The One to One Future: Building Relationships One Customer at a Time

Book by Peppers Don Rogers Martha

That Was Then. This Is Now.

When we wrote The One to One Future in 1993, the Internet was still primarily a tool for college professors, and the Worldwide Web was just an interesting graphical user interface from some computer lab in Europe. Mass customization was still considered by some a contradiction in terms.

Since its publication, readers have turned to The One to One Future for insight into using the Internet to better communicate with their customers. More and more companies have realized that interacting with customers is no longer an option, but a competitive necessity. And now they have questions, How should an interactive company treat its customers? What objectives should a business set for the interactions that take place at its site? How can it measure success? Should different customers be treated differently? Is it sometimes necessary to reward customers for participating in Internet dialogue?

Parallel with development of the Worldwide Web and interactivity, we've seen a surge of mass customization technologies, from bicycles to blue jeans. And while customization might be a difficult and unusual capability for most firms, it is a total question mark for others. How do we customize this commodity product? Will a mass-customized pair of slacks ever cost less than a standardized pair?

The answers to these questions and many more are within the pages of The One to One Future. They are simple, but not obvious.

If anything, this book is even more useful today than it was three years ago. It is more in demand by marketing professionals. It is more popular than ever before in countries like Japan, Portugal, Spain, Germany, China, Korea, and Israel. It's not only more interesting to today's businesses, but more relevant.

And now it's more affordable.

User's Guide

The One to One Future: Building Relationships One Customer at a Time
Don Peppers and Martha Rogers, Ph.D.

The One to One Future addresses a way of doing business that wasn't feasible just ten years ago--although it is a direct reflection of business as it was practiced a  hundred and ten years ago! Technology has brought us back to a very old-fashioned way of doing business by making it possible to remember relationships with individual customers sometimes millions of them--one at a time, just as shop owners and craftspeople did with their few hundred customers 150 years ago.

We've developed the User's Guide to help you begin thinking in the 1:1 mindset and applying the principles and examples in Future to your own business. Before we begin asking the kinds of questions that we ask our clients, we will summarize some of the basic principles of 1:1 marketing.

The One to One Future: Lessons and Study Notes

* We are facing a paradigm shift of epic proportions--from the industrial era to the Information Age. As a result, we are witnessing a meltdown of the mass marketing paradigm that has governed business competition throughout the twentieth century. The new paradigm is one to one (1:1)--mandated by cheaper and faster data management, individually addressable and interactive media, and increasing capabilities for mass customization.

* Definition of 1:1 Marketing: The basis for 1:1 marketing is share of customer, not just market share. Instead of selling as many products as possible over the next sales period to whomever will buy them, the goal of the 1:1 marketer is to sell one customer at a time as many products as possible, over the lifetime of that customer's patronage. Mass marketers develop a product and try to find customers for that product. But 1:1 marketers develop a customer and try to find products for that customer.

* The ability to identify each customer makes it possible to calculate share of customer--the company's share of all the business this customer does--as well as lifetime value of each customer. One to one marketers can differentiate customers, and not just products, in order to ascertain and predict which customers are worth more than others, and how to meet each one's individual needs.

* Mass marketing companies know exactly how to manage products, and reward their successful product managers for selling more product and winning market share. But customer managers at 1:1 organizations know how to manage and grow their customers' value, and are rewarded for increasing the share of customers and lifetime value for each customer, one at a time.

* Mass marketing is adversarial. 1:1 marketing is collaborative.

* Each point of market share costs more to attain than the last point (because of increased discounts, as well as media weight) and thus each additional point of market share achieved comes at a lower profit margin. Just the opposite is true for each additional point of share of customer, which requires fewer introductory discounts and lower per-customer communication costs.

* The organizational structure required to implement 1:1 marketing will be based on customer management, rather than product or brand management. Under customer management, each customer is assigned to a customer portfolio, and is the responsibility of one (and only one) customer manager. Customer managers are evaluated and rewarded for current actions which improve the individual lifetime values of the individual customers in their portfolios.

* The store of the future will transcend geography by separating the information-exchange function and the inventory function of the traditional retailer. Channels will emerge as one of the most compelling management issues of the 1:1 future. Who will own the customer relationship--the manufacturer or the retailer?

* While the mass media advertising's goal is to acquire new customers, 1:1 marketers want and to build dialogues with--individual customers and establish relationships based on mutual learning.