A version of this article first appeared in Customer strategy, a magazine published 10 times a year in London by TBC Research. Through its comprehensive portfolio of magazines, events and research, TBC Research is dedicated to helping senior business professionals make more informed technology decisions.
One-to-one marketing sounds such an impossibly simple idea. Build share of the customer rather than the market, because the more the customer spends with you, the less likely they are to "churn" away and the more likely they are to re-use the investment which they have already made in teaching you about themselves.
Yet the impossibly simple may be simply impossible, as little attention has been paid to the technological reasons for the failure of companies around the world to implement a one-to-one approach with their customers.
One-to-one proponents Peppers and Rogers are quite clear about the many problems. For one thing, companies are used to thinking about products rather than customers. They sell the products they have created rather than delivering what the customer wants. They determine their success by market share, but know little about share of customers' spend. And how do they start relating to customers if they have never done so before?
The Peppers and Rogers solution uses the "picket fence" theory. Draw a picket fence around your top customers and work through one-to-one relationships with them. Once they are covered, extend your fence to bring in your next tranche of customers--until you have covered all your customers. It sounds simple in theory, but in practice it is not.
The heart of a one-to-one relationship is knowledge about the customer. What do they like, where and when do they want things delivered? How do they want to structure their payments? What do they spend with the competition? When those contracts come up for renewal, will they buy your star product?
Salespeople often remember important information about their top customers and may even make notes on Rolodex cards. But that salesperson is the only person in the organization who can access the information, no matter how critical it is to other departments and individuals. So today we ask them to populate a CRM database.
But while you can write anything at all on a Rolodex card, you can only tell a database what it wants to know. There are two options for inputting information for which a relational database doesn't have a field.
Let's suppose your top customer always wants a bouquet of roses when an order of champagne is delivered to a particular address, but not when it goes to any other. By managing this, differentiate yourself, and retain a valued customer who appreciates your personalized response. One technology option is to build a new database field that covers the attachment of a bouquet of roses to champagne orders. No problem, except the field will apply to every customer on your database--not quite a one-to-one relationship. You will also have to modify your software application to know how to look for the new field.
You could attach a note to your customer's database record. This is a straightforward solution, but useless if the business application that accesses the database cannot pick up or act on data held in notes. The guy delivering your champagne will not know that he is also supposed to pick up a bunch of roses, since it will not be in his delivery schedule as printed by the software application.
The problem is repeated for every instance of customer individuality. Our corporate knowledge bases just do not help us when it comes to building individual relationships with our customers. Is there a way out? Lazy Software founder Simon Williams believes so. He has proposed a new style of database, called the associative model, that deals with problems of this nature that plague the technology departments of every company in the world.
His tack is to allow a database to record data that is unique to a customer (or product, or supplier) without demanding that it be relevant to all other customers. Further, he proposes a new breed of "omnicompetent" software programs that can learn about changes to the structure of a database without the need for constant reprogramming. Specific information that you want to hold about customers can then be acted on as necessary by your business applications.
Williams has much to do to deliver on his revolutionary ideas. But if he succeeds, Peppers and Rogers will have to thank him personally, because he will have made one-to-one marketing a viable reality.