More profitable customer relationships-- E-commerce gives buyers and sellers more clout

AMR Research predicts total revenue for the CRM market will top $7.5 billion in 2002, compared to $762 million in 1997. A large part of that market is the services sector, which is growing as companies look for guidance in developing successful e-CRM systems.

As the former VP of First Union , Dr. Naras Eechambadi is considered an expert in CRM, having developed the financial institution's Knowledge-Based Marketing Group. Eechambadi is now CEO of recently launched Quaero , an interactive marketing services company that he said helps clients close the gap between their marketing departments and IT.

Eechambadi suggests that too great a distinction has been made between a CRM system and what's now being termed an electronic relationship management (ERM) system. He said that the goals of each are essentially the same. "Profitability, revenue per customer-- those things haven't changed," he said. "At end of day you still need good customer information."

Eechambadi believes that Internet commerce has given consumers more clout over retailers; offering the ability to comparison shop, or gain product information online. However, he said the same technology offers advantages to the retailers as well, such as the ability to capture detailed demographics.

"Customers are much more powerful in this emerging world," Eechambadi said. "While that's true, these channels actually offer companies knowledge of those customers, and companies can balance the scale and regain advantage."

Quaero doesn't recommend specific applications. "None of the packages work as advertised," Eechambadi said. Rather, the company provides insight into e-commerce and customer information-based marketing and advises clients on better use of their existing technologies, while building a case for long-term infrastructure changes.

"Companies that purchase CRM systems have the goal of building stronger links with customers and creating more profitable relationships," said Eechambadi. "However, the biggest problem with technology-driven CRM is the gap that exists today between the marketing department and IT. Many marketers just don't know how to effectively apply tools like the Internet and data warehousing."

According to Eechambadi, too often companies invest in electronic CRM technology without understanding how to get a return on the investment. Or they risk losing focus on core competencies to more fully exploit those systems.

Eechambadi advises his clients to build customer relationships that are not based on price alone. Citing an example of a toy company that knows its customers well enough to suggest appropriate toys a few weeks prior to a child's birthday.

"A Pokemon card is a Pokemon card whether it comes from Toys R Us or, E-toys," he said.