, location specific information, such as wireless coupons and retailer-specific promotional offers. iTV will be primarily used for brand building efforts, special promotional campaigns and synergistic advertising opportunities.
Avoiding Channel Conflict
Datamonitor reports that a common mistake among CPG manufacturers has been to believe that having an e-commerce strategy means selling products online, even though selling products online is not a core competency for CPG manufacturers, nor is it a desirable one.
Currently, online sales account for only 0.2 percent of total global food and drink sales and 0.4 percent of total global personal care sales. By 2005, Datamonitor predicts that those percentages will have increased only to 3.6 percent for food and drink and 5.6 percent for personal care items.
Meanwhile, companies that have moved to online sales face a triple threat: channel conflict, distribution and logistics complexity and the viability of selling consumer packaged goods online. Channel conflict, especially, is becoming a serious problem as retailers become increasingly sensitive to the threat of disintermediation, according to the report.
Rather than attempting to compete directly with retailers, manufacturers should view online efforts as a method to indirectly increase offline sales by offering online product information and new product alerts, Datamonitor asserts. In addition, by using the Internet as a "contribution" channel rather than a distribution channel and by combining customer data gathered over the Internet with aggregated retailer data, CPG manufacturers will have the ability to tailor marketing campaigns and offer personalized customer service.