About atoms and bits

When thinking about business in the future, Nicholas Negroponte suggests we ask ourselves the question: What work do you do that involves atoms (physical stuff) and what work do you do that involves bits (digital stuff)?

It is clear that in many ways relationship marketing and the thinking that goes around it is the very cornerstone of e-business.

What a great question! Answer that question and you will start moving towards those areas of the business that would be best served by digital strategies (or e-business, to state it in its current form). It is about the questions fundamental to your business.

Back to basics and one of the basics of business is customers, and with that a question that keeps most of us awake at night: How do I segment and serve my customers best and in the most cost-effective way? In thinking this through, it is also an area of the business that is moving most strongly to being about "bits". Most information about clients, in businesses big and small, is in some way digitised and many interactions already take place in the digital world. This is really what the topic of relationship marketing is about.

It is clear that in many ways relationship marketing and the thinking that goes around it is the very cornerstone of e-business. Relationship marketing is not just an add-on to the existing organisation, it is not just automating business as usual; rather it is the catalyst for significant change and new go-to-market strategies for the organisation.

The idea of relationship marketing itself is really quite simple; being in a learning relationship with your customer and having the organisational willingness and ability to change your behaviour towards that individual customer based on what the customer tells you and what you know about your customer.

Even more fundamentally it is about customer "self-service". It is about creating both the infrastructure and organisational behaviour which encourage and enhance customer self-service, allowing the customer to do as much as possible, including segmenting themselves and on through the purchasing cycle.

Clearly the implementation of this in an organisation is where the difficulties lie. On the one hand it is based on having good knowledge about the client and on the other that the organisation can and is willing to change its behaviour. (I will make the obvious assumption that the organisation has understood the reasons why it wants to do relationship marketing and has realised that it is not just about doing it because it is fashionable today.)

So let`s talk a little bit about the knowledge part of the problem. Identifying your customer. At the very least the company needs to be in a position to contact a fair number of its clients directly, or at least a fair proportion of its most valuable clients. The company needs to be in a position to know as much as possible about those customers. Over and above the obvious name and address, it needs to know something about their habits, preferences and so on. Once this is known, it needs to remain current and be amplified over time.

This is the topic of segmentation. However, it is essential to get into thinking about "bits" as opposed to the traditional approaches. It is about e-segmentation. In the old familiar model you spend lots of money to find your customers and more money to get consultants to talk to your customers and tell you what they think (market research). You spend even more money to get the customers into your business to sell them your product or service, only to find that you don`t have exactly what they want.

In the digital world this information comes to you from your customer, cheaply and effortlessly through online feedback or through their buying behaviour. This is definitely the topic of some very exciting new and emerging technologies to support these new approaches and techniques. Everything from advanced data mining, working on very advanced data warehouses, to integrated contact centres; to new real-time, profiling technologies and in-store or online interactive devices.

The benefits in moving from atoms to bits is enormous. Not only do you save time and money, but by studying the behaviour of your clients in a real-time, regular and interactive way, you have the opportunity to build a predictive capability that tells you where the market is headed next.