Ask the Marketing Doctors
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.* * *
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.* * *
Problem: This temporary-placement firm has hundreds of corporate clients, but they call only when there's an emergency.
One-to-One Solution: We do the simple things first.
1. We get to know the senior executives at every client company, and remember their needs in temp-help skills -- Mac, Windows, graphics, accounting.
2. We call a customer after every nontrivial assignment. One important purpose is to ask what a client liked least. That question doubles as a form of product specification. We take whatever the client says into account the next time we serve that customer.
3. To the extent possible, we assign the same temp employees to the same positions at any client, provided there was no negative feedback. In the feedback call, we focus on new temps' performance.
4. In addition to getting referrals from clients, our salespeople constantly dig up more referrals to give our biggest clients.
But the real business opportunity is in figuring out how to help clients anticipate, prepare for, and avoid emergencies.
5. We book recurring "emergencies" (financial closings, inventory counts, store openings) in advance.
6. We place a "crisis manager" at the client's disposal to document the situation and help figure out how to avoid it next time. We charge for the service, then measure specific savings in the next crisis. We feel strongly enough about the value and importance of this service that if a client balks at paying the fee, we often give the service away, at least the first time, to a prospective large client.
We look for additional services or products to sell, especially to our biggest clients.
7. We think about selling permanent employee placements, payroll processing, and collection services.
8. We also help clients identify full-time positions that might be better handled by part-time or temp personnel. ("Why don't we rent you a three-hour-a-day clerk to man the mailroom?")* * *
Wing and a Prayer
Problem: This struggling airline is known above all for poor customer service.
One-to-One Solution: None. First fix the service. You can't practice one-to-one marketing with bad service. Period.* * *
Plastique Injection Molding
Problem: This plastics supplier is dependent on three major customers.
One-to-One Solution: First, we get down the basics of one-to-one marketing for the three big customers.
1. We keep computer records on the needs of each customer.
2. We remember every aspect of every customer's relationship with us.
3. We maintain detailed profiles of every key decision maker, spec writer, and influencer within each customer's organization.
We make each customer's business at Plastique the line responsibility of a relationship manager.
4. The relationship managers have the authority to decide final policy with respect to their customers, as it concerns product delivery, customization, fulfillment, inventory, and billing terms.
5. The relationship managers are totally responsible for the profit their customers generate across all divisions and departments at Plastique.
We help customers think through and document any requests for proposals (RFPs) for extruded plastic products or plastic equipment of the type Plastique sells. For the next 10 RFPs for customers that we bid on, our engineering staff should actually have written the bulk of 8 of them.
Plastique gets more than 80% of each current customer's business -- which can be a problem. Customers occasionally want an outside bid just to be sure they're continuing to get the lowest-possible cost and the highest-quality product and service.
6. So we start an information clearinghouse for extruded industrial plastic products, not just for our customers but for our company as well. We gather relevant data from all over the country and report on our products' comparative strengths, cost, and so forth.
7. We build a World Wide Web site that includes comparative product data and serves as an interesting eye on the rest of the industry.
8. We're considering expanding our information service and offering it on a fee basis in a variety of related industrial applications. We'd subcontract it out.
One of our principal business strategies is to continue to search for new ways to help customers make more money in their own businesses.
9. Although our customers are in three totally different industries, we stay current with each industry.
10. Our salespeople always are on the lookout for referral business they can swing to a customer.
11. Our customers deal mostly with original equipment manufacturers (OEMs) themselves, and our RFP-writing expertise enables us to help them respond to OEMs' RFPs as well. We don't charge for this service, but we make sure to record and remember each customer's boilerplate language and bidding preferences.