BOSTON -- Imagine Chicago's Wrigley Field filled with 40,000 customers. Now, suppose only 80 of those customers really mattered to your bottom line, and you've got a great picture of the car rental business, Don Peppers, founding partner of Peppers and Rogers Group, said in his keynote at the CRM Focus show here.
"Only 0.002% of customers rent 25% of the cars," Peppers said. A traditional marketer would place billboard ads around the stadium, and possibly run a promotion during the seventh inning stretch, he said. A smart marketer would find those 80 customers, sit next to them, buy them beers and hot dogs, and find out what they are looking for when they rent cars, he said. At the end of the game, the smart marketers would have 25% of the car rental market, Peppers added.
Peppers used this metaphor to describe one-to-one marketing, where the key is to treat different customers differently. One-to-one marketing is based on offering individual customers products and services that are customized to their needs, and growing the relationships with the customers through ongoing dialogue, he said.
In a "learning relationship" with a customer, the customer tells the company his preferences, and the company tailors its products to the customer's preferences, according to Peppers. "The more effort the customer invests, the greater their stake in making the relationship work," he said. "Now, the customer finds it more convenient to remain loyal, rather than re-teach a competitor."
Peppers shared the story of a florist whom a friend had used to order flowers for his mother's birthday one year. The next year, Peppers' friend was sent a note two weeks before his mother's birthday, asking if she still lived at the same address, detailing his order, and offering to send her flowers again charged to his credit card. This is the kind of personalization that companies need to have, and his friend was not inclined to phone other florists to see if they had lower prices, Peppers said.
Business no longer consists of finding customers for products, but finding products for customers whose needs the business has discovered through dialogues, Peppers said.
"One to one is ... relevant for most businesses," Peppers said. There are principal four steps to implementing one to one that are followed at Peppers and Rogers, he said.
The first step is to identify customers, according to Peppers. "If you don't have customer identities, you don't have customer relationships," he said. Companies that don't have a way to identify customers as a part of their business model may want to add in some way to get in touch with their customers. For example, Peppers cited frequent shopper programs at supermarkets as a way to add in identifying to the business model.
The second step is to differentiate the customers by values and needs, Peppers said. "The value is not how much the customer spent, but their lifetime value," he said. "First, rank (customers) by value, then differentiate them by their needs."
Third, companies need to interact with their customers more cost-efficiently and effectively, he said. Interaction "is not to tell the customer (something), but so that the customer can tell me something."
Lastly, companies need to customize some aspect of the enterprise's behavior, Peppers said. When customers tell the company what they want in their products or services, the company needs to tailor some of those products or services to their needs, he added.
"The more direct and purposeful the dialogue (companies) have with customers, the more profit" they will realize, Peppers said.
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