felix velarde: personal and professional work and cv

The following article is about my current views on the way that CRM is developing, and the shift from advertising-driven agency networks towards digitally-driven agency networks.

Do you remember the days when if you wanted to complain you sent a letter and waited for a reply; when you wanted to go on holiday you lined up some time next Saturday to go into a travel agency and spent several hours with a rep before going up the road to the next?

Expectation has shifted step by subtle step over a remarkably short time - a dozen years - such that we expect to have an idea, investigate it, make a selection, negotiate a price and make a commitment in no more than an hour or two (though it may be spread over many days in few minute bursts). Relationships, previously based on whether you liked the person you dealt with, are these digital days brittle to the extreme - one false move and your customer is off into the ether. Today's digital society means most customer contact - interactive customer contact - requires immediacy of response to ensure basic continuity of relationships. So relationship management is a key strategy in a competitive environment where customers are more ready to switch than ever.

If you can get this immediacy right though, it does mean you can address tactical business needs whilst appearing to simply keep an open channel to your customer: shifting inventory, promotions to support outlet-level demands (with different executions based on location, for example), or tactical response to competitor opportunities and threats.

Companies like Nickelodeon, LA Fitness and Virgin Holidays have proven through trial and (rare) error that this kind of responsiveness and immediacy can work magic on the bottom line. The last few years have been spent developing email marketing programmes that rely on a well-developed understanding of data and a real grasp of customer life cycles, sales cycles and segmentation strategies. And digital agencies have been well working alongside forward-thinking advertising and DM agencies. As a result, for example, Virgin Holidays' eCRM programme, developed and managed by Underwired, generated a sustained return on investment of 26:1 last year. So from the point of view of those agencies who have invested in this kind of strategy, email marketing works. When it gets more sophisticated we may like to call it eCRM. But actually, when we start working alongside the client's DM agency to make sure what we do works symbiotically with what they do with snail mail channels, the whole CRM / eCRM convergence gets a little complicated.

Going back before the days of digital immediacy, the way we communicated with customers was via broadcast media, later single message single audience via direct mail. Ten years ago DM agencies hit their stride, taking the advertising agency account management model and applying it to segmented marketing. Their thinking revolutionised marketing. Granularity of targeting became a possibility and eventually a norm. And it's this granular approach to marketing that web agencies adopted in 1995 when they started to personalise content and reward participation with tailored offers. The digital agency did away with the traditional agency account management model, partly because for companies of ten employees having expensive account managers who didn't programme or design all night was impractical, partly because we simply didn't know how to manage that formal structure and still make money, especially when clients weren't investing in unknowable returns.

Luckily for the digital marketing scene it also meant agencies could be extraordinarily adaptive. They could build stuff that wasn't just TV advertising or letters and mailing packs. They could do something new every other week, and many did. By necessity they suffered or enjoyed evolution in action. And those with the most adaptable structures survived, reinventing the model time after time to respond to changes in marketing strategy and fluidity of customer acceptance of the new media.

Today, when eCRM is finally proving itself after its necessary few years of tentative baby steps, clients are finally happy that digital is one of the fundamental marketing channels. The question now is how will the industry make room for the newly matured sector? In fact how should clients see their new agency mix?

Well, I don't believe eCRM should be a separate discipline to CRM - eCRM's just the digitally-delivered subset, and when all CRM is largely digitally delivered, we'll dispense with the 'e'. CRM is fundamental to any client's strategy - an unmanaged relationship is a tenuous, brittle one. But I do not think that the traditional custodian of CRM, the DM agency, is well-placed to manage it going forwards. Their structure is still the same as practised by the advertising industry for sixty plus years. It's clunky, unwieldy and founded in media that are as responsive as a zeppelin.

I believe that CRM needs to be centred around those channels that give you immediacy and cost effectiveness - email, web and mobile - as part of the wider marketing strategy. However, where the DM industry shines, and where the digital industry can and must learn, is in understanding data and segmentation. If we can learn from - and actually if we can acquire - the brilliant minds who have driven the rigour of DM, then the future of marketing will no longer be advertising-centric, the hub will become digital. It means that one day, probably very soon, there will be an agency network with a digital agency at its core, not an advertising agency. The next agency superpower will have the adaptability of digital, will acquire the insight of DM, and will simply buy in the channel creativity that gives tactical support to CRM strategy. The next WPP will not be born from TV.