Two one-to-one marketing experts explain how they would improve five hypothetical companies.
Got a sales problem? Margins not high enough? New customers too expensive to find? One-to-one-marketing gurus Don Peppers and Martha Rogers have answers. Here, step by step, is what they would do when asked to stand in as CEOs of five hypothetical companies
L. L. Jean
Problem: With 20 million customers, how can this national catalog know each one?
One-to-One Solution: We don't try to build relationships with all 20 million customers. Rather, we want to be able to differentiate among customers in order to find out which ones are valuable enough to warrant relationships. For the other customers, we continue to use traditional marketing methods, relying primarily on advertising and promotion.
1. Suppose research has shown that 0.5% of our 20 million customers -- 100,000 of them -- account for some 75,000 orders a month and for nearly 30% of sales revenues, or nearly $2,000 per customer per year in sales. These are our highest-value customers -- the elites.
2. A whopping 95% of our revenues can be accounted for by just 25% of our 20 million customers -- about 5 million in all, with an average annual order volume (not counting the elites) of more than $80 a customer.
Our 100,000 elites receive the most highly personalized service.
3. We produce 100,000 individualized catalogs, printed digitally by Donnelley Digital, a new service from R. R. Donnelley. Frequent shirt buyers get extra shirt selections, golf-accessory purchasers more golf stuff, younger folks more sporting goods, older customers more convenience items.
4. We divide our elites into roughly 14 portfolios, based on the type of merchandise they buy and the needs we think they have. We put a customer manager in charge of each portfolio and print his or her name clearly on each elite customer's catalog. We hire 12 retirees to produce handwritten notes to those customers for inclusion in all merchandise shipments.
5. Through a deal with UPS, we offer all merchandise to elite customers on a next-day-delivery basis at absolutely no extra charge.
6. And, of course, we give the elites the use of a special, unlisted 800 number.
For the 5 million high-value customers (including elites), we do the following:
7. We record all customer measurements, addresses, credit-card numbers, and delivery specifications so a customer never has to respecify anything.
8. We offer to record gift preferences and remind customers of upcoming occasions.
For all customers, we constantly look for additional ways to disseminate information and help them sort through a wider array of goods more quickly.
9. We offer fax-on-demand specification sheets for all items, especially complex ones.
10. We put a bigger catalog on CD-ROM, with software that remembers what customers looked at and for how long, so they can easily find their way back.
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Downtown Deluxe Dry Cleaning
Problem: This service's professional clientele expect more but want to pay less, and there's lots of competition.
One-to-One Solution: First, we don't forget the basics.
1. We always remember each customer's individual preferences -- no starch, folded, on hangers.
2. Our frontline counter people are encouraged to learn faces and names, especially of regular clients.
3. When a new client walks in for the first time, we ask permission to take a Polaroid snapshot, to help the salespeople recognize him or her the next time. For the most part, clients will be flattered by this attention.
We also maintain a clothing-inventory service for customers. We charge $45 a year for it but waive the fee for the best customers.
4. When customers buy a new suit or dress, we ask them to bring in any extra yarn, thread, cloth, or buttons, and we file them away for later use, as necessary.
5. We offer to mend, alter, and tailor clothes under this service.
6. We write up an inventory of customers' clothes as they acquire them, and we keep it current for insurance purposes.
7. We also offer a used-clothing service for those customers. "Tired of those dresses? Bring them in, we'll appraise them and donate them to a charity, and then we'll deliver the tax receipt to you."
We use our pickup and delivery service to pick up and deliver much more than just dry cleaning and laundry.
8. We pick up our customers' packages for shipping, mail to be returned, videotapes, even recycling.
9. We do a variety of "nuisance" errands for customers for a fee per transaction, usually of $5 or less: key duplication, shoe shining, and the like.
We also offer completely "no hassle" pickup and delivery.
10. We offer in-home laundry pickup and put-away service. Customers provide a key to their back doors, so we can come pick up dirty laundry every week and put away the clean laundry we're returning. (Customers just show the delivery person, the first time, where everything goes.)
11. Or we allow customers to provide an extra key to their car door and simply leave their dirty clothes on the backseat. We go by their parking space in the company garage once a week or once a day and look in the backseat to see if there's a pickup and to hang up the freshly cleaned clothing.
12. All our pickup and delivery services make it important for us to put clients on an invoicing schedule. We just send each customer one bill a month, or bill clients' credit-card accounts monthly if that's what they prefer.
