It is now recognised that the acquisition costs of a new customer is many orders of magnitude greater that of retaining an existing customer. For example, in the general insurance industry acquisition costs can be equal to 2 to 3 years profit, yet many customers are switching suppliers every year! Further, with the introduction of Data Mining, many companies are now realising that just 20% of their customers provide 80% of the profits. Worst, many of the remaining 80% of customers are lost-makers.
One to One Marketing is different to mass marketing because it differentiates customers not products, and because it selects customers based on their lifetime value. Studies by Don Peppers and Martha Rogers show that such an approach produces a more profitable income stream and more competitive advantage.
Many of these more profitable customers are discerning, and they demand or aspire to more personalised products and services. It is true that the provision of such products and services has in todays mass markets become an expensive niche, and many customers feel "forced" to take the standard offerings. No wonder they become dissatisfied and switch when a new bargain is advertised. And in situations where there is no mass market. (e.g. solicitors) customers are becoming resentful for the apparent poor value for money. But now we have powerful and plentiful IT, allowing us to create a whole new paradigm. It's called Mass Customisation.
Mass Customisation is a componentised approach for assembling individual products and services to meet the unique needs of your customers but at the same cost as a mass produced product. Using modern information technology, customers, your agents, distributors or employees can assemble these products and services to meet your customer's specific requirements. But it doesn't stop at product sales. Over time, the products and services are amended so that they continue to meet customer needs, and continue to reinforce the bonds between you and your customers.
When One to One Marketing is combined with Mass Customisation we have a very powerful synergy that provides a true competitive advantage.
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