• by Neil Rosen , March 8, 2011

Marketers are beginning to see how the Internet is deteriorating customer relationships and threatens to destroy the traditional concept of CRM marketing, removing the "R" from CRM.

Why? Well, to start with, many popular Internet technologies make it difficult for companies to manage and optimize the customer relationship. Search engines bring competitors closer to companies than ever before, product review sites and social networks make it easier for consumers to get information on competitive product offerings, and, in addition, social networks spread both positive and negative information about companies -- sometimes true and sometimes not -- virally to millions of people in just minutes.

To add to the confusion, cool new technologies usurp the traditional relationship companies have with their customers -- technologies such as daily deals (Groupon, RueLaLa, Gilt Group), and auction sites such as eBay and Swoopo, as well as Craigslist -- all create buying environments that give little back to the brand. These technologies make the shopping experience completely different from what it's been before and, therefore, the customer-marketer relationship has changed.

What we see is that the new, post-Internet connection is with whomever is selling a given brand at a given time, not any longer with the brand itself. And that's the real loss of traditional CRM. And what it means is that there's more and more distance between marketers and their customers.

Has customer relationship management simply morphed into customer management, period, due to the relationship deterioration caused by new Internet-based marketing tools?

Think about it: even the laziest of shoppers has such quick and easy access to product and company information that they can't resist using it to make purchasing decisions. In fact, it's no harder than surfing with the remote control on your TV. And, unfortunately, it doesn't really matter all that much how reliable the information is.

Starting with social networks, people are asking friends and family for product reviews. While what they typically end up with is simply unique product and company experiences, this still strongly influences their buying decisions. In addition, throughout the process the consumer is being offered competitive advertisements in a free-for-all environment.

Fun technologies have also taken their bite out of company/customer relationships. Auction sites, charitable contribution mall sites, and daily deal sites, for example, all dig into a company's margin, and deteriorate customers relationships by putting the deal, and the technologies, first and foremost in the mind of consumers.

Any hold a company still might have on the mind of the consumer is tenuous at best and rapidly disappearing. But there are things companies and brands can -- and must -- do to get the customer relationship back.

Companies must listen, respond, and engage. While consumers have access to great Internet interruptive technologies, so do companies. Now as never before, companies can listen to what their customers are saying about them and about their products and services in real time. The information is invaluable. Companies that respond consistently, transparently, and with relevant content to information they gather online and to the people talking about them online are the companies that develop market-changing dialogue with their most important customers: their influencers and ambassadors. These influencers are the people that others listen to and whose opinions they respect, as well as being people who have large networks of friends and followers. No single group of people can positively (or negatively) affect a brand as much this group.

But responding is not enough. Companies must engage their influencers and ambassadors, become a trusted source of product information for them, and be seen as a brand respected for outstanding products and service. They must offer this group tools to spread the work about the company, tools such as content-sharing mechanisms (video sharing, F2F), roles on their blogs and in their forums, and prime space in their communities.

And companies must, especially for those customers and subscribers who have opted-in to communicate with them on a regular basis, use available consumer data and tracking devices to anticipate their customers' needs and offer them a higher level of convenience, and lower level of intrusion, than any other shopping experience. They must do this before their customers hit the search engines, ask their friends for advice on a social network, or make a purchase on eBay.

This is the next wave of the Internet experience. To date, it has been the consumer that has been empowered by the Internet; now it's time for great companies to leverage the Internet ... and put the R back in CRM.