Andy Wood, MD, Total DM You Asked What did the CRM industry focus on in the year 2005?

The turn of the year is always a good time for reflection and prediction. And this is particularly the case as we move from 2005 into 2006.

2005 is the year when customer development took the driving seat over prospecting. The seriousness with which customer relationship management is being practised is witnessed by the proportion of top companies who have appointed a senior Head of CRM (44%). And consolidation in the top end of most industries has highlighted the criticality of effective database merging.

Perhaps the single most important statistic to come out of this has been the revelation from Pitney Bowes research that more marketing budget is being devoted to developing existing customers than winning new ones. This is a sea change in British marketing, and is going to revolutionise the balance of advertising media in this country. For retailers, it has occasioned a collective sigh of relief, in that it would appear to justify all the investment that has been put into loyalty schemes over the last decade.

However, there should be a pause before laurels are rested upon. Whilst the country now has so many loyalty schemes that every consumer has, on average, at least two loyalty cards in their wallet, this does not mean that every scheme links customer data with transactions. Although this may seem an obvious thing to do (i.e. use customer knowledge to identify and drive more spending and therefore more profit) many schemes are expected to boost retention and spending by simply existing in their own right.

Not surprisingly, many have been disappointed by their scheme’s apparent lack of performance and have come to regard it as a burden (“why reward customers who would spend anyway….”) and have unwisely signed up for consortium schemes that create loyalty for the scheme but not necessarily its individual participants.

Mr Wood is a pioneer in the loyalty sector, having started and run the ground-breaking Homebase loyalty scheme in the 1980s, and now managing schemes for a variety of companies today. Andy has fourteen years experience in the field, and has created and managed more retail loyalty programmes than anyone in the UK, including Spend and Save, Do It All, Dunnes Stores and Toys R Us. Four years ago AAndy set up Total DM, a full service direct mail company that specialises in customer database analysis and Loyalty programmes. His particular skills lie in the analysis of data and its application to improving customer communication, turnover and ultimately profit. During his 14 year career Andy has written a number of papers and articles that have been published in the marketing press and rresearch publications. He has also lectured at several seminars on loyalty and analysis for the CIM and IDM diploma courses, DMA seminars and for the Institute of Directors. Total DM