Getting intimate with customers

Here is a paradox. The Internet is global in character, offering access to millions of customers. At the same time, it offers a unique opportunity to establish one-to-one relationships with customers and prospects. It's all about CRM - Customer Relationship Management. And there's a practical example at the end of this article!

Information technology is increasingly offering this opportunity outside the Internet. But why is it important for companies to "get intimate" with customers?

• Increasing globalisation of markets is leading to a massive increase in competition. The growth in the number of suppliers is faster than the growth in the number of consumers.
• Consumers - both private individuals and business consumers - are becoming more fickle and less loyal to established suppliers.
• Acceleration of product life cycles (check out our article on Product Life Cycles here) means that consumers are changing or renewing products more frequently - hence making more frequent buying decisions - than in the past

If we make customers feel that they are special and unique, we stand a better chance, both of retaining their loyalty when they next make a buying decision, and of gaining new business through word of mouth and recommendation.

With one-to-one service provision to a small number of customers, "getting intimate" does not present a great problem. "Intimacy" is usually part of the service. However, mass markets frequently demand a different approach.

"Segmenting" markets is a pointer to a solution. Market segmentation has long been a successful approach to targeted marketing, identifying clusters of prospects, and selling to them on the basis of perceived differing needs.

This can help to get intimate with customers to a limited extent, but it is not always so. Horowitz and Kumar, in a study of airport catering, found that the management segmented the market into:

• Businessmen
• Tourists
• Local airport employees
• Groups

However, when they observed customers in the airport restaurants and bars, although there were common needs to reduce stress (by getting away from crowds) and to obtain refreshments, there was another distinctive way of categorising customers:

• Those who were in a hurry
• Those who were not in a hurry, and were killing time

As a result of the study, catering staff were trained to spot the

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Other examples quoted by Horowitz and Kumar included:

• A 'fast auto mechanical repair' firm, where the traditions market sectors of "age of car", "size of car" and "sex of driver" proved not to be as useful when satisfying customer needs as two other segmentations: "the car lover" (e.g. needs tangible evidence of work carried out) and "the utilitarian" (eg give them a newspaper whilst they wait).
• A music store, where "the ectlectic" (wide tastes, needs help in making their selection) proved to be a highly profitable sector, once the store had worked out how to satisfy their needs.

In all of these cases, the key to "getting intimate" with customers was to identify manageable clusters of customer types, and then to tailor the product or service to meet their specific needs.

Sometimes, by providing an appropriate range of service options, customers can self-select what they need. Sometimes, staff will need training to uncover customer needs, either by observing individual customers, or by asking them a series of questions. Having identified the customer type, they can then be directed to give them the service most likely to satisfy their needs.

To gain and maintain competitive advantage in an increasingly crowded market place, it is important to make customers feel special and unique. In a mass market, the most effective way is to identify and serve the different needs of manageable clusters of customers. IT methods can be used, but in face-to-face situations, the design of services and staff training are at least as important.

Internet marketing can increasingly make use of IT methods through such techniques as customised Web pages, "push" technologies and tailored and targeted email. Building one-to-one relationships and "getting intimate with customers" are the keys to successful Internet marketing.

Here is the practical example that I promised you at the start of this article. I would really like your feedback on this article. Please help me by completing the very short feedback form below. Thank you for your time!