With the plethora of software tools and the ubiquity of the Internet of Things – generating location data and other data from sensors and mobile devices – it can be tempting to develop and implement a marketing strategy based on gathering data about the behavior of your market segments and then developing insight into trends which can be addressed by differentiating your product or service mix. This is, after all, the promise of implementing Customer Relationship Management (CRM).
However, this can, at best, miss the point of customizing for each individual. At worst, it can create backlash from customers who may feel ‘owned’ or ‘managed’ by the process and who crave an authentic and intimate experience. They will simply migrate to your competitors who offer such services. Instead, by treating each customer as a participant in the design and logistics process, rather than simply a source of statistical information, you can maximize the value of each and every customer, creating authenticity, and true loyalty while also reducing costs. In essence, you should shift the antagonistic relationship you have with your customers, to one based on the ‘3-c’s’ of collaboration, co-operation and co-creation.
Customer Dialogue Creates Authenticity
In his book ‘Authenticity – What Consumers Really Want,’ B. Joseph Pine II builds on the work by Dove, Pine and Peppers, etc., on Mass Customization and Agility, with the emergence of the Experience Economy. With the introduction of mobile computing and other technologies, all companies, no matter what their supply chain stance or positioning, will have to be authentic and participate in creating authentic and customized experiences to their markets.
Contemporary marketing theory tells us to segment the marketplace and differentiate the product or service to meet each segment’s needs. At its’ heart, online or mobile data gathering still uses the well-worn technique of market segmentation and product or service differentiation. According to Pine, authenticity means engaging in dialogue with the customer rather than collecting data about their location and shopping habits. It lies in collaboration with the customer to innovate and to co-create rather than trying to increase access to their personal shopping habits and then crunching the numbers to spot – and address – market trends.
Mass Customization continues this process, segmenting the marketplace down to ‘segments of one.’ Pine says there are no markets, only customers, and therefore exhorts us to ‘stop marketing and start customering.’ Pine even suggests further segmentation down to segmenting each individual’s processes and time spent on their screens and devices. Pine says that in today’s Experience Economy, companies compete for the time, attention and money of individual customers – those are the currencies of the Experience Economy.
Voice of the Customer – Putting Customers First
Due to the widespread practices in modern marketing of gathering and analyzing customer data gathered from, for example, location detectors on your mobile phone or other sensors on the ‘Internet of Things,’ several commentators and software developers created the software tools that aim to provide customers with independence from vendors and better means for engaging with vendors. According to Wikipedia, these tools come under the name Vendor Relationship Management (VRM). Developed as ‘Project VRM’ at the Berkman Center for Internet and Society at Harvard University, they are intended to provide customers with the means to bear their share of the relationship with vendors, and guide those relationships to the customers’ benefit.
This came about as a way of redressing the information power balance between vendor and customer. Instead of seeing the customer as an entity which needs to be “targeted,” “captured,” “acquired,” “locked-in,” “directed,” “owned,” or “managed,” via data and trend analysis, VRM is intended to make the customer a fully empowered actor in the marketplace, co-designing and co-creating in a one-to-one relationship with the vendor. Other initiatives to tip the balance in favour of the customer are the strategies of Customer Experience (CX) Voice of the Customer (VoC) and Content Strategy (CS), all listening to the voice of the customer and developing a Customer-centric online presence.
Pine has planted a flag in the murky space between data collection for information based marketing and data sharing and collaboration for one-to-one marketing. He claims that there are four different ways of interacting with customers to collaborate and create value, putting the customer first rather than simply collecting data from an increasingly unwilling and antagonistic customer:
These modes of interaction still rely on software tools and technologies, but are driven by the customer herself rather than by the number-crunchers looking for trends. As an example of Co-creation, many Disney rides feature personalized photos of selected riders, once the ride is over. In addition, the recent Scotiabank Toronto Waterfront Marathon (STWM) displayed personalized race photos online and a customized race ‘congratulations’ video display at the finish line, both driven by personalized race bib numbers. In the Orchestrate interaction with customers, many customers actually prefer to be in charge, orchestrating their own experiences from the modules presented to them on TV, on Twitter on their phones, while looking at websites on their tablets.
Moreover, customization can be driven down the Value Chain, from customer down to vendor, from vendor to supplier, and so on, more easily and quickly than ever before. Information about individual customer needs can be transmitted easily and at low cost these days, due to Internet communications, from e-mail to social media and ERP to EDI and CRM, as illustrated in the following table.
|Value Chain Stance||Example of 1-to-1 Customization||Enabling Tools|
|Customer Co-Creator||Location Detection, Uber, AirBnB||VRM, VoC, CX, CS|
|Experience Provider||You Tube, Mobile Banking, Disney, STWM||TV, Twitter, Phones, Tablets, Social Media, email|
|Service Provider||Call Centre Customer Focus||CRM, Vendorweb|
|Product Provider||Automobile Options, Bells and Whistles||Enterprise Resource Planning (ERP)|
|Raw Materials Supplier||Jewellery Customization||Electronic Data Interchange (EDI)|
The Agile Value Chain and its’ Enabling Tools
These enabling online tools stimulate and facilitate Agile behavior by all players in the Value Chain. As a consequence of this, old economies of scale (large inventories) to cut costs matter less in product pricing. When customers collaborate and co-create or orchestrate, production and management of inventories is guided by intelligence directly from the customer, and not based on educated guesses about the customer’s buying patterns. In essence it bases your business on actionable information based on customer demands and desires (VoC), rather than on estimation and guesswork based on an antagonistic relationship between customer and your marketing department.
Conclusion: Work with Your Customers, Not Just for Them.
Mass Customization is the marketing strategy of serving each customer one-to-one. Agility is the operational strategy to support Mass Customization. Wherever your company lies on the ‘Value Chain,’ you can customize for the specific needs of your individual customers by simply committing to the strategy of Agile operations and Authentic ‘customering’ rather than basing your marketing efforts on data collection and trend analysis. Customers can all to easily see through – and reject – such strategies. What they really crave, instead, is Authenticity based on customization.
Vendor Relationship Management (VRM) and other newly emerging customer tools such as VoC, CX and CS, are intended to redress the balance of power and information between the customer and the digital marketer, by making the customer a fully empowered actor in the marketplace. Rather than simply consuming what is given to them, the empowered customer now has the market and technological leverage to participate in co-designing and co-creating a one-to-one relationship with their vendor(s) and providers of online experiences, services and products.