Don Peppers - Managing Customer Experience and Relationships

25 25 James G. Barnes, Secrets of Customer Relationship Management (New York: McGraw-Hill, 2001).

26 26 Rishabh Rathi, “Customer Acquisition Cost by Industry,” March 30, 2020, Startup Talky, available at https://startuptalky.com/cac-by-industry/, accessed August 30, 2021.

27 27 Banks' customer acquisition costs can vary wildly, between $150 and $3,600, depending on the source, the product, and the channel, so $200 is a more-than-conservative figure.

28 28 Boston Consulting Group and Shop.org, “The State of Online Retailing 3.0: A Shop.orgStudy” (Silver Springs, MD: Shop.org, 2000).

29 29 Don Peppers and Martha Rogers, Ph.D., Rules to Break and Laws to Follow: How Your Business Can Beat the Crisis of Short-Termism (Hoboken, NJ: John Wiley & Sons, 2008).

30 30 ROC is pronounced are-oh-see.

31 31 John Drummond, “Long-Term Marketing a New Paradigm Shift,” Guardian, November 16, 2012, available at http://www.theguardian.com/sustainable-business/blog/marketing-long-term-paradigm-new-markets, accessed August 17, 2021. Also see Dominic Barton, “Capitalism for the Long Term,” Harvard Business Review, March 2011, accessed August 17, 2021 at https://hbr.org/2011/03/capitalism-for-the-long-term/ar/1. Janamitra Devan, Anna Kristina Millan, and Pranav Shirke also published a research finding in “Balancing Short- and Long-Term Performance,” McKinsey Quarterly, no. 1 (2005): 31–33. They examined 266 companies and grouped them into four groups of high versus low short-term versus long-term performance over a 20-year period. They discovered that those companies that balanced strong long- and short-term performance had higher total shareholder return (TSR), lasted longer than their more mediocre competitors, enjoyed three years longer incumbency from chief executives on average, and had less volatility in stock prices. Companies with strong short-term performance but weak long-term performance enjoyed less volatile stock prices but came out poorly on other measures. The most successful companies were seen to have “instilled a long-term mind-set.”

32 32 Don Peppers and Martha Rogers, Ph.D., Rules to Break and Laws to Follow: How Your Business Can Beat the Crisis of Short-Termism (Hoboken, NJ: John Wiley & Sons, 2008). Also see Don Peppers and Martha Rogers, Ph.D., Return on Customer: Creating Maximum Value from Your Scarcest Resource (New York: Currency/Doubleday, 2005).

33 33 Vinicius Nardi, William Jardim, Wagner Ladeira, and Fernando Santini, “A Meta-Analysis of the Relationship between Customer Participation and Brand Outcomes,” Journal of Business Research 117, September 2020, pp. 450-460, https://doi.org/10.1016/j.jbusres.2020.06.017, accessed October 18, 2021; Andrei Hagiu and Julian Wright, “When Data Creates Competitive Advantage … and When It Doesn't,” Harvard Business Review, January-February 2020, pp. 94-101; and Drummond, “Long-Term Marketing a New Paradigm Shift.” Also see Peppers and Rogers, Rules to Break and Laws to Follow: How Your Business Can Beat the Crisis of Short-Termism.

34 34 See Chapter 11for an explanation of companies' “used-up” customers.

Nothing ever becomes real 'til it is experienced.

—John Keats

Treating different customers differentlymay be the shortest, most succinct way to summarize what is meant by “ customer relationship management,” or by “ one-to-one marketing.” But what does it really mean when an enterprise “treats” a customer in some manner? To answer this question appropriately, we must first take our customer's perspective (while remembering that each different customer has their own unique and personal perspective). And from the customer's perspective, the “treatment” a customer receives from the enterprise can be thought of as the customer's “experience” at the hands of the enterprise. So the objective an enterprise has, when treating different customers differently, is to provide different customers with different experiences—experiences that are individually appropriate for each individual customer.

When an enterprise seeks to treat different customers differently, to keep them longer and grow them bigger, it must start by trying to see its own business through its customers' eyes, experiencing what the customer experiences, and then treating each different customer in the way that customer wants to be treated. Only by pursuing this goal effectively can an enterprise manage and continually improve the customer experiencedelivered by whatever brand or product the enterprise is selling. In an ideal world, the enterprise would deliver just the right experience to each individual customer at the just right time. The technology to do this has only recently arrived on the business scene, but it continues to evolve rapidly, and technology doesn't slow its pace to allow mere mortals to keep up with it. To be competitively successful, business managers today must upgrade their enterprise's capabilities at a rate that keeps pace with technology's often disruptive cadence.

Over time, every customer can be expected to have a whole series of customer experiences and these experiences compound themselves into the customer's ongoing relationship with whatever enterprise is delivering the experiences. To manage these customer experiences and the relationships they give rise to over time, an enterprise needs data systems, analytics capabilities, and interactionplatforms. But in addition to these technological tools, the enterprise must also ensure that its organization is properly aligned, so that it can see and manage each customer's experience rationally, even as its processes are being influenced by the actions and reactions of multiple different business units, across the whole range of channels and through time. No matter how advanced technology becomes, it will never be possible to automate everything, and human-to-human interaction is the most direct and perhaps the only sufficient way to inject authentic humanity into any system of commerce. As a result, the people within the enterprise will need to have the right mindset, one that predisposes them to want to make the right decisions with respect to protecting customer interests, and to take the right actions even in the absence of plans, algorithms, or scripts.

Technology, automation, and increasing levels of artificial intelligencemay be driving this massive, worldwide transformation of business competition, in other words, but the fact remains that an individual customer's own experience, by its very nature, is based on the customer's humanity . Computers and automated systems may render products and provide services ever more efficiently, but machines and automated systems have no needs to meet, no problems to solve, no desires to satisfy. Machines never want or need anything. Only people have wants and needs, and only people engage in commerce to satisfy these wants and needs. And while they do recognize the benefitsof services and products that have been personalized by automation, they also crave things that only other humans can provide, including empathy, creativity, humor, irony, praise, social engagement, and the sense of emotional fulfillment or accomplishment that comes from doing new things or mastering new tasks. Technology alone will never be able to fulfill these human cravings, but it can still empower and augment the efforts of an enterprise whose managers and employees seek to do so.

The point is that delivering a better customer experience means delivering a better human experience to customers, and because every human being is distinct and different from every other human being, once a business sets out to see things through its customers' eyes and to improve the overall quality of its customer experience, it must embrace the idea of treating different customers differently. This poses an immense problem to solve, even for a company with no cumbersome Industrial-Era baggage. With every new interactive platform or mobile app, the urgency of delivering a better, more personal, and compelling customer experience intensifies. At the same time, customers become even more informed and impatient, while an enterprise's competitors are scrambling to do it first.