loyalty.com : Customer Relationship Management in the New Era of Internet Marketing

A few years ago, everybody with a product to sell got a dose of the same religion. In marketing circles, it's called customer relationship management, or CRM. In your house, it's probably called "How the hell did I end up with all these plastic cards in my wallet?" Your grocery store offers you special discounts if you bring one of those cards to wave over the scanner. If you travel, you probably have "loyalty cards" from airlines, hotel chains, and car-rental companies. All these discount and loyalty programs allow the companies to built substantial databases about you--your preferences and patterns--but they also depend on you to do the work, to lug those plastic cards around, keep track of your points and miles, and so on.

There are better ways to build customer relationships, argues Newell. He caused a stir in 1997 with The New Rules of Marketing, and now with Loyalty.com, he wants to cause another one by declaring that most companies attempting to create customer loyalty are going about it all wrong. In fact, he shows that areas with the most aggressive loyalty programs tend to have the least loyal customers--and vice versa. Today, writes Newell, the Internet has made market research cheaper and faster than ever. Software can be designed to predict what a customer will want before she knows she wants it, and the company can go straight to that particular customer to suggest she buy that particular product, rather than showering millions of potential customers with hundreds of product solicitations. It's not easy, and pitfalls abound, as Loyalty.com shows (the issue of customer privacy alone will be the subject of endless legislation in coming years). But the company that masters customer relations will be rewarded with both loyalty and profits. --Lou Schuler