Creating Profitable One-to-one Relationships

The days when all a business needed for good customer sales and service was basic contact data—name, address, phone, history of orders—are gone. Today, any information that can help you better understand (and keep track of) your customers' wants and needs is critical to keeping each customer and expanding the amount of business he or she brings to you. Too many think that a "rich" customer database is one that has basic information and the date of each customer's birthday. In reality, a good database is one that captures the full relationship between the buyer and seller. What have you sold the customer in the past? Did the product or service help the customer? Could you have done more to help the customer? What problems or concerns is the customer dealing with today? And tomorrow? This is the kind of data you really need to collect.

In general, yes. It can be done handily at the start of the business relationship—not something you bring up in each and every contact. Many customers will be impressed that you care enough to be collecting information that can help them meet their own needs. But data collection is something you must be cautious about. It's not only a question of how you will use the data; you may be adding customer information into a company database that could be used in improper ways by others. Also, you may be bound by guidelines, rules, or legislation to advise customers about data collection and use. In any case, it's good commercial practice to publish a clear privacy policy explaining your procedures; Apple, for example, has a good one. You should always tell customers how you intend to use the data. Experience indicates that customers are happy to part with information if they see some tangible benefit, yet concerns about security and privacy issues remain major barriers to the development of e-commerce.

No. Collecting data is pointless unless it helps you to build a stronger relationship with customers. They must see that you are using the data to help them. That means you are expected to continually enhance the customer experience. If, even once, you confess to a customer that you forgot they needed supplies on the last Monday of the month, you've shown that all the past information they shared with you was for naught. It's not unlike forgetting the names and ages of your best friend's children. One online-sales expert believes that the main reason for maintaining an up-to-date sales database is to just stay in touch. "Essentially," says Chris Le Roy, "once you have the customer details in a database you can then use a whole range of techniques to maintain contact."

The benefits of one-to-one marketing are numerous. But this question deserves a multi-level answer. At the base level, every customer appreciates customized sales and service. On the next level, the more you know about each customer, the greater the chance that you can expand the amount of goods and services you can provide him. But there's a third level to consider. For one-to-one marketing to work effectively, you need the right level of information on customers. You may not always be able to get that level of information on individual customers. However, if you have sufficient information on groups of customers with common needs, you can use techniques such as direct mail to communicate with a degree of precision. As your information on individual customers grows, you can move toward one-to-one communication.

Inc. says that the first thing you need to do when thinking one-to-one is to pinpoint your objectives. The more information you have about your target audience, the more precise you can make your campaign. In an ideal world, direct marketing techniques would allow you to communicate one-to-one with every prospect, but in practical terms you are more likely to be communicating with groups who share the same characteristics. This enables you to develop a unique relationship that competitors will find very difficult to match. It can also reduce your marketing and customer management costs by reducing time and effort.

One-to-one marketing is designed to:

• Boost the quality of customer service
• Increase the strength of customer relationships
• Maximize the profitability of each customer relationship
• Attain higher levels of customer retention rates
• Maximize your ROI in marketing and customer service

At the heart of effective one-to-one marketing is a data networking solution that collects, stores, manages, and distributes all relevant customer information via a single, integrated customer database. The database is updated from all customer channels and is accessible by all customer-facing employees. What is destructive to solid one-to-one relationships is a splintered system in which numerous representatives from the same company know some, but not all, of a customer's needs. In such cases, no one from the company can completely help the customer.

Ovation Marketing advocates "a properly constructed and maintained database," and they suggest that such a database must be refreshed regularly with data on each customer, such as:

• Products they've purchased
• How often they purchase
• How much they typically buy
• The last time they purchased
• How long they've been a customer or prospect
• Preferred contact method
• Channel(s) they've purchased through
• Whether or not they purchase gifts
• Interests (hobbies, leisure time interests, etc.)
• Presence of children
• Demographics (age, gender, income, etc.)

The more you know about your customers, the better your chances of increasing lifetime value. Data capture must therefore be an integral part of all your sales, marketing, and customer service campaigns. Take every opportunity to find out more about your customers so that you can build a real competitive edge, based on one-to-one personal relationships.

Perhaps the best customer database is the one maintained, at least in part, by the customer himself! If you offer personal pages on your Web site, you can allow customers to add further choices to their profile, using a special checklist. You can readily find examples of how businesses are using a customer-driven database. However, it is important to use customer information in appropriate ways. Attempts to increase customer interactions and provide more personalized information have made many consumers concerned about privacy issues. It is essential to let customers control the frequency and scope of interaction. Businesses must understand the difference between using and abusing the information they gather.

The contact between buyer and seller (especially on the Internet) is moving toward the ultimate one-to-one experience. Database technology supports a level of personalization that can deliver highly tailored products and services to specific individuals. Each time a customer logs on to a Web site, for example, the database can pull together purchase history and personal preferences as a basis for a highly personalized response. This is sometimes called clickstream analysis. By giving customers a single point of entry, you can increase customer loyalty and learn more about their purchasing patterns. This provides an excellent basis for adding value and for the development of new products.

Because most people check their e-mail routinely and generally read or quickly scan most messages, it has become a powerful marketing tool with a high potential return for a modest investment. Your e-mail goes straight into the customer's in-box, so you don't have to spend money attracting people to your site. When a customer elects to take regular e-mail from you (and can choose the nature and frequency of your e-mail contacts), you have an opportunity to build a strong relationship. This makes online marketing more predictable and gives you the chance to develop a one-to-one relationship. Yet, here, too, it is wise to think through your own e-mail policies and practices. You might want to compare your approach with the guidelines followed by the Interactive Advertising Bureau.

Interactive facilities on a Web site, or in a database managed by call centers or personal sales reps, allow customers to design their own customized products. Cars and computers are good examples. The customer chooses a basic model, and then selects features and options from a database. The system provides a price for the customized product, then gives the customer the choice of ordering now or storing the specification on a personal Web page for later modification. The high level of interaction gives customers greater choice and provides you with detailed insight into their needs. Is anyone doing this? Yes. In fact, one source reports that the mega catalog sales vendor "Lillian Vernon today offers 14 different kinds of personalization and personalizes 5.3 million products a year." Customization can lead to impressive sales growth.

The abuse of a customer database has been discussed with urgency for a number of years. One-to-one marketing is based on the acquisition and use of high levels of personal information. You should publish a privacy policy on your site and you should also make sure that you comply with relevant guidelines, rules, and legislation. When you collect data, tell visitors what you do with the information, and follow best practice on privacy issues.

The primary reason for collecting data is to find out more about customer needs so that you can build long-term relationships and increase customer loyalty. It is essential to act on the information you collect, analyze it, and develop strategies for building a personalized one-to-one service. Abusing customer information may be a crime, but not using customer data—or using it poorly—is a tragedy.

Peppers, Don, and Martha Rogers. Return on Customer: Creating and Maximizing Value from Your Scarcest Resource. Currency, 2005.

Green, Charles H. Trust-Based Selling: Using Customer Focus and Collaboration to Build Long-Term Relationships [audiobook]. American Media International, 2007.

The Peppers & Rogers Group's site: www.1to1.com

Marketing Links: http://en.wikipedia.org/wiki/Marketing