In years past, the most successful companies were mass-marketers. A few names probably come to mind right now. These companies spent veritable fortunes creating and promoting brands, with the coveted prize being market share. Just the fact that you can name them shows market domination. But, somewhere in the last decade, new companies emerged that didn’t care about brands. They cared about customers, had far fewer customers than the mass-marketers and became hugely profitable. How did they do it? Through customer intimacy. First, they targeted specific customers and customer groups. Then, they learned their intimate wants, needs and desires, ultimately creating the perfect buying atmosphere and product lines to delight those customers. This new, yet not new, phenomenon was coined one-to-one marketing.
In fact, one-to-one marketing is so old; it’s new again. If you think back to the hometown small dry goods store, it’s a classic example of one-to-one marketing. Shop owners knew their customers intimately, including all the family members, birthdays, anniversaries, etc. They stocked their stores with exactly what those folks wanted and requested. The most savvy and profitable shop owners had a natural talent for sensing what their customers might buy even if they weren’t asking for that product, and delighted their small, loyal customer-base with new offerings.
In petroleum, we have largely operated from a mass merchandiser mentality. This is not surprising considering our most important suppliers were and continue to be large brand promoters. In essence, our suppliers design their products and retail sites to appeal to a national buying base. By trying to please everyone, however, sometimes they please no one.
Have you ever felt uncomfortable shopping at a retail site? The store might have had a colorful fountain area with neon lights, an old time looking coffee bar, an automotive section that makes you think you’re in a NAPA store, and a grocery isle that looks like a drugstore. It’s a bit like eating a pepperoni, enchilada flavored ice cream with anchovies on top. Each is perfectly fine on its own, but put them together and it’s definitely a disaster. Mass marketing may be reaching that point where in trying to please everyone, potentially loyal customers are left with a bad taste in their mouth.
To stay profitable throughout the remainder of this decade, we must make tough decisions about whether our best customers want pepperoni, enchiladas, ice cream, or gourmet anchovies, and not try to offer it all. In other words, it will take some degree of one-to-one marketing.
To achieve high profits this decade, we must stratify our existing customer base and identify best customers. Then, we must design facilities, purchasing processes and product offerings that match what those best customers want and need, worrying most about the bottom-line, not about market share. Forget volume and think quality.
So right now you should be asking yourself, “What do my best customers look like and what do they want from me?” These should be relatively easy questions to answer, however surprisingly, most business owners don’t know the answers. But thankfully, through sophisticated and now readily available demographic data, marketers can now learn enormous amounts of information about customers and potential customers.
One of the easiest ways to learn more about retail customers is by utilizing a loyalty program. Loyalty programs work best in combination with scanning, but non-scanning locations can still capture valuable data using simple punch cards. For punch cards to be effective, the customer must be required to provide basic personal information on the back of the card when it is turned in for a free item. Even with just a home zip code, you can learn a remarkable amount of buying information about your customers from data metrics firms. In addition, by dating the punch card with just two dates, the first punch and last punch completion dates, you can also track the buying cycle of your customers. Combining that data with zip code data provides even greater information for marketing and promotion decisions. Add at-the-register surveys and a wealth of information can be gleaned even in a low-tech environment.
The trouble with the loyalty card customer-intimacy tool, however, is that it doesn’t address the important question of who is NOT buying. With your current facilities and offerings, you may be missing out on potentially valuable customers. This is again the job of data metrics firms who can provide you with detailed neighborhood profiles, which you can then compare against your customers’ buying patterns to see who you are missing. Be forewarned, however, that the truth can get ugly. Many a marketer has become painfully aware of missed customers, then is faced with a major capital spending decision. It’s much better to know about these missed customers, and spend the money to take action now, than to have a facility slowly become obsolete and operating with increasing losses.
Make sure that a customer intimacy action plan is high on your priority list for 2002. Customer intimacy is the vital key to beating hypermarkets.