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Now What?
Feb 1, 2008 12:00 PM , By Keith Wardell
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The combination of unlimited choice and the ability to find anything and everything quickly has shifted the power from direct marketers to their customers. Google, Yahoo!, shopping comparison sites and peer reviews have all played a part in making this change happen.

So the question now is: How will DMers respond to a process that's controlled by their customers?

On any given day in the United States there are almost 2 billion Web site visits, 200 million inbound calls and 600 million retail visits — a total of 2.8 billion customer initiatives. Compare this with the nearly 1.4 billion 30-minute television programs viewed daily. DMers spend more than $200 million a day on TV advertising to reach out to passive consumers. How much is being spent on consumers who are actively reaching out to marketers?

This role reversal has taken just a few short years. But most companies have not adjusted their marketing plans to reflect this new reality. It's time to add another element to the marketing plan: collaboration.

A combination of several trends over the last few years has tipped the balance in favor of consumers.

They are:

  • Product proliferation

    Technology has made it easier for companies to make product improvements and copy similar enhancements from their competitors. By shortening the development cycle, technology has reduced the ability of companies to maintain product advantages in the market. Electronics is a great example; in this sector new features may count their unique lifetime in mere months. Financial services, retail, travel and automotive have all been affected. Technological development has led to product parity across most vertical industries.

  • Channel explosion

    Media has evolved from a world of few choices to a vast landscape of options for receiving entertainment, information and advertising. Once upon a time, the cable explosion divided the viewing audience across a still ever-growing number of outlets, making media planning and buying a far more difficult process. Imagine the challenge marketers face today developing business plans with the Web, variable data printing, cell phones and iPhones in the mix.

  • Consumer fragmentation

    Whether product expansion and media evolution preceded the fragmentation of the consumer market or resulted from it is hard to determine. Regardless of which came first, marketers are faced with a more diverse and selective audience.

    But control has a downside for consumers. Yes, they have more choices than ever before, which has led to a huge increase in the decisions they have to make every day. But they haven't mastered the art of making those decisions.

    What follows are four transitions companies should make if they want to thrive in this new era. They can be summed up simply: Marketers must collaborate with their customers.

  1. Major channel proactive to multichannel reactive

    Proactive campaigns usually are one-time events delivered to a broad audience at the marketer's discretion. Reactive campaigns are delivered individually in response to a customer initiative such as browsing a Web site, abandoning a cart, calling customer service, visiting a store, running out of toner or not purchasing in an expected time frame. They're usually automated, with a single template that's used frequently (i.e., daily, weekly). The content for this template is dynamic based on particular circumstances (products related to those purchased or browsed). These efforts can be run for months with minimal updating.

    Historically, proactive campaigns through the major channels have attracted as much as 90% of marketing budgets. They're designed to create consumer awareness and engagement. Companies that adapt to the trend and add reactive campaigns to their current program will improve customer relationships and experience a dramatic increase in their marketing programs' efficiency.

  2. Mass marketing to merchandising to the individual

    The development of reactive campaigns requires marketers to respond to individual initiatives with targeted campaigns that use dynamic content. The complexity of building individual relationships means a good deal of these efforts must be automated. This frees up staffers' time, allowing them to think about the types of experiences and collaboration they want to offer.

    Customers are taking the time to express interest in your company, and they expect a response that's relevant to that interest. By merchandising for the individual using dynamic content, companies reinforce their relationship with customers and increase their own likelihood of success.

  3. Product proliferation to mass customization

    Companies can begin to overcome the effects of product proliferation with mass customization. Rather than meeting the needs of each individual customer by carrying multiple items, adding flexibility to the production process may achieve the same result for less cost. Firms can take advantage here by allowing consumers to specify their requirements.

    Take Dell Computer, for example, which allowed people to select from a menu of options and in the process boosted customer satisfaction and kept production costs in line. And while Starbucks stores don't take up a lot of physical real estate, they offer more than 4,000 product combinations, allowing patrons to create the caramel nonfat half-caff latte of their dreams.

    Apart from actual product flexibility, businesses can customize selection, services and delivery. Netflix didn't change the product but rather the way it was sold and delivered. The same is true for Peapod in the grocery industry. Likewise, PhillyCarShare didn't change the car, but the way consumers use cars.

  4. Consumer confusion to simple solution

    A product-centric approach can force consumers to make too many choices. A serious move to customer-centric thinking can begin to eliminate the confusion and simplify the process. Companies must get involved in the dialogue by reacting to all customer queries. This will assure these folks that they've been heard and define the possible next steps to be taken. When they're implemented correctly, reactive campaigns can shorten the decision process and improve the overall experience for customers and marketers alike.

These transitions will begin simply and grow in sophistication over time. Marketers will learn to automate many of their communications. As the approach develops, companies will be able to send individually relevant communications and eliminate those that don't contribute to a dialogue with their customers. By eliminating unproductive marketing efforts, big savings will result. Acquisition costs will shrink, lifetime value will grow, production will be streamlined and wasted marketing efforts will disappear.

KEITH WARDELL (keith@marketing1by1.com) is CEO of Marketing1by1 LLC in Fairfax, VA.



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