Evolving from the ashes of CRM, Prospect Relationship Management (PRM) is emerging as an established methodology.
CRM was propelled onto the centre stage of the marketing arena in the late 1980s as practitioners began trading in software systems positioned as the panacea for managing relationships with customers. Doubts emerged and controversy ensued as millions of pounds were invested in CRM systems with little consideration given to the nature and quality of data or how to get at it for analysis purposes. This oversight was identified early on by many data marketing professionals who recited the 3:3:70 rule (£3 million invested, three years to deliver, 70 per cent failure). In this climate, few direct marketers were surprised by the failure of CRM to deliver in terms of payback.
Fortunately, the vast majority of companies now accept that building loyal customer relationships involves more than making a large investment in information technology. Although establishing intimate personal relationships is unrealistic in today’s mass market society, detailed knowledge of customers is vital in enabling you to answer their needs and target them more appropriately. Whilst technology can facilitate this process, it is insight that drives it. So if companies have realised this for managing customer relationships, why haven’t they adopted the same practices for managing prospect relationships? Or are we still living in the tactical world?
PRM can be defined as a strategic lead generation approach which assists in the nurturing and development of prospects from the initial contact through to the final stage of purchase. Maintaining good prospect relationships at all times lies at the heart of PRM, driven by a strong analytical function.
So PRM is a business development strategy that seeks to optimise prospect retention and convert sourced leads into active customers. It operates on the principle that if you have segmented your prospect base correctly, every prospect on it has the potential to become a customer in the future, whether this takes ten days or ten years to accomplish. This is valid assuming that both the nature of your offering and the character of the business you are targeting do not change dramatically throughout the relationship. Unlike consumers, companies aren’t inclined towards impulse purchasing and alternately embrace more formal procedures such as pitches, tenders and contracts. PRM should engage with this trend and communications can orbit key dates such as contract expiry.
Segmentation and profiling are areas where companies encounter problems as too much focus falls upon collecting the data, but there is little value in gathering stores of data unless it can be used and maintained.
Data specialists have first hand industry knowledge and can be introduced to conduct statistical analysis programmes. Priorities should focus on creating segments through identifying key variables. These can be defined by examining basic data relating to the business such as company type and size. Segmentation can involve transactional data collected through research or point of sale, so you can examine what has been purchased, how much, when and how frequently, and establish purchasing power.
Attitudinal and behavioural data is useful in segmentation and is being increasingly used in B2B marketing, particularly in the SME and soho market, as it can offer a multitude of clues which assist targeting. Knowledge of an individual’s personal preferences can affect the offers that are relevant and style in which these are presented.
Profiling equips companies with knowledge of the data they require for licensing purposes. This means budgets are conserved through avoiding repeated rental charges and the licensed data can be exploited in terms of recording outcomes.
But how is PRM carried out? Having identified prospects, analysis of your existing customer base enables you to prioritise leads and establish rankings ranging from ‘cold’ to ‘red hot’. Also, each ranking can be split into further life stages of development originating with initial contact and moving towards purchase. Each ranking and life stage should be targeted with different messages according to their position, so for example, frequency is likely to be intensified as companies make the transition from ‘warm’ to ‘hot’. ‘Cold’ leads may receive basic maintenance to retain a relationship, but too much communication could drive them away while they inhabit an early life stage.
PRM has the potential to transform prospect relationships and should form the basis of any new business development programme. It provides a unique means of deriving maximum insight from data which has already been collected. The way this data is then used to shape marketing communications strategies can transform information into healthy profit margins. More companies must realise the benefits of analysing their customer and prospect databases these information sources are largely being wasted. If you don’t understand who you’re talking to, how can you communicate effectively with them?
