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According to Gartner, Generation Virtual (also known as Generation V) is not defined by age or gender, social demographics or geography, but instead on "demonstrated achievement, accomplishments, and an increasing preference for the use of digital media channels to discover information, build knowledge, and share insights." Gartner believes that "Generation V" is a phenomenon reflecting that general behavior, attitudes, and interests are starting to blend together in an online environment. Furthermore, Gartner believes that this development changes the nature of the buyer-seller relationship.

"Conventional wisdom has focused on customer identification as the foundation for one-to-one marketing campaigns," says Adam Sarner, principal analyst at Gartner. "The reality of Generation V creating anonymous online personas, and the sheer power of their growing influence in an online environment, mean companies must change their methods of acquisition and relationship building." He believes that CRM-focused companies and particularly their marketing departments must take notice of this change and engage with these "online personas" rather than with the actual customers who stand behind them.

"Going forward, customers' true identities will have less importance, and instead companies will need to understand the role or persona that customers are playing at any given time and treat them accordingly," says Sarner, who further believes that providers of third-party customer data, business intelligence, and analytic tools will shift toward consumer applications and eventually arm companies with automated, artificial intelligence and self-learning "persona bots" to seek customers' needs and desires. Consequently, Sarner has the following recommendations for CRM-focused organizations:

1. Collect "persona" data not just personal data. The way that a customer represents himself or herself on the Web will be a better determinant of buying behavior than the customer's actual identity. Persona information will therefore be useful for product development, customer feedback, loyalty management, customer segmentation, campaign targeting, and persona group customer satisfaction management. This wealth of data can be used for marketing and selling and will provide insight into how customers want to be treated.

2. Move away from product-based segmentation. Because "personas" often have wide tastes and interests, companies that want to sell to them should segment their marketing activities according to persona "wants" rather than toward product offerings. Gartner notes that various virtual worlds, such as Second Life, already provide sandbox scenarios, where multiple personas can explore wants and desires that companies are attempting to fulfill.

3. Develop a mutually beneficial relationship. Use the information that you gather from your customer base (through data collection and communication) to create a two-way flow of information between your "persona" customers and your company. Use that input to hone your offerings to match various "persona" wants.

4. Focus on social sciences, anthropology, and game design. These are skills that will attract, connect with, contribute to, and gain insight from personas and virtual environments. Few companies currently employ people with these skills, but they will be vital to understand how personas interact, to draw insight from cultures, and to create engaging virtual environments in the future.

5. Understand how "persona bots" are going to change business. A persona bot is an automated, personality-infused, self-replicating, virtual representative that will be used as a tool to facilitate life events in an online environment. Gartner predicts that by 2017 the persona bot will be mass adopted with more than 20 million active persona bots in the U.S. alone. If so, they're going to play a major role in driving buying behavior.

6. Create your own "automated bots." To fully engage with Generation V, companies will have their own automated bots for critical relationship handling, such as sales, customer service, and marketing. Key drivers, such as 24/7 presence and the capability to communicate domain expertise, will help customers navigate their way toward purchases.

If Online Marketing Is the Future, Why Are Some CMOs Stuck in the Past?
by Knowledge@Wharton - Feb. 8, 2008

Why CMOs Need to Pay Closer Attention to a New Metric to Focus Investments on the Most Profitable Actions

Weighing in on Net Promoter
There are many ways to invest marketing dollars to try to grow revenue, but how many of them really work -- and how can we tell which ones will be profitable? Smart companies increasingly are realizing that marketing-investment decisions need to be based on apples-to-apples comparisons, and customer equity is the strategic metric that makes that possible. By basing strategy on customer equity, a marketing executive can focus investments on the most profitable actions and effectively evaluate return on investment.

Here's why: Customer equity is the sum of the lifetime values of a firm's current and future consumers. But what does that really mean, and why do we care? Think of customer equity as the discounted profit flows summed across all of a firm's customers.

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Related Graphic:
Customer Equity Drivers
Computing Customer Equity
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If you remember Finance 101, that is almost exactly the definition of the value of the company. That is, customer equity is a very good marketing proxy for the value of the firm, and in fact there are a number of studies that show that customer equity is usually quite close to the firm's market capitalization. Bottom line: If a chief marketing officer wants to drive shareholder value, increasing customer equity is the way to do it.

Three drivers
This also suggests that marketing executives should pay more attention to customer equity -- which considers both current and future profits -- and less attention to market share, which is only a current snapshot. In fact, marketers are increasingly paying attention to a new metric -- customer equity share -- which is the brand's customer equity divided by the total customer equity in the market.

How can a firm figure out a brand's customer equity and customer-equity share? It requires a combination of customer surveys and internal company information. The customer surveys are similar in time and length to customer-satisfaction surveys, but they are broader. It's useful to measure three main drivers of customer equity and industry-specific subdrivers within each of the three. The three drivers of customer equity are value equity (the rational and somewhat objective part of customer equity, which involves things such as quality, price and convenience), brand equity (the emotional and subjective part, involving things such as brand image and brand attitudes) and relationship equity (which involves relationship-building activities, such as loyalty programs, that bind the customer to the brand). (See customer-equity driver figure above.)

Customer ratings on these three drivers and their subdrivers should be obtained for all of the leading companies in the market. Also obtained on the survey is information about purchase frequency, volume per purchase, most recent choice and expectations about the next purchase. This is combined with internal company data on time horizon, discount rate and market shares. From this information, one can estimate the lifetime value of each customer, from which we get the customer equity of the brand.

Companies can build simulators from these data that can be used to examine what-if scenarios of marketing actions. One prominent example of this is TNS's Revenue Growth Manager. A number of leading companies worldwide already have implemented similar systems, and my colleagues Kay Lemon and Valarie Zeithaml and I have helped build several of them. One of the key advantages of a customer-equity system is that it can be used to identify the key drivers of customer equity. For example, an airline might find that value equity is the most important of the three drivers, and that passenger seating comfort is a strong driver of value equity. Kay and Valarie and I did just such a study of American Airlines' seating in research for our book, "Driving Customer Equity," and found that expanding coach leg room was likely to be profitable. Interestingly other airlines, such as United Airlines and JetBlue, ultimately followed American's lead and also invested in this way.

Key advantages
One of the advantages of a customer-equity decision-support system is its ability to evaluate marketing ROI. It is a poorly kept secret that many marketing expenditures are not held accountable in most companies, but top management increasingly insists on financial accountability. By projecting shifts in the driver ratings or subdriver ratings and taking into account the amount of money invested in the shift, it's possible to project marketing ROI for any marketing investment. The ROI is simply calculated as the projected increase in customer equity minus the discounted investment divided by the investment. This makes possible those apples-to-apples comparisons of competing marketing investments. And it's also possible to use customer equity to evaluate marketing ROI after the fact -- by inserting the actual shift in the driver or subdriver into the simulator and then calculating the ROI as before. (See ROI calculator figure.)

Basing marketing strategy on customer equity adds financial discipline that marketing has often lacked. It gives marketing executives a metric that maps closely to the value of the firm and therefore speaks in a language board members can understand. And, yes, all this should help move the needle on CMO tenure, because, as we all well know by now, the more marketing executives can quantify the impact of their investments and make them financially accountable, the more status and impact CMOs will have on the top executive team.

I recently sent an email to my 13-year-old son concerning the fantasy baseball team we co-manage and didn't receive a response back from him. On the other hand, I text messaged him the other day on a different topic and received a response within five minutes. I was thinking about this when I re-read a January 2007 report released by Pew Internet & American Life Project that stated:

91 percent of all social networking teens say they use (you fill in the blank) to stay in touch with friends they see frequently, while 82 percent use (you fill in the blank) to stay in touch with friends they rarely see in person.
72 percent of all social networking teens use (fill in the blank) to make plans with friends.
Most of us who do not define ourselves as "social networking teens" would probably fill in the blanks above with "email." However, that's not the word I removed. In the report, titled "Social Networking Websites and Teens: An Overview," the original text in those blanks read "these sites," and referred to sites like Facebook and MySpace. And before you say, "Well, that's just a few teens who use social networking sites," a 2006 Harrison Group study estimated that 68 percent of teens have created profiles on social networks, and there were more than 80 million visitors to Facebook and MySpace in February 2007. According to the same study, the average teen chats via IM with 35 people for a total of three hours a week. But the average teen will only call or email seven people who are not on their IM list on a weekly basis.

The numbers don't lie
When you look at teens and text messaging (SMS), the numbers are equally startling. Parents surveyed by Jupiter Research earlier this year said that nearly half of 12- and 13-year-olds will have a mobile phone by the end of 2007, and text messaging is an integral part of their daily lives. Seventy-three percent of teens ages 13-17 are sending text messages from their cell phones. A recent survey by CTIA found that more than 158 billion text messages were sent in the U.S. in 2006. This represents a 95 percent increase over 2005. And the majority of these probably came for from the 15-25-year-old age group.

All of this makes me wonder whether teens today have adopted the attitude that email is "old school." Looking at their behavior, it's hard to escape that conclusion. When I asked a respected colleague that question, her reply to me was "duh!" 2006 research by Parks Associates showed that less than 20 percent of the 13-17-year-olds surveyed profess to using email to communicate with friends, compared to 40 percent of adults ages 25-54.

Everything points to IM, SMS and social networking sites as being substitutes for social communications among teens.

The push and pull approach
This phenomenon is not just limited to teens either. According to an article in The Chronicle of Higher Education (October 6, 2006), "College officials around the country find that a growing number of students are missing important messages about deadlines, class cancellations and events sent to them by email because, well, the messages are sent to them by email."

It's almost as if teens and college students use email like they would use their DVRs…you get your messages when you want to vs. when the sender wants you to get them. SMS and IM interrupt the recipient, which is not yet seen as a bother but rather a strength. And this is supported by a 2007 study by Empcom that reported 75 percent of online teens opt for instant messaging rather than email due to the greater immediacy associated with it.

What's particularly interesting about teens' use of social networking sites for communication is that it turns the whole "push" approach to communication completely around and makes it more of a "pull" model. By that I mean that those of us over a certain age are likely to attach email pictures of our latest vacation to an email (or use email to direct a friend to where the pictures are posted) and send it out to friends and family, whereas a teenager will likely post the photos on her MySpace page for others to come and view as part of their regular routine. Someone visiting that page can then post a message to that friend's profile, page or "wall." No email involved!

What does all of this portend for email marketing in the future? Maybe nothing, though it is becoming clear to me that between IM, SMS and postings on sites like MySpace, today's teens are using very different public and private digital communication tools than the rest of us. (Like the song from the show "Bye Bye Birdie" laments, "Kids! I don’t know what's wrong with these kids today!")

The crystal ball of email
In my public speaking, I often talk about the "Internet Crystal Ball." This refers to the fact that internet behavior and digital device usage tends to stay fairly constant as age bands get older. In other words, a marketer trying to gauge the propensity of 30-year-olds to use mobile search in five years time should look at what 25-year-olds are doing right now.

For those of us doing email marketing, it would be a mistake to assume that today's teens and early twenty-somethings will shed these habits and become email addicts like the rest of us as they get older. Of course, they might do just that (and completely contradict my Crystal Ball theory). But just in case they don't, now is the time to begin learning about SMS, MMS, mobile advertising, mobile search, GPS targeted text messages and social networks. This doesn't mean you should be throwing marketing dollars at these areas, in fact that's something I've continually advised against. However, you should become a student of user behavior around text messaging and social networks, and you should do your homework on companies already operating in these spaces so that when the time comes, you can integrate these tactics into your broader digital marketing strategy. At Acxiom Digital, where it makes sense, we are already integrating SMS into some of our client's email programs.

In conclusion, one could make the argument (as others have) that as young people enter the workforce and begin to use email as a critical part of their daily work, their perceptions of the value of email will shift. They will certainly be using it more routinely, which means they will be checking their email accounts more than once every couple of weeks. Even that would be a big improvement!

P.S. I'm still waiting for my son to reply to my email.

For many of these marketers, e-mail campaigns come closest to making this dream real. For instance, their campaigns are largely triggered by user behavior or other data; e-mail content is targeted based on purchase and link history; and each communication is personalized from the subject line, to the offer, to the landing page, and beyond. The most advanced digital marketing partners are also appending demographic data to make their clients’ e-mails more meaningful, even for the newest subscribers on a list. There is little doubt that e-mail is leading the move to greater personalization and dynamic targeting.

But marketers are demanding even more: they think the entire customer purchasing experience should be more like e-mail, with content assembled dynamically to match the users’ needs and the marketer’s goals. Before this becomes a reality, though, I can see five challenges that marketers must overcome – some obvious, and some less so.

• Data integration. This is top priority for many marketers right now. Companies must work out how to assemble data from external and internal sources to build that elusive single view of the customer.

• Cross channel integration. Today, technology makes every type of marketing dynamically targetable, but the numerous systems and solutions that make targeting possible generally don’t talk to one another. So the behavioral data, which I used to target the banner you just saw does not travel with you as you enter my Web site; nor does your recent click behavior accompany you into my email database after your purchase.

• Optimization. With so much content and so many users, and each visit lasting only a few clicks, how do you decide what to show next on your Web site? Once you pluck the low hanging fruit, like ‘abandoned shopping cart’ and ‘last product viewed’, how do you make systematic progress at a rapid pace without spending a fortune on creative development?

• Content Management. Elaborate, powerful content management systems are often limited in practice to serving content on a Web site, and even then they can be too hard to change to meet marketing’s timetables. Content needs to be organized and accessible to all channels.

• User Anonymity. Success stories often focus on the customers about whom marketers know the most – frequent visitors, past purchasers – but for most companies, 80 percent of opportunities to interact with prospects occur with people for whom there exists no record of past behavior, or almost none.

Despite these five challenges, the general opinion in marketing-land is that the advent of integrated, personalized, optimized marketing is near. One of the reasons is that real technological progress is being made by a generation of exciting young companies.

For instance, behavioral targeting companies like Tacoda are offering ways to more effectively target the anonymous web user. Optimization specialists like Optimost help marketers make content more productive, while personalization specialists like Touch Clarity, acquired last week by Omniture, can apply a similar logic to the individual user experience. Venture-backed companies like Aggregate Knowledge are tackling the problems of leveraging collective behavior to select the best content to offer each user. And those are just a few examples.

Equally important, we are seeing the emergence of large, cross-channel, integrated marketing organizations that are well placed to make use of these new technologies. Our firm is part of this trend, bringing together under one brand a broad set of related marketing technologies and expertise, and combining them to introduce innovative, integrated new solutions.

Publicis’ recent acquisition of Digitas demonstrates that it’s not just technology players like us, but also traditional agency holding companies that are moving towards offering integrated execution. And the recent investment by General Atlantic in AKQA, at a very dramatic price, shows that smart money is prepared to back the trend.

So buckle your seat belts – integrated personalized marketing is around the corner. Here are four things to keep in mind as you plot your course:

• Targeting isn’t just for your best customers. It’s easier to reach them if you’ve got more data. But, consider devoting just as many resources to improving yields from the larger mass of relatively unknown prospects, because that’s where you’ll ultimately find the biggest gains.

• Leverage the content you have. Too many great ideas never get off the ground for lack of time or money for creative. Before you let that happen to your project, make sure you are fully leveraging the promotions, offers, and content you’re already paying to develop.

• Don’t be deterred by limited information. There is usually data available to be leveraged, even on a user’s first click, and recognition technology can help hone in on the user’s identity faster than you might imagine.

• Focus your efforts on users as well as content. Don’t just worry about what product to show next, what elements to keep or add to the page. The really critical question is ‘what does the user want?’ What question is in their mind? Make the data answer that question.

Creative generates average-response lift of 13%-plus
from DM News

The creative components of direct mail campaigns account for 25 percent of total lift and generate an average-response lift of more than 13 percent.
These were key findings from a recently released research report from the Direct Marketing Association's Research and Marketing Intelligence Unit called "Getting Creative with Direct Mail." This is the first research produced by the DMA to examine the key creative components of direct mail campaigns.

Inspired by the question that fuels the DMA's Response Rate Report --How can the most aggressive ROI be achieved? -- the DMA's report benchmarks overall usage and testing patterns, as well as effectiveness ratings from marketers themselves.

Providing data on which creative elements within each component is most effective, the report examines how marketers are using and testing each creative component, including envelopes, brochures, postcards, postage and incentives.

Some of the most revealing insights found in the report come from data obtained from "direct mail experts," the DMA said. These are high-quantity mailers who consistently test their campaigns. The report isolates this special group of respondents to allow the reader to take a look at mailers' preferred practices and techniques.

The report presents 11 specific categories of creative components and their relation to lifting response rates and testing. Among the report's key findings are the following:

· Outer Envelopes: More than two-thirds (69 percent) of respondents used the No. 10 envelope in the past 12 months, followed in popularity by the 6-inch by 9-inch envelope. The No. 10 envelope was also the most relied on, with 9.6 percent of respondents saying they used it in every campaign.

· Postage: Despite using bulk-rate indicia the most frequently, it ranked lower than First-Class Mail in terms of effectiveness.

· Letterhead: Respondents overall rated letterhead with a company's logo (4.01) the most effective variety, followed by personal stationery (3.59). Respondents who test letterhead gave letterhead with a company's logo a somewhat higher rating for effectiveness (4.33) than did non-testers (4.03).

· Reply Devices: The report found that the business reply envelope was the reply device most widely used as a control, followed closely by toll-free numbers.

· Involvement Devices: "Free gift offer" was the most widely used involvement device, used by 42.6 percent of respondents in the past 12 months.

· Incentives: As for perceived effectiveness, respondents overall rated free gifts (3.58) and discounts (3.48) as the most effective. In line with their usage of incentives, fundraisers gave a higher rating to free gifts (4.22) than the average respondent (3.58).

· Brochures: Respondents said that a direct mail piece with no brochure was more effective in lifting response than a brochure alone.

· Postcards: Nearly equal proportions of respondents felt a direct mail piece alone and postcard used as a supplement to a future direct mail piece were the most effective while stand-alone postcards were considered less effective.

· Self-Mailers: Self-mailers are commonly used, but lagged well behind traditional direct mail packages in effectiveness. Nearly six out of 10 respondents mailed self-mailers in the last 12 months, but only about one-third (36.8 percent) said they mailed self-mailers more often than direct mail packages.

The 275-page "Getting Creative with Direct Mail" includes more than 400 tables of information and can be purchased online at www.the-dma.org/bookstore.

Futurist foresees a new type of consumer identity
from TheWiseMarketer

The future trends consultancy Faith Popcorn's BrainReserve has predicted the formation of a whole new type of consumer identity over the next few years: the 'New Networked Self', based on technological advances that connect people in an unlimited, yet potentially intimate, way.

As a result of technologies such as internet-based social networks and consumer generated content, the company believes that consumers are increasingly turning away from the ego-driven self-aggrandizement that characterised the old era of hyper-consumption. thomse67a This article is copyright 2007 TheWiseMarketer.com).

Instead, the New Networked Self is far more ecologically aware than its predecessor, with the consumer seeing himself or herself as a tiny-but-instrumental part of a much larger picture that's constantly changing. With this new awareness comes a personal sense of responsibility to understand - and to engage with - the whole.

Behaviour changes ahead?
The company foresees several changes in consumers of the near future, including:

Personality shifts
These technology have enabled consumers to experiment with different personalities, leading to a much more fluid sense of who they are, the company says. And, having tasted the nectar of virtual liberation, many are beginning to reject the singularly-defined roles they are traditionally expected to play in society. Gender-neutrality goes mainstream. People list skills on their business cards rather than title, and dress up in various costumes depending on who they feel like being that day.

Liquid brands
Today's consumers are capricious and non-committal. Brands will have to become more liquid to keep up with their constantly moving targets. Chameleon-like brands focus less on communicating a static message and more on being the right thing for the right persona at the right time. Constantly morphing retailers carry products until they sell out and never restock.

Virtual immortality
Consumers globally are creating fully fleshed out existences in the virtual world-dressing up their avatars, making friends, having affairs and buying property for their digital alter-egos. And now that people have multiple lives, who says you can't live forever? While some let their avatars drift away to online purgatory, many more leave behind specific instructions on how their virtual selves should proceed. Services offering avatar surrogates flourish, and we bequeath avatars to friends and family in our wills.

Environmental movement
Like the movement to combat environmental pollution, the next consumer-led reaction will be against the mental pollution caused by marketers. With every corner of the world both real and virtual becoming plastered with marketing messages, bombarded consumers are starting to say they've had enough. The current attack against marketing to kids is just the beginning. Companies will be expected to reduce the amount of damage they are doing to the consumers' mind. Savvy companies will sponsor marketing-free white spaces in lieu of polluting the environment with models and logos.

Product placement
In the globally networked age, consumers are much more concerned about the consequences of consumption. Is my garbage poisoning someone in a developing country? How much fuel was burned in order to get these strawberries to my local supermarket? In the future, enviro-biographies are attached to just about everything, letting consumers know the entire life story of a product: where the materials were harvested, where it was constructed, how far it travelled, and where it ended up after being thrown away or recycled.

Brand-aides
Governments have let citizens down when it comes to providing the social services traditionally expected. Brands are stepping in to take over where the government left off. Companies are already finding there's profit to be made from providing affordable healthcare to the masses. In the future, socially responsible brands will be making money while providing desperately needed services. Communities will be revived by the likes of Target daycare, Starbucks learning centres, and Avis transportation services for the elderly.

Moral status
Anxiety In today's increasingly philanthropic climate, expect conspicuous self- indulgence to go straight to the social guillotine. The globally conscious consumer regards altruistic activities as a necessary part of self-improvement. In the future, a person's net worth will no longer be measured by dollars earned, but by improvements made. Families will compete with each other on how many people they fed while on vacation, and the most envied house on the block will not be the biggest but the most sustainable.

Oldies but goodies
Our culture is suffering from an experience deficit. With the availability of online knowledge, we're claiming expertise based only on secondary experience. Now that everyone's a web-educated know-it-all, we're secretly longing for authority figures to guide and assure us with indispensable nuggets of wisdom that could only come from having actually accumulated life experience. In the future, respect for elders makes a comeback in the form of "Ask Your Grandma" hotlines and the proliferation of online video clips by seniors, showing us all how to tie knots and concoct home remedies.

More Info: http://www.faithpopcorn.com

Customer Managed Relationships
by Peter Massey

The term "CMR" - or "customer managed relationships" started to be spoken about 2 years ago but still gets little airplay. "Self service" is a term that is more broadly used but misses the power of what customers want. It looks at the saving from a company's point of view, not the empowerment from customer's perspective.

CMR is three things:
1. An ability to rethink, to reshape your organisation and its knowledge so that it is at the disposal of your customers
2. Internet enabled management tools which customers use to get what they want
3. An ability to react to the information being generated and used by customers in order to increase profitability

If executed well CMR generates three major benefits over CRM:
1. It is easier to implement because the customer is doing the complex stuff
2. It creates lock in since customers having invested their data with you will not move easily
3. It allows you to move faster than your competitor since you are in a trusted relationship with your customer

Companies need to understand CMR and then change accordingly. To paraphrase the strategy guru Hamel - you need a well developed view of the future, whether or not it is true. You have to invest in the competencies to make that future come true. You need to experiment and learn to see which parts of your view are developing.

CMR or CRM - what's the impact?
This article looks at one potential future. Just imagine if all the marketing spend that went into getting CRM onto the board's agenda had gone into CMR instead. For those of you who believe in neurolinguistics (i.e. something along the lines of "the words you use show what you are thinking") using the term CMR would mean that the board actually thought the customer was in control, that the customer managed the relationship.

A simple thought but a major impact.
Think about it. Customer managed. They do it to you. You do not do anything to control them. You have to start thinking and behaving differently.

It used to be hard to envisage but with internet enabled platforms it is perfectly feasible to imagine how whole industry processes can be reconstructed putting the customer in charge of their own needs by giving them the internet based management tools and data they require. This is what a customer managed relationship is about.

The industry is not designed to give customers what they want

I don't want a relationship with you
How many customers actually care about a relationship with their financial services providers? To someone in a company with a mindset that says "we have a relationship with the customer" it implies good relationships result in profit. To a customer who wants an overdraft it implies a simple yes over the phone will do!

At conferences over the past 5 years, I've always asked, "Who here wants a relationship with their bank?" Very few do. Unless you want something from them of course. You decide when a relationship is useful.

In some cases it is even worse. People do not trust financial institutions to act in their best interests. There is no basis for relationship. Misselling and monopolistic behaviours mean that trust in financial services has to be carefully defined. Many brands generate trust but that just means "BigCo looks after itself so well by charging the customer and is so well protected by regulation that it cannot go out of business taking my money with it".

Ask a simple question
I also used to ask audiences which financial institution had the capability to answer the following question: "How much money have I got and what shall I do with it".

One or two small wealth banks might come close to answering that question. But surely that question is one we, as customers, have to answer all the time. It's too dynamic and complex a problem for most organisations to handle. Putting in a CRM system does not solve that problem.

The solution cannot come from current thinking so how could we imagine a different future using the concepts of CMR?

Thinking only in the here and now
Within your financial institution, everything you build is based on profitability and or growth. Getting bigger, making more money, keeping the shareholders happy and pushing the share price ever upwards. Customers are essential, you may even be excellent at servicing them but they are not in control.

So imagine your customer wants to manage the relationship (CMR) - I mean along comes this upstart customer who actually believes that they control what goes on in their finances. What would the financial services industry look like if they were in charge?

Let's imagine for one moment….
Let's imagine Mr & Mrs Customer are very prejudiced. They live in this parallel universe we just described where they do not trust you and get little benefit from a relationship with the bank. Sure, they get mailers and offers, spending statements that mean little and annual statutory statements that look like mailshots from the outside and tell you nothing on the inside.

They believe that they have to take responsibility for their own finances. They have to in fact since they have financial products such as insurance, pensions and savings with so many companies. Many of their "financial products" are kids, cars, job prospects, and leisure pursuits. They vary from day to day in value. One day the job is brilliant and never going to change. Next day he changes his boss. One day the kids will never go to private school, the next day they are put with the wrong teacher.
He still wants to know how much money he's got and what he might do with it. He looks at the Sunday papers and sees league tables of the best credit cards, investments and cheque accounts. He occasionally hits a good web site, more often he hears about them down the pub. He doesn't do anything though. It's just too damn complicated to bother.

I'd move but I can't be bothered….
But then he hears about this web site that does it all for you. It's been designed by some ex games software guys. There's no help but you get your own Lara Croft to run round and show you what to do. The killer is that it automatically calculates tax returns taking live feeds from all the BigCo banks and institutions. Some wit in a government e-think tank saw to that by persuading the banks they could keep their clearing system monopoly if they did.

Ok worth a try. Crikey all that data needed to get started! That's worse than the tax return. Ah but once done…I'm never doing it again.

Play as you learn
So, you play a little with the games simulator showing you what you can do. You play with some dummy data about yourself. You hit all the league tables for different products. You play in the various personal scenarios, finding you needn't enter the data since Lara cheated and showed you Mr Well-above-average's profile which has been remarkably similar to your own in the past. The forecast results are interesting. Betting on the housing market vs. interest rates and all that.

After playing several times you get the hang of the dynamics of the model and get pretty good at beating Lara at it - not bad since Lara was trained by someone on the Bank of England's monetary committee in reality and its their model you are playing with. Even the data is up to date and from that same source. In fact all the economic data is government or better, branded news sources or better. And of course there's online help from real people if you want.

Killer app?
All great fun for five minutes. Sounds good at dinner parties. Then along comes next year's tax return. All that scratching around for bits of paper, ringing round for interest statements, daft questions from accountants. But Lara's email says she can do it all for you.

Of course she'll need your permission. And then she will get all the data on you from the various institutions. In practice she's already got it. The Government says they have to give it her live and online. Even your employer has been obliged to provide live access on expenses and pay, pensions, NI etc.

Pay as you earn
In fact you don't need to declare anything since some whizz has written a software programme that sits in the ether somewhere and is constantly looking at all this data and checking your tax payments are up to date. Next year they are proposing to abandon tax returns altogether. You won't need to declare tax it will have been recalculated online all the time and deducted there and then.

What's in it for me?
You don't have to of course, but if you do you get 1% discount and an equivalent of interest on early payment. And you get free online access to all your own data, ready installed in Lara's programme so you can play scenarios and make choices.
You get free use of the expenses submission tool, which is obligatory at your firm anyway so they can keep P11D expense submissions live. You get free alerts on pension triggers you asked for, whether because your account suggests it or legislation allows it. You can look at any of your statements anytime you want and talk to the online ombudsman if a company you deal with isn't responding in plain English or at all.

If you are self employed then all your tax, NI, billing, VAT is done for you. A huge overhead taken away.

In fact it is very little different to being employed since time data is required to ensure employment legislation is being met. All sounds like a bit of an overhead but once you start playing with the management information tools its worth it. Self analysis, coaching on line, skills profiling and so on are all there too should you want to go further having looked at how you spend your time. Now if only you get the car to implement the mileage data directly and coordinate it with the diary.

In fact it is much simpler to keep all financial data up to date online this way, 5 minutes here and there. Using either proprietary software to enter data or the tools that come with the site.

I'm now living in a CMR world. I have tools with which to manage the big picture of my finances. I get best offers all the time. If service levels are not good I get to know before I buy by asking other customers of the companies concerned. These financial services companies are now wholesalers or manufacturers or advisors. The whole clearing system is a subset of this system. Banks do not do that anymore. Of course I need some cash sometimes but that's getting rarer because my PFA (personal financial assistant - Laura) can't track it for me, so I have to enter stuff manually. That will never die out though since lots of people still want anonymity for many things. Financial service always was an oxymoron!

What's in it for Government?
The system networks all the relevant knowledge, process and contact I need. It is regulated and government backed. For the moment government owned. They've made more money out of online tax collection and the equity value they have in "than the national lottery and the G3 licenses put together.

The hardest part they had to play was to persuade all the vested interests to set up the new system and to select smart, sharp operators who could build and operate such a scaled up system in the new technologies. Of course the fact they only paid on % of turnover and had forced liability for errors onto the supplier consortia made a big difference. The prototype took 3 months - a student project to cut out the wisdom that would prevent progress. But the full system took 3 years of absolute stamina. That's what Mr Blair must have been talking about by e-enabled Government. Whatever happened to him? On the board of "MyMoneyandWhattodowithit" last I heard.

What's in it for BigCo?
Of course the real winners were the BigCo.s who got their heads round the idea of CMR very early and started changing their organisation to meet the knowledge based economy. They studied the stakeholder pension model but not really got the point about how much they should be allowed to take out of people's pockets. The ones that focused on innovating product design based on the new data they had about customers did well. Those that withdrew to large scale fund management did well. Those that built and now run large scale internet based solutions to support many channels be they IFAs or BigCo brands have done well.

Yesterday's financial services companies were very good at all sorts of things which are sustainable today when customers expect to be able to manage their relationships effectively and in their best interests.

I don't believe it…
If you are sitting comfortably, perhaps even complacently, then remember the parable of the dangerous student. They are out there working on this solution for a new financial system now. You just don't know where.

To whom it may concern:
I currently hold a CapitalOne Visa Business card and have done so for more than a year. Despite this, I have been receiving frequent mail solicitations to apply for a CapitalOne card.
This makes it appear that you have no idea who your customers are, and wastes your money (presumably my rates) besides.

Recently, I received a promotional offer for a CapitalOne Travel Rewards card. I called to find out if I could simply upgrade the account I already have to add this service, and was told this isn't possible, as the travel rewards program involved a partner that isn't involved with my current account.

If you'll think about the situation from the perspective of your customers, you'll have to agree this makes no sense at all. Even if it's true from an internal process perspective, you certainly should be able to take my request and automatically issue a replacement card and account that has the new feature without my having to worry about it. As it is, I was treated to the experience of your customer service representatives suggesting I might want to go through a brand new credit application with you for the privilege of carrying around two CapitalOne cards in my wallet.

So here's my question: Why on earth would I want to do that? If I'm going to fill out a new credit card application and be treated like a total stranger, I'll do so with a company with which I am a total stranger.
I expect better from a company with which I've been doing business for a while.

In this regard, I ask a favor: The new offer was signed by J. Alan Berson, Senior Vice President. Assuming there is such a person I ask that you forward this e-mail to him with my request that he respond personally.
Thanks for your time and attention.
- Bob
Robert Lewis
IT Catalysts, Inc.

Did he ever get an answer? You gotta be kidding. CRM doesn't extend to the interactive, because that demands actual customer relationship management.

Herschell Gordon Lewis is a renowned direct mail copywriter. This article is excerpted from his book, "Asinine Advertising (How Stupid and Unethical Adverting Costs You Money!" (Racom Communications, 2005).

Experiential Marketing Comes Alive
Dennis Armbruster, 1to1 Magazine

In emerging marketing strategy is making some brands come to life. It's no slight of hand or magician's secret. It's called experiential marketing, and as the newest iteration of event marketing blended with product sampling it melds the art of customer reaction with the science of fact-based management. Experiential marketing manages sophisticated customer interaction by integrating data into event planning and execution. It delivers on the brand promise in more meaningful and relevant ways.

To show the possibilities inherent in experiential marketing we need to define some terms. First, in our view, event marketing has served and continues to serve companies very well. Event marketing invites customers to experience a product or immerses them in a brand. For example, Corvette generated huge awareness and even qualified leads during its 50th anniversary tour in 2003–2004, which was a series of road rallies and vintage car expos that drew more than 26,000 registrants. Product sampling is simply the process of getting free products in the hands of people who might like them enough to buy them, and maybe even tell friends to buy them. That practice is as old as retailing.

Experiential marketing, however, brings your brand promise to life in a totally unique moment in the customer lifecycle. It increases a potential customer's consideration of a product or service at a deeper emotional level. By making data part of the equation, and borrowing principles from one-to-one and database marketing, experiential marketing presents some truly innovative opportunities to activate brand strategies.

Let's look at a hypothetical example to illustrate EM. Bellwether, a successful high-tech company, is introducing a new handheld cell phone/messaging system. It's the first new product introduction in two years. A product sampling strategy would involve sending the new product to influential journalists with the goal being that they will give the product positive press coverage. Event marketing might include inviting key user groups and influential press people to a swank launch event. There they could meet-and-greet company executives, use the new product, and have a nice dinner on the company's tab.

Experiential marketing takes product introduction to a higher level. Here's a five-step strategy:

1. Gather initial customer data
Bellwether would first mine its database to determine who the best potential customers are for this new handset. By determining how often people buy new handheld combinations (let's assume that through its data Bellwether estimates 18 months) it can easily determine the customers who are poised for a new purchase. Then Bellwether could analyze its current top 10 markets through Internet and retail purchase reports. The company can now plan to invite qualified potential buyers in those markets to "experience" the new handset.

2. Plan an event
Bellwether now needs to determine how potential customers can have an emotional and deep experience with the new product. The company may choose to host a launch event in each selected market during which potential customers could not only try the new handset, but they could also learn about new advances in wireless technology. The company might schedule private demos for business customers who could profit from learning about the handset's increased data capacity and flexibility. It might also invite those business customers to a luncheon with a wireless industry expert who could discuss with them firsthand industry trends that might affect their businesses. The key here is to give customers an experience that not only showcases the product and brand, but also gives them other relevant information.

3. Optimize the audience
Next Bellwether would determine how to take that customer list and add prospects to its experiential project. Maybe the current customer invitees can bring a friend or business associate. Maybe a partner company, such as a cell phone service provider, has a list of potential customers it could invite as well. The issues here are keeping the event intimate enough so customers truly experience all that the event and product offer, but also inviting enough customers to generate qualified leads.

4. Optimize the event
Bellwether needs to collect as much data as it can on site from attendees, including how they rate the event and how likely they are to purchase a new handset. That information should be aggregated into the database.

5. Follow up
After they've been qualified at the event, Bellwether should have a new, cleaner set of data that provides a valuable customer prospect list. Now the sales team takes over. Before this point, there should be no aggressive selling. Everything Bellwether has done up to this point should have been about setting up a strong relationship between customers and the experience.

As you can see, data is the difference. So far, one of the better examples of experiential marketing in action has been the user conferences that most tech companies organize (at huge expense) at least once a year. Apple, Oracle, Siebel, and SAP have all put on these huge events. They don't qualify attendees right down to their propensity to purchase new products; they focus on letting those clients experience the brand, products, and related technologies. And they follow up after the event.

The key to experiential marketing is planning in detail the experience that will benefit both your company and your clients, using customer data to match the customers with the experience, and then selling those customers aggressively after they have had a positive experience.

That relevance is why experiential marketing holds a great deal of promise in a landscape full of expensive marketing tactics. There are so many different ways to deliver advertising that a more personal, relevant approach like experiential marketing is an ideal way to cut through the clutter.

Additionally, brands are struggling in their ability to get to the next level of sales, revenue, and profits. Email, direct mail, telemarketing—all of these tactics can be effective but their returns are diminishing. Companies looking for ways to get, keep, and grow customers need to find new ways to create, maintain, and build incremental value from customer relationships.

Finally, all companies want to connect with their dealer base and their consumer base on a local level. In-store promotions can still do this, but they can't scale on a local level as well as an experiential marketing campaign. Nor can they fully engage local market resources to activate the brand with in-market customers. Experiential marketing starts on a national level with national goals. From there, it drills down to the local level and lets local sales forces follow up on specific leads.

Experiential marketing fills that most evasive of marketing goals, and that's accountability. Run a raft of 30-second spots on network TV to launch a new product and you'd be hard-pressed to account for those dollars. An experiential marketing campaign results in a stronger database, stronger customer relationships, and highly qualified leads. No magic here. Just results.

“This model talks about a respect of the disciplines coming together in a very, very holistic way that says we respect the brand builders and we respect the direct marketer folks, sales and finance to be all working together,” said moderator Richard Rosen, president/CEO of AlloyRed.

Jon Roska, founder, CEO and chief creative officer at Roska Direct, said direct marketers can be their own worst enemies.

“I like to refer to direct marketers as slash-and-burn marketers We hammer a file. We feature offer, benefit, response triggers,” Roska said. “We hammer and hammer it until we get in a situation where we’re in a declining control position. Then we move on. It’s just like burning the rain forests down as you grow crops. We deplete the soil. Over on the other side you have the brand marketer. He’s building all this image awareness. I like to refer to them as a let-the-crops-rot-in-the-field marketer because they grow the crops, but they don’t harvest. They don’t take the order. The trick is to bring these two things together.”

Shelley Lanman, executive vice president and chief creative officer at Draft, agreed.

“I think in the long run what we’re after is more of a dual-like thing,” Lanman said. “It should be two forces working as one to build a relationships and generate ROI.”

Pam Larrick, chair and CEO of FCBiWorldwide, compared marketing with an age-old axiom in another field.

“In some ways like you think about real estate -- location, location, location -- I think increasingly it’s targeting, targeting, targeting.”

Other thoughts from the panelists:

Fred Rubin, partner and director of iDeutsch and directDeutsch: “Changing the lexicon is really important. It’s not really about a brand. It’s what the problem is and how are we going to solve it.”

Rod DeVar, vice president of advertising at the U.S. Postal Service: “Clients are looking for empathy. The moons are all aligned for more of this business. We just need to have a little more empathy in the client situation.”

Risa Lee Stokes, assistant vice president of institutional marketing at MetLife: “Research isn’t a secret for direct marketers. We do it all the time. It really drives a lot of what we do, which is exactly what the brand people do. The strength is putting that on the table and coming together and saying, ‘What do we want to do for this client?’”

Lanman: “Brand and direct need to be one. What that comes down to is who is the consumer and how can we get this consumer to engage with us?”

Roska: “It’s easier for you as direct marketers to learn brand than it is for brand marketers to learn direct. That gives you the edge. Take advantage of it. If you don’t, you’ll miss the boat because that’s where everything is headed.”

Larrick: “How many times to get to be a part of an industry where you’re actually getting to figure out what the next phase is? ... We get too much into the language and talking about is it a print ad? Is it TV? Is it direct mail? Is it online? It doesn’t matter. It’s really about the consumer.”

Rosen: “It really is about respect. It really is about empathy -- and not only empathy for who you’re speaking with but empathy within your copy platform, within your structure of print, mail, TV.”