Managing Customer Experience and Relationships. Don Peppers
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the twentieth century heralded the dawn of a new competitive arena, in which commoditized products and services have become less reliable as the source for business profitability and success, it is the new computer technologies and applications that have arisen that assist companies in managing their interactions with customers. These technologies have spawned enterprise-wide information systems that help to harness information about customers, analyze the information, and use the data to serve customers better. Technologies such as enterprise resource planning (ERP) systems, supply chain management (SCM) software, enterprise application integration (EAI) software, data warehousing, sales force automation (SFA), marketing resource management (MRM), and a host of other enterprise software applications have helped companies to mass-customize their products and services, literally delivering individually configured communications, products, or services to unique customers in response to their individual feedback and specifications.
The accessibility of the new technologies is motivating enterprises to reconsider how they develop and manage customer relationships and map the customer experience journey. More and more chief executive officers (CEOs) of leading enterprises have identified shifting to a customer-strategy business model as a top business priority for the 21st century. Technology is making it possible for enterprises to conduct business at an intimate, individual customer level. Indeed, technology is driving the shift. Computers can enable enterprises to remember individual customer needs and estimate the future potential revenue the customer will bring to the enterprise. What's clear is that technology is the enabler; it's the tail, and the one-to-one customer relationship is the dog.
Traditional Marketing Redux
Historically, traditional marketing efforts have centered on the four Ps— product, price, promotional activity, and place—popularized by marketing experts E. Jerome McCarthya and Philip Kotler.b These efforts have been enhanced by our greater (and deeper) understanding of consumer behavior, organizational behavior, market research, segmentation, and targeting. In other words, using traditional sampling and aggregate data, a broad understanding of the market has preceded the application of the four Ps, which enterprises have deployed in their marketing strategy to bring uniform products and services to the mass market for decades.c In essence, the four Ps are all about the “get” part of “get, keep, and grow customers.” These terms have been the focal point for building market share and driving sales of products and services to consumers. The customer needed to believe that the enterprise's offerings would be superior in delivering the “four Cs”: customer value, lower costs, better convenience, and better communication.d Marketing strategies have revolved around targeting broadly defined market segments through heavy doses of advertising and promotion.
This approach first began to take shape in the 1950s. Fast-growing living standards and equally fast-rising consumer demand made organizations aware of the effectiveness of a supply-driven marketing strategy. By approaching the market on the strength of the organization's specific abilities, and creating a product supply in accordance with those abilities, it was possible for the firm to control and guide the sales process. Central to the strategic choices taken in the area of marketing were the—now traditional—marketing instruments of product, price, place, and promotion—the same instruments that served as the foundation for Philip Kotler's theory and the same instruments that still assume an important role in marketing and customer relations today.
The four Ps all, of course, relate primarily to the aggregate market rather than to individual customers. The market being considered could be a large mass market or a smaller niche market, but the four Ps have helped define how an enterprise should behave toward all the customers within the aggregate market:
1 Product is defined in terms of the average customer—what most members of the aggregate market want or need. This is the product brought to market, and it is delivered the same way for every customer in the market. The definition of product extends to standard variations in size, color, style, and units of sale as well as customer service and aftermarket service capabilities.
2 Place is a distribution system or sales channel. How and where is the product sold? Is it sold in stores? By dealers? Through franchisees? At a single location or through widely dispersed outlets, such as fast-food stores and ATMs? Can it be delivered directly to the purchaser?
3 Price refers not only to the ultimate retail price a product brings but also to intermediate prices, beginning with wholesale; and it takes account of the availability of credit to a customer and the prevailing interest rate. The price is set at a level designed to “clear the market,” or the highest price that will sell the product easily and widely, assuming that everyone will pay the same price—which seems only fair because everyone will get the same product. And even though different customers within a market actually have different levels of desire for the same product, the market price will generally be the same for everybody.
4 Promotion has also worked traditionally in a fundamentally nonaddressable, noninteractive way. The various customers in a mass market are all passive recipients of the promotional message, whether it is delivered through mass media or interpersonally, through salespeople. Marketers have traditionally recognized the trade-off between the cost of delivering a message and the benefit of personalizing it to a recipient. A sales call can cost between $300 and $500 (a 2012 Center for Exhibition Industry Research study put the average cost of a business-to-business [B2B] sales call at $596),e but at least it allows for the personalization of the promotion process. The cost per thousand (CPM) to reach an audience through mass media is far lower but requires that the same message be sent to everyone. Ultimately, the way a product is promoted is designed to differentiate it from all the other competitive products. Except for different messages aimed at different segments of the market, promotion doesn't change by customer but by product.
a E. Jerome McCarthy, Basic Marketing: A Managerial Approach (Homewood, IL: Irwin, 1958), is now in its 16th edition, and has been substantially updated.
b Philip Kotler, S. C. Johnson Distinguished Professor of International Marketing, Kellogg School of Management, Northwestern University (emeritus), is widely known as the father of modern marketing. His textbook Marketing Management, coauthored with Kevin Keller, has become the foundational text for marketing courses around the globe. First published in 1976 by Prentice Hall, it is now in its 16th edition.
c Philip Kotler, Marketing Management: Analysis, Planning, Implementation, and Control, 9th ed. (Upper Saddle River, NJ: Prentice Hall, 1997), pp. 92–93.
d Philip Kotler, Kotler on Marketing (New York: Free Press, 1999), pp. 116–120.
e Bloomberg Business, “Sales Moves Beyond Face-to-Face Deals onto the Web,” January 10, 2013, available at: https://www.bloomberg.com/news/articles/2013-01-10/sales-moves-beyond-face-to-face-deals-onto-the-web, accessed August 17, 2021; “The Cost of a Sales Call,” 4D Sales, accessed February 3, 2016, available at: http://4dsales.com/the-cost-of-a-sales-call/, accessed August 17, 2021.
Continuing Roles for Mass Media and Branding
Communicate to nonusers who have not yet raised their hands.
Build image and brand identity.
Establish a brand position with nonusers to help users make a statement about their own image.
INITIAL ASSESSMENT: WHERE IS A FIRM ON THE CUSTOMER STRATEGY MAP?
Recognizing that two families of technology have mandated the competitive approach of building customer value by building customer relationships, we can map any organization—large or small, public or private, for-profit or nonprofit—by the level of its capabilities in the arenas of interacting with