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| Capturing (and Keeping) Your Customer, Part 1 |
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Capturing (and Keeping) Your Customer: The Goal of One-to-One Marketing
by Helen Chantos, director, International Services, National Housewares Manufacturers Association.
This is the first of a two-part series describing how this effective business concept is put into practice.
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| | Just Imagine |
An appliance store conducts an exclusive pre-sale event for its "best" (repeat) customers and lets them shop early for bargains. A toy shop sends timely birthday greetings to regular customers along with a certificate for a complimentary gift. A catalog retailer issues special editions to its catalog featuring certain product brands, styles, and price ranges — and even a personalized message to the recipients.
These are just a few examples of how successful businesses capture and keep their customers. Could — and should — you implement similar strategies? "Most definitely," respond the growing number of retailers to the business concept known as one-to-one marketing.
 The scenarios described above are examples of the "brave new world" of one-to-one marketing. They may seeem like fantasy or science fiction to some, but they are already a reality for many. They may seem daunting and impossible to many housewares retailers and manufacturers, but they are the wave of the future, according to marketing consultant Martha Rogers. Rogers presented an overview of one-to-one strategies in a presentation at the 1999 International Housewares Show in Chicago, sponsored by the National Housewares Manufacturers Association (NHMA/USA). With her business partner Don Peppers in the Conneticut-based Peppers and Rogers consulting firm, Rogers has co-authored several books on one-to-one marketing, including the recently released One to One Fieldbook (Doubleday/Currency, 1999.) She promotes one-to-one as the business strategy that will simultaneously enable an enterprise to capture customer loyalty, to gain a higher share of the customer's business, and to obtain relief from margin erosion.
"These ideas really are not new," says Jim Gillies, vice president market development at Newell Rubbermaid. "Many of them started in the 1940s or even earlier, but there is a new interest among retailers who are looking for ways to differentiate themselves." And while retailers seek to differentiate themselves to consumers, manufacturers must also look for ways to differentiate themselves. "Our strategy has always been to work closely with our retail partners," Gillies says. "It's just everyday common sense stuff to work with our distributors and retailers to find out what is best for them."
Conveniently, two trends appear to be coming together. Philip Brandl, NHMA's president notes, "Luckily, at the same time that there is increased pressure to differentiate in order to capture and hold the customer, new technology provides an ever-growing ability to reach, interact with, and respond to the individual customer in unique ways."
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| Customizing Products and Services |
"Give the lady what she wants" was the motto for success of Chicago retailer Marshall Field in the late 1800s. But he never dreamed to being able to keep track of what millions of customers want. Thanks to computerization, however, such individualized, targeted attention is now possible on a massive scale.
Target, a major U.S. superstore that carries innovative, mid-market housewares, has the capability through its "Club Wed" bridal registry of keeping track of what gift items a couple wants and what the couple has already received, and of sending them anniversary greetings for years to come–along with reminders about sales on products that they haven't purchased or been given yet.
We are leaving behind the era of traditional marketing, of standardized products and services and even standardized customers," Rogers predicts. "Today growth comes from customization." Such customization is based on keeping and growing individual customers by interacting with them to determine what they want and how they want it, Rogers says. "If we learn something about a customer that a competitor does not know, that gives us a competitive advantage."
Today, housewares retailers are both able to interact easily with customers and to keep track of what individuals like and how they like it — all thanks to the computer and new information technology. Club Wed couples register their wedding date and other details and then take a portable hand-held product scanner through the store to record their gift selections, giving Target a great deal of consumer information and the ability to customize its services for those couples.
Office supply chain Staples encourages its regular customers to identify themselves by giving "members only" discounts to shoppers with a special bar code on their membership card. "Customers win with big discounts, and Staples wins by identifying its best customers," Rogers says. Plus, Staples will be more likely to hold on to those customers because it has specialized information about them.
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| Moving from Mass Media to Microchips |
"It's becoming too costly to mass market by means of the traditional mass media," Rogers says. In the past, housewares retailers and manufacturers have primarily relied on mass media such as newspapers and magazines for the efficient mass marketing of products and services. Today, however, the high cost of advertising in mass media is prohibitive, especially for the smaller enterprises such as a housewares specialty shop.
"The idea with one-to-one marketing is that the housewares retailer does not have to flood the market with information," says Brandl. "Rather the retailer focuses on informing and attracting certain consumers."
In addition, many of the so-called "mass" media are fracturing and becoming more narrow in their focus, and thus losing their ability to reach mass audiences. Today, people obtain information in many new ways, and the successful retailer must use the new technology to find today's consumers.
The United States, for example, has moved from fewer than a half dozen television channels in 1970 to thousands of channels today. While the readership of major newspapers has declined, since 1978 there has been a 50% increase in the number of consumer magazines and a 100% increase in trade publications. Thousands of specialty catalogs are now mailed to consumers annually.
At the same time, new media and new technologies have grown significantly. More personal computers are currently sold than television sets,and over a fourth of all U.S. households are already online more than 12 hours a week. The number of websites is growing exponentially, and more e-mail is sent daily than first-class mail through the U.S. Postal Service.
The "invasion of the microchips" has led to a revolution in the cost of information according to Rogers. In the last 20 years, the cost of processing a single bit of information has declined by a factor of 1,000, she says. Moreover, thanks to computer technologies, "it costs every company half as much every 18 months to manage and analyze the data about an individual customers," she adds.
All these developments make forward-looking possible for housewares retailers to track individual usage and tastes and to obtain feedback from customers in ways that were unthinkable just two decades ago. Now it's possible to really "know" your customers, not just in small, neighorhood "mom-and-pop" shops but in large-scale enterprises.
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