30 December, 2008

Is your Company ready for ‘One to One Marketing’?

Mila IT Centre - Workshop 4 Marketing Executives
Handout - By C. Radhakrishnan

For some companies, being ready simply means being prepared to launch a limited initiative. PRACTICED CORRECTLY, One-to-one marketing can increase the value of your customer base. The idea is simple: one-to-one marketing (also called relationship marketing or customer-relationship management) means, being able to change your behaviour towards an individual customer based on what the customer tells you and what else you know about that customer.

Why One-to-One?
Initial benefits can be gained from taking steps-even small ones-towards one to one marketing in specific areas. Relationship marketing is grounded in the idea of establishing a learning relationship with each customer, starting with your most valuable ones.

Think of a learning relationship as one that gets smarter with each interaction. The customer tells you of some need, and you customize your product or service to meet it. Every interaction and modification improves your ability to fit your product to this particular customer. Eventually, even if a competitor offers the same type of customization and interaction, your customer won't be able to enjoy the same level of convenience without taking the time to teach the competitor the lessons your company has already learned. There are four key steps for putting a one-to-one marketing program to work: identifying your customers, differentiating among them, interacting with them, and customizing your product or service to fit each individual customer's needs.

Getting Started
The following activities are keyed to the four steps of a one-to-one marketing program: identifying customers, differentiating among them, interacting with them, and customizing your product or service to meet each customer's needs. Most companies should be able to accomplish these activities fairly readily. If you have not yet identified your end-user customers, you can apply these suggestions to your channel partners. At some point, however, you will need to identify and interact with your end-user customers to get the most out of your relationship-marketing program.

Identifying your customers
To launch a one-to-one initiative, your company must be able to locate and contact a fair number of its customers directly, or at least a substantial portion of its most valuable customers. It's critical to know customers in as much detail as possible: not just their names and addressable characteristics (such as addresses, phone numbers, or account codes), but their habits, preferences, and so forth. And not just a snapshot - a one-time questionnaire.
 Collect and enter more customer names into the existing database
 Collect additional information about your customers
 Verify and update customer data and delete outdated information
 Ask your customers one or two questions every time you are in touch with them.
 Put your customer files in a systematic way - easily accessible way.

Differentiating your customers
Broadly speaking, customers are different in two principal ways: they represent different levels of value and they have different needs. Once you identify your customers, differentiating them will help you to focus your efforts so as to gain the most advantage with the most valuable customers. You will then be able to tailor your company's behaviour to each customer in order to reflect that customer's value and needs. The degree and type of differentiation in a company's customer base will also help you decide on the appropriate strategy for a given business situation.
 Identify your organization's top customers.
 Using last year's sales or other simple, readily available data, take your best guess at identifying the top 25% of your customers.
 Determine which customers cost your organization money.
 Look for simple rules to isolate the bottom 20% of your customers (such as customers who haven't ordered in more than a year or those who always bid you out) and reduce the amount of mail you send them.
 Select several institutions or individual customers you really want to do business with next year.
 Add them to your database, and record at least three contact names per institution.
 Find higher-value customers who have complained about your product or service more than once in the last year.
 'Baby-sit their orders: put a product or quality-assurance person in touch with them - check on your progress.
 Look for last year's large customers who have ordered half as much or less this year 'Go visit them now, before your competitor does.
 Find customers who buy only one or two products from your company but a lot from others.
 Make them an offer they can't refuse to try several more items from you.
 Rank customers into A, B, and C categories, roughly based on their value to your company. (Don't try to isolate the top 25% or bottom 20%-any "blunt instrument" criterion such as annual spending or years doing business with the company will work.)
 Decrease marketing activities and spending for the C's and use the savings to fund increased activities for the A's.

Interacting with your customers

Improving both the cost-efficiency and the effectiveness of your interactions with customers is a critical component of a one-to-one marketing program. Cost-efficiency improves by directing customer interactions toward more automated and therefore less costly channels. For example, a company that provides helpful, up to-date information at its Web site won't need to spend as much as it once did supporting a more expensive call centre. Effectiveness improves by generating timely, relevant information, providing either better insight into a customer's needs or a more accurate picture of a customer's value. Every interaction with a customer should take place in the context of all previous interactions with that customer. A conversation should pick up where the last one left off, whether the previous interaction occurred last night or last month, at the call centre or on the company’s reception.
 If you are focusing on channel members, call the top three people at your top 5% of customers.
 Don't try to sell-just talk and make sure they are happy.
 Call your own friends and ask questions; see how hard it is to get through and get answers.
 Test eight to ten different scenarios as a "mystery shopper." Record the calls and criticise them.
 Call your competitors to compare their customer service with yours.
 Repeat the above activity.
 Use incoming calls as selling opportunities.
 Offer specials, dose-outs, and trial offers.
 Evaluate the voice response unit at your customer information centre.
 Make the call centre/recordings sound friendlier, be more helpful, and move customers through the system faster.
 Follow the interaction paper trail through your organization
 Seek to eliminate steps: reduce cycle times to speed up your response times to customers.
 Initiate more dialogue with valuable customers
 Use technology to make doing business with your company easier
 Print personalized messages on invoices, statements, and envelopes.
 Have sales reps sign personal letters rather than mass-mailing letters signed by a senior manager.
 Have the right people in your organization - call the right customer executives. (That is, have your CEO call another CEO, or have the VP of marketing call the business owner.)
 Call every valuable customer your company has lost in the last two years and give them a reason to return.
 Gather the e-mail addresses of your customers in order to follow up with them.
 Offer alternative means of communication.
 Scan customer information into the database.
 Improve complaint management system - Plot how many complaints you receive each handling day and work to improve the ratio of complaints handled on the first call.

Customizing your enterprise's behaviour
Ultimately, to lock a customer into a learning relationship, a company must adapt some aspect of its behaviour to meet that customer's individually expressed needs. This might mean mass-customizing a manufactured product, or it could involve tailoring some aspect of the services surrounding a product-perhaps the way the invoice is rendered or how the product is packaged. In any case, the production or service delivery end of your business has to be able to treat a particular customer differently based on what was learned about that customer by the sales, marketing, or any other department. In rushing to reap the rewards of relationship marketing, it's easy for a business to overlook this critical fourth step, leading many to misunderstand the entire discipline as simply an excuse for direct mail and telemarketing.
 Customize paperwork to save your customers time and your company money
 Use regional and subject-specific versions of catalogues.
 Personalize your direct mail
 Use customer information to individualize offers.
 Keep the mailings simple.
 Fill out forms for your customers
 Ask customers how, and how often, they want to hear from you
 Use laser equipment to save time and make you look smarter.
 ‘Use fax, e-mail, postal mail, or personal visits as the customer specifies.
 Find out what your customers want
 Ask your top ten customers what you can do differently to improve your product or service 'invite customers to focus groups or discussion meetings to solicit their reactions to your products, policies, and procedures.
 Respond to their suggestions.
 Follow up and repeat the process.
 Involve top management in customer relations
 Give them lists of questions to ask based on the history of individual customers.

These four implementation steps overlap considerably. Nevertheless, they are roughly in order of increasing complexity and increasing benefit for a company. Identifying and differentiating customers, the first two steps, are largely internal "analysis" steps, whereas interacting with your customers and customizing products and services are external "action" steps, visible to the consumer.

From that perspective, the four steps can he used as a kind of general checklist to guide your efforts in implementing a one-to-one marketing program. If you can't identify your individual customers, you have no hope of differentiating them, much less adapting your behaviour to address each one's needs.

Good luck to your new endeavour in marketing!

You can always email me for clarification or assistance.