Ladies and Gentlemen, thank you for joining us for tonight’s episode of Celebrity Deathmatch! For tonight’s match we have two very serious contenders. It’s old against young, it’s seasoned warrior against upstart. Let’s see who has what it takes.

On my right, in the black and white shorts, is Customer Relationship Management, otherwise known as CRM. She’s old and she’s battle-scarred. Retailers first fell in love with CRM in the late 1990′s, when they heard her siren song. She promised them dreams and riches – she would help them put faces and names to all those faceless, nameless customers walking through retailers’ store doors. Once retailers could attach those faces and names – and a bunch of other lifestyle details, like when their birthday is or how many kids they have and what ages they are – CRM promised that we could turn that information into gold: if retailers could just get to know their customers better, they would be able to sell those customers much more than they could today.

It wasn’t that CRM lied, exactly, it was that she didn’t realize how big of a problem she was taking on. At the time, CRM had a pretty successful track record delivering gold on the front porches of B2B companies, even in cases where the B2B company might have a lot of customers. The problem was, she was used to working her magic in places where all customers are known and basically are required to identify themselves in order to do business with the company in question. And that just wasn’t the case for retailers. Instead, they needed CRM to track the idea of a customer without knowing much about that customer, and get better about adding information to that customer over time, until the retailer could say with certainty that this string of purchases actually belonged to this customer.

To be fair, at the time retailers had some significant relationship baggage that they kept from CRM, namely a deadbeat child on their hands named Loyalty Program. The grocers that fell in love with CRM were particularly susceptible to this issue – they had their Loyalty Programs, often known as ‘club cards.’ These cards put a customer identifier on every purchase (when customers remembered to use them), and made it much easier for CRM to track customer purchase history.

But customers were pretty fickle and didn’t always remember to use their cards, so to help them remember, and to answer the nagging question that customers kept asking (Hey, what’s in it for me to use this card?), the retailers with Loyalty Programs offered discounts that were only available to consumers who used those cards. And in some cases those discounts kept getting bigger and bigger in order to get more and more customers to use them, and a lot of retailers started to feel like Loyalty Programs were like good-for nothing children who graduated from college with no job prospects and moved back home with nothing but a lot of student loan debt. In other words, Loyalty Programs were awfully good at burning through the retailers’ future success, namely by giving away margin in the form of discounts, and they weren’t all that good at driving loyalty of any kind.

Some retailers felt like CRM and Loyalty Programs together were about the worst thing that could’ve happened to them – they spent gobs of money trying to make CRM successful in the hopes that she would finally, finally deliver all those riches she promised so long ago, only to find that all she was good at was in helping Loyalty Programs spend the retailer’s hard-earned margin even faster.

Some of them got so mad, they threw both CRM and Loyalty Programs out on the street and swore they would never let them in again. In some retail organizations even the mention of CRM’s name was banned. Company owners and CEOs swore they would die before they let a Loyalty Program back into their lives.

Out of the depths of despair, CRM came back from her hardship. She got much more clever at tracking customer purchases, even if she didn’t know exactly who made the purchases at first, and especially when faced with the new challenge that she wasn’t really allowed to use credit card numbers any longer to help figure these things out.

She also got much better at handling an awful lot of customer records for analysis, and in fact she got so good at it, she was finally able to start delivering that promised gold. It maybe wasn’t as much as she originally promised, but she was at least able to demonstrate that, for the retailers that had them, Loyalty Programs weren’t as deadbeat as retailers thought, and in fact, could be used to influence customer behavior and ultimately lead to more frequent purchases or larger basket sizes. And she wasn’t so good at targeting individual customers – she could certainly make recommendations at that level, but most retailers couldn’t reach customers at that individual level, so no one really cared. Little movements among customer masses at least finally multiplied into a payoff.

So now she’s back, she’s entrenched in the retailers that let her come back into their lives, and for some retailers, the investments they made to get her in the door have finally paid off. Can she hold on to her hard-won position within retail?

We will see.

On my left, in the grey shorts lined with gold, is Digital Marketing Platform, or DMP for short. Don’t call her “dump “, by the way. She doesn’t like that, and she might have to hunt you down. She could do that – hunt you down – because she doesn’t care anything about who you are or how many kids you have, or even where you live. And yet she knows an awful lot about you – she can find you anywhere, because these days, you, like the rest of us, spend an awful lot of time online one way or another.

DMP is the snake in the grass, the newcomer who watches quietly until she sees her opportunity – and then she strikes. She’s got listening and watching down to a science, literally, and was designed at a time when science is a lot better at handling a lot of data than the days when CRM was designed. And in some parts of the retail enterprise, she’s the golden child – worth a heck of a lot more than crusty, clumsy old CRM.

She was designed from the ground up to operate in a world of both extreme ambiguity and way more information than CRM ever had access to – the online space. There are a lot of stories about where DMP came from – from personalization engines, from email marketing tools, from digital channel managers that helped retailers advertise in multiple online channels, even from the marketing capabilities of eCommerce sites themselves. They’re all true. And DMP’s not done adding capabilities yet, not by a long shot.

No matter where she came from, DMP has in many cases grown to the point where she can watch the behavior of a consumer coming to the retailer’s website without knowing anything about that consumer except maybe how she found the site in the first place, and she can compare that behavior to other similar shopping behaviors. Armed with the sum total of all browsing behavior on the site – whether the customers were known or not – DMP can make some pretty good guesses as to what that customer is trying to do and ultimately which products that customer might buy. She’s also pretty sneaky – even if that customer doesn’t buy anything on that trip, if the customer’s online settings are right (and let’s face it, most customers don’t know nearly enough about how their browser works to worry about such technical things), she can mark that customer’s computer so that when that customer comes back, she can recognize them – even if she doesn’t know who it is.

But the real beauty of DMP is that unlike with CRM and store transactions, pretty much every shopper who wants to buy something online has to provide substantial information about themselves, like their name and address, especially if they want what they bought to be delivered to their house. And thanks to some clever people at other companies, like Facebook, DMP can make it “easier ” for that customer to provide that information by using Facebook as the login, thereby providing personal information alongside information about that customer’s friends and all the things that customer likes and dislikes on Facebook. Talk about a treasure trove.

DMP has been busy watching and listening to retailers’ customers as they operate online – she’s been very busy building what is essentially the customer’s digital life as the retailer can see it. But she doesn’t stop there. Instead of having to offer mass-oriented promotions to large groups of people, like CRM, she’s much more able to reach individual customers with individual offers, because she has their email address and she can see them on Twitter and Facebook and Pinterest and all kinds of other cool places online, and if she can’t see them, then probably Google can and she can buy that access (but that relationship is another story). And she can recognize customers when they visit the retail eCommerce site, sometimes because the customer logs in, and sometimes just because she’s marked that customer and would recognize them whether they logged in or not.

She hasn’t exactly figured out how to execute on a one-to-one level yet without being creepy and scaring off customers, but when she does figure that out, there’ll be no stopping what she can do in making small moves to drive big results from small groups – it’s not the big groups that CRM can reach, but her moves are much more effective. If she can figure out how to drive big results from a lot of different small groups all at once, without requiring a lot of focused attention on the retailer’s part, she will have struck the gold that CRM once promised.

Now, ladies and gentlemen, you might be thinking that CRM doesn’t stand a chance in this match, but that’s not true. DMP is small – for a lot of retailers, she can only drive results that impact 5-10% of the retailer’s business, because she’s limited to what happens online and she doesn’t know anything about what goes on in stores. And stores, for most retailers, are where the majority of their purchases happen.

So, lets get the competitors out into the ring – what’s that? What’s going on in the stands? Wait a minute, ladies and gentlemen, we have a new challenger trying to get into the ring. Stand aside, let her through, let’s take a look…

I can’t believe my eyes! It’s Loyalty Program! She’s back, and she’s not the deadbeat she used to be! Looks like Loyalty Program figured out she can solve a big problem that retailers have discovered they have. Seems that online shoppers also, in most cases, happen to be store shoppers too. But without a common identifier across both channels, retailers don’t have a good way of figuring out which online shopper is also which store shopper. And look who figured out how to solve that problem – Loyalty Program!

In fact, the retailers who set up their online sites as something completely separate from their stores quickly ran into problems when customers couldn’t get the same loyalty points for online shopping as they get in stores, and those same customers got very upset when they couldn’t redeem loyalty program offers online. Those retailers were forced to bring online under the same loyalty program that served stores, and when they did that, they discovered a huge side benefit: they were able to identify customer behavior as they crossed channels.

Who will Loyalty Program side with? CRM, or DMP? CRM and Loyalty Program go way back, but CRM is no good at managing the extremely detailed information that DMP can manage, and Loyalty Program and DMP together could be a powerful combination in going after those small group-big result combinations, to the point that reaching a lot of small groups all at once may actually be possible. But DMP doesn’t know a lot about how messy store transactions can be, and she’s not really proven at the scale of transactions that stores generate for a lot of retailers – if she pairs up with Loyalty Program, will she be able to handle it, or will the partnership crush her?

The three of them are warily circling each other in the ring. It looks like there’s no love lost between all three of them. While they figure out which alliances they’ll strike, or who buys up whom, I’m afraid we’ll have to part ways for a short commercial break. Will you see a targeted ad or a mass advertisement that is barely relevant to you during the break? I guess it depends on if you’re watching this broadcast online or on TV. And whether CRM or DMP served up the offer.

Hold on to your seats, ladies and gentlemen! We’ll be back.