Feature Article
Business feature written by Richard Stewart for
International Business Systems' (Stockholm, Sweden)
customer magazine Business Advantage.
Martha Rogers
Building Profits -- One Customer at a Time
Business author and visionary Martha Rogers
shows how smart companies are harnessing
technology to make customer interaction
personal ... and profitable.By Richard Stewart
With the growth of the Internet and sweeping advances
in business information systems, companies all around the
world are realizing an ironic truth. These powerful new
technologies are suddenly making it possible to do
business in a very old-fashioned way -- by interacting with
customers on a one to one basis. And that, says internationally
acclaimed business theorist and author Martha Rogers, PhD.,
is the path to greater profits and long-term success.
In a series of four best-selling business books, Dr. Rogers
and co-author Don Peppers have pioneered the concept of
"one to one marketing," or simply "1 to 1." The concept is also
referred to as "customer relationship management" or CRM.
In the first book, The One to One Future: Building Relation-
ships One Customer at a Time (1993), Rogers and Peppers
suggest that the future belongs to companies which can harness
technology to build long-term commercial ties with their best
customers.
The books have now been translated into 14 languages
and have established Rogers and Peppers as the philosophical
leaders of a fast-growing international business movement.
Their latest work, The One to One Manager (1999), offers
case studies on businesses of all kinds that are putting 1 to 1
into action. According to Rogers, those companies are seeing
"an enormous payoff" in increased customer loyalty and
reduced cost of operation.
Mass Customization
How does 1 to 1 differ from traditional marketing? "It's really
a shift in business strategy away from the mass marketing
thinking that dominated the Industrial Age," explains Rogers,
who is a professor at Duke University's Fuqua School of
Business in the U.S. as well as an author and consultant.
"What caused mass marketing was the technology that we
had for the last hundred years. What's causing 1 to 1 is the
technology that we're stepping into now -- technology that
gives us the ability to keep track of individual customers, to
interact with them or, more accurately, for them to interact
with us. This new technology allows us to mass customize."
In traditional mass marketing, companies develop a
product and then try to make it appeal to the broadest
possible audience. With 1 to 1, the emphasis is on getting
to know what a customer wants and then providing it. While
the mass marketer tries to build a product's market share,
the 1 to 1 marketer concentrates on building the volume and
quality of business conducted with the customer. Advanced
database technology, which enables a company to "remember"
an individual customer from transaction to transaction, makes
it all possible.
Rogers summarizes the concept this way: "If I can keep
track of you as an individual customer, then I can get to know
who you are. When you talk to me, I can remember what you
tell me. And if I can remember what you tell me, I can know
something about you that my competitors do not know.
Today's technology makes it possible for me to do something
for you that my competitors don't do."
Success Demonstrated
Practical applications of the 1 to 1 philosophy can be found
across a wide spectrum of companies:• Flight attendants on British Airways call up a passenger's
profile from the airline database to help them "remember"
which amenities that customer prefers.• At La Mansion del Rio hotel in San Antonio, Texas,
parking valets observe and report. They jot a note if they
see golf bags in a guest's trunk. That information goes into
the hotel's database and, by the next morning, a staff member
calls the guest to offer assistance in making arrangements
for a round of golf.• Online book-selling giant Amazon.com greets returning
customers by name and, with their permission, "remembers"
their credit card information, shipping address, and reading
preferences.That kind of personalization builds customer loyalty, which
helps companies retain customers and build profits, says
Rogers. She quotes research that shows if a company can
increase customer retention by just 5 percent, profits can
increase 25 to 85 percent, depending on the nature of the
business.
The 1 to 1 approach is especially powerful when directed
at a company's most valuable customers, for example, an
airline's frequent fliers or customers who consistently buy a
manufacturer's most profitable line of goods. Now that the
age of customization has dawned, companies that fail to pay
individual attention to those elite customers risk losing them
to a competitor who has adopted the 1 to 1 way of doing
business.
Rogers uses the car rental industry as an example.
"Research shows that the top 0.2 percent of all car rental
customers rent 25 percent of all the cars. So if a competitor
comes along and takes away just that top 0.2 percent of my
business, then tomorrow I have will still have as many custo-
mers to serve as I did yesterday -- but I will have 25 percent
less revenue," she observes. The 1 to 1 approach is "power-
ful stuff," she adds, "not just in terms of what we can get out
of it, but what we can lose if somebody else does it."
Managing Information
Companies like IBS, a leader in the development of informa-
tion technology solutions for businesses, are key players in the
1 to 1 marketing revolution, she notes.
"You have to be able to manage the information in order
to make this work," says Rogers. "I don't know of any
companies that have done 1 to 1 marketing successfully with-
out first putting in the database infrastructure."
Companies that make the decision to implement a 1 to 1
marketing program should work closely with information tech-
nology suppliers and consultants who understand the concepts
of customer relationship management, she advises. "Vendors
who don't understand the principles of 1 to 1 marketing will not
be able to help implement technology in a strategic way."
Many companies venturing into 1 to 1 marketing are finding
that most of the obstacles in their path are not technological,
but cultural: "It's not the cost of the investment in technology
or even the limitations of the technology, that pose the biggest
obstacles -- although those are not trivial matters," she notes.
The problem comes from the way in which companies are
structured around traditional measures of success, such as
increased market share. Executive performance is rewarded
on that basis. To shift to a new way of measuring success, in
terms of customer retention and share of business from top-tier
customers, requires "a huge cultural and organizational leap,"
Rogers acknowledges.
Looking to the future, she sees the trend continuing toward
more customization and personalization in all kinds of commerce.
Even a downturn in the economy should not slow the global
movement toward this type of customer relationship manage-
ment, she feels.
"We can see how well 1 to 1 serves companies in a
booming economy, but it will serve them even better in a tight
economy," she explains. "In a downturn, the only thing that will
get you through is having customers who really want what you
provide and who are willing to work with you and stay with
you because of the relationship you have developed with them."
Four Tips From ...
Martha Rogers, business theorist and consultant, for companies
venturing into 1 to 1 marketing:• Take an integrated approach. True 1 to 1 marketing must
go beyond the marketing department to motivate every function
and discipline within the company in order to get everyone
thinking from the customer's point of view.• Expect resistance internally. Identify the biggest obstacles
working against change in your organization. Identify the
policies, practices and people most likely to block the way.
Then develop a strategy to make changes and bring those
people on board.• Protect your customer's privacy as though it were your own.
Make a "privacy pledge" to customers, telling them exactly
what you will do and will not do with the personal information
they give you. Then keep that pledge.• Analyze your customer base. Companies that benefit most
from 1 to 1 marketing have a highly differentiated customer
base, with certain elite groups of customers who account for
more business than others. Identify and differentiate them by
their individual needs. Then, based on that information, begin
to personalize your interaction with each one.
Corporate Profile:
Peppers and Rogers Group/Marketing 1:1, Inc.
Martha Rogers, Ph.D., is a partner with co-authors
Don Peppers and Bob Dorf in the Peppers and Rogers
Group/Marketing 1:1, Inc., a management consulting firm
with offices in Stamford, Connecticut and San Mateo,
California in the U.S., as well as in London and Mexico
City. The firm's extensive client roster includes: 3M,
BellSouth, AT&T and Ford Motor Co. in the U.S.; Fiat
in Italy; Lego in the Netherlands; NTT in Japan; and
Banco Santander in South America, among others. Client
Hewlett Packard has built more than 100 "1 to 1 camp-
fires" (pilot programs) around the world, all based on the
1 to 1 principles pioneered by Peppers and Rogers.
The consulting firm offers thought leadership and
strategy in the fast-growing fields of interactivity, market-
ing technology, customer relationship management,
training, and business development. The company
recently was named to the Inc. magazine list of the 500
fastest-growing private companies in the U.S. A web
site (www.1to1.com) offers a variety of tools and
checklists for implementing a 1 to 1 marketing program.
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