Strategic Marketing

Planning
Customer Relationship
Management

Professor Walter Vizarreta

Table of Contents
 One-to-One Marketing
 Step 1: Identification
 Step 2: Differentiation
 Step 3: Interaction
 Step 4: Customization

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One-to-One Marketing

 Consists of:
“Treating different customers differently.”

 One-to-One Marketing strategy is based on:

 How a company’s customers differ from each other.
AND
 How these differences should affect the company’s behavior
towards each one.

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One-to-One Marketing
Different
Customers

Treat

Differently

Source: Peppers & Rogers

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One-to-One Marketing
 This is not a program. It is more than just sales
and marketing.

 It implies a shift in the company: designing

products and services tailored to the customer’s
needs (individually).

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One-to-One Marketing
My company must UNDERSTAND that customers are different.

Photo: Permitted by PampaBytes Perú

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One-to-One Marketing
 There are 4 steps to a One-to-One Marketing
strategy:
 Identification
 Differentiation
 Interaction
 Customization

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Identification
 Before anything else, identify who the customers
are:
 End user?
OR
 Intermediary user?

The answer will determine the type of program a

company implements and that program’s direction.

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Identification
 First, identify all the company’s customers.
OR
 At least identify the top customers.

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Identification
 “Customer identification information” aids the
company in a) separating one customer from
another, b) following all transactions or
interactions customers have with it, or c)
contacting each customer individually.

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Identification
 Should include:
 Name
 ID code
 Address
 Telephone #
 Email
 Profession or occupation
 Position

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Differentiation
 There are 2 steps involved:
 Classifying customers by their value to the company
(most valuable customers)
 Differentiating based on needs (most valuable first)

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Differentiation

 Building a long term relationship with, and

gaining the loyalty of, customers starts with
tailoring products and services to the specific
“needs” of each one.

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Differentiation
 What is the value of a customer?
Comprised of:

Lifetime value +
Strategic value

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Differentiation
Lifetime value
 Net present value of the stream of expected future
contributions from the customer.
 Future contributions are product and service sales
less servicing costs.

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Differentiation
Strategic value
 The total profit a firm could realize from a customer if
it developed a strategy for that particular customer.
 A bank example:
 Actual customer value is figured from the 2 products he
presently has: savings account and checking account.
 Strategic value is figured from other products he could
acquire: mortgage or credit card

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Differentiation
 Share of customer refers to the percentage of
total business conducted by a customer with a
particular enterprise, in the product and service
arena offered by that enterprise and expressed
by:

Lifetime value/strategic value

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Differentiation
Customer classification by value.
Customers fall within one of these categories:
I. Most Valuable Customers
II Most Growable Customers
III Below Zero Customers

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Differentiation
Putting it into practice.
 Separate customer base into “reasonably” different
groups, i.e. groups that require substantially different
marketing strategies.
For example, the Yellow Pages breaks down customers into
business clients and users.

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Differentiation
Putting it into practice.
 Each group is further broken down into subgroups
that have different characteristics and that require
differentiated marketing strategies.
For example, airlines cater to business and pleasure
travelers. Within the former, there are frequent and non-
frequent travelers.
…continuation

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Interaction
“A company must engage customers in an
ongoing dialogue that will allow it to learn
more information on their particular
interests, needs, and priorities.”

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Interaction
 From a customer perspecitve, this is the first
“visible” One-to-One Marketing action.

 Requires active customer participation and

“engagement”.

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Interaction
 Abusing this stage can become bothersome to
the customer:
 A restaurant asking customers if the service is fine while they are eating.
 Calling a customer during peak office hours to see if a product is
working correctly.
 A hotel calling a guest to tell them the concierge is “at their service”.
 Sending an “important” message to every database contact about a new
product or service that interests less than 1% of them.

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Interaction

This is NOT relationship

marketing.

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Interaction
What is correct customer interaction?

 Minimizes their inconveniences

 Provides them real benefits
 Influences company behavior towards them

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Interaction
How to create cost-effective interaction.
 Possible media are:
 Call centers
 Internet
 Direct marketing
 Personal sales
 Email

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Interaction
How to create cost-effective interaction.
 After classifying customers, determine the type
of interaction for each one based upon their
value, for example:
 Personal sales for GPM
 Internet for others
…customers entail a transaction cost…
…continuation

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Interaction
Conclusion:
Dialogue = Information
Information = Knowledge
Knowledge = Loyalty
Loyalty = Profitability

Thus:
Dialogue = Profitability

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Customization

Companies must act according to what they

have “learned” about their customers, using that
knowledge on a case by case basis to
customize the way they treat each one.

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Customization
 Customization is directly linked to analyzing
customer needs learned during differentiation.

 Beyond the physical product, the more defined

the needs, the more likely a company can
provide a customized solution.

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Customization
If a company individually uses what
it learns about customers to tailor
products or services based on their
needs, then it can gain their
“loyalty”.

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Peppers & Rogers
Case

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Wong Case
Bembos Case
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Amazon.com Case
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Consumer Goods
Companies
Customization
Loyalty = Added value
Added value = High cost of
inconvenience for the customer
High cost of inconvenience for the
customer = Loyalty

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