Control your own destiny with one-to-one marketing

The customer relationship management (CRM) bandwagon has rolled through the corporate world with such effectiveness over the last five years as to ensure most senior managers are well up to speed on its purpose and output. However, there is still a significant disconnect between what management knows is needed and what it does.

Embarking on the journey to one-to-one marketing begins with a major attitudinal shift.

Doug Leather, MD, Intact Solutions

Wherever we look, the business case for retaining and growing customers is overwhelming, but corporate behaviour and strategy does not yet reflect an awareness and embracing of this.

The US-based Alexander Group reports that CRM has become the number one priority for CEOs, as research indicates that 46% of business growth will be driven through deeper engagements with existing customers, as against 19% from new customers and 22% from new products. However, while management knows this to be true, typical customer engagements are still centred on product sales, rather than on customer requirements.

As a business, you operate either in the customer dimension or in the product dimension. If you operate in the product dimension, you must be the lowest cost producer of goods sold into a mass market. If you operate in the customer dimension, you need to structure your business in such a way as to be able to remember the customer when he comes back, and make it easier and easier to do business.

This concept, developed by CRM consulting firm Peppers and Rogers, is encapsulated in the notion of the "learning organisation". In this relationship, the customer tells you what he wants, and you tailor your products, communication or service accordingly.

The more time your customer invests in this relationship, the greater the stake they have in making it work. Simply put, they don`t want to re-invent the relationship with a competitor, so to gain customer loyalty, show your customers you will change how you treat them if they take the time to teach you how to serve them.

The rewards are compelling. Harvard Business Review reports that cutting customer defections by just 5% boosts profits between 25% and 85%. As a corollary, Forum Corporation says most businesses lose 15% to 35% of their customers annually, and 69% of these defections are due to a poor sales or service interaction with the customer.

The ability to retain and grow customers arises with identifying the best and most profitable ones, as the Pareto Principle applies: 80% of your business is derived from 20% of your customers; but which constitute the 20%?

Presenting a further hurdle is the fact that customer information is held in silos across most organisations. Various customer interactions are held in different databases, significantly hindering a single, unified view of the customer.

The goal must be for the organisation to be able to identify the customer individually and addressably through whichever channel the customer communicates with the business, to understand the needs of the customer and to understand the value of the customer to the organisation.

The value component consists of actual value and strategic value, and to determine strategic value one has to interact with the customer, to ask the customer their intentions, with the goal of getting a greater `share of customer` business. It`s a major challenge, especially for large organisations with multiple legacy systems, but without this single insight, there can be no customer identification, and without identification, there can be no one-to-one marketing.

Embarking on the journey to one-to-one marketing begins with a major attitudinal shift. Traditional companies flood the market with information, and expect customers to sort through the information and then take the initiative in buying products or services.

The one-to-one business uses information about each customer to figure out what he needs next. This means we can control our own destiny, and create loyal customers for life.