Page 160 - Marketing Management

CREATING LONG-TERM LOYALTY RELATIONSHIPS | CHAPTER 5 137

develop stronger consumer relationships by respecting consumers’ wishes and sending messages
only when they express a willingness to become more involved with the brand. 57 Godin believes
permission marketing works because it is “anticipated, personal, and relevant.”
Permission marketing, like other personalization approaches, presumes consumers know
what they want. But in many cases, consumers have undefined, ambiguous, or conflicting pref-
erences. “Participatory marketing” may be a more appropriate concept than permission market-
ing, because marketers and consumers need to work together to find out how the firm can best
satisfy consumers.
Don Peppers and Martha Rogers outline a four-step framework for one-to-one marketing that
can be adapted to CRM marketing as follows: 58
1. Identify your prospects and customers. Don’t go after everyone. Build, maintain, and mine a
rich customer database with information from all the channels and customer touch points.
2. Differentiate customers in terms of (1) their needs and (2) their value to your company. Spend
proportionately more effort on the most valuable customers (MVCs). Apply activity-based cost-
ing and calculate customer lifetime value. Estimate net present value of all future profits from
purchases, margin levels, and referrals, less customer-specific servicing costs.
3. Interact with individual customers to improve your knowledge about their individual needs
and to build stronger relationships. Formulate customized offerings you can communicate
in a personalized way.
4. Customize products, services, and messages to each customer. Facilitate customer interaction
through the company contact center and Web site.

One-to-one marketing is not for every company: It works best for firms that normally collect a
great deal of individual customer information and carry a lot of products that can be cross-sold,
need periodic replacement or upgrading, and offer high value. For others, the required investment
in information collection, hardware, and software may exceed the payout. With automobiles that
can cost over $100,000, Aston Martin engages in one-to-one marketing with a select group of cus-
tomers. High-end dealerships offer separate owners-only clubroom sections and weekend getaways
to test-drive new models. 59
CUSTOMER EMPOWERMENT Often seen as the flag bearer for marketing best practices,
P&G’s former chairman, A.G. Lafley, created shockwaves with his Association of National
Advertisers’ speech in October 2006. “The power is with the consumer,” proclaimed Lafley, and
“marketers and retailers are scrambling to keep up with her. Consumers are beginning in a very real
sense to own our brands and participate in their creation. We need to learn to let go.” In support of
his contention, Lafley pointed out how a teenager had created an animated spot for Pringles snacks
that was posted on YouTube; how Pantene, the hair care products company, had created a campaign
that encouraged women to cut their hair and donate the clippings to make wigs for cancer patients;
and how sales of Cover Girl Outlast lipstick increased 25 percent after the firm put mirrored ads in
women’s restrooms asking, “Is your lipstick still on?” and ran targeted five-second TV ads with the
same theme. 60
Other marketers have begun to advocate a “bottom-up” grassroots approach to marketing,
rather than the more traditional “top-down” approach in which marketers feel they are calling the
shots. Burger King has launched attention-getting edgy campaigns in recent years (“Whopper
Freakout,”“Subservient Chicken,”and “Wake Up With the King”) on consumer-friendly new media
such as YouTube, MySpace, video games, and iPods. Allowing the customer to take charge just
makes sense for a brand whose slogan is “Have It Your Way” and whose main rival, McDonald’s,
already owns the more staid family market.
Marketers are helping consumers become evangelists for brands by providing them resources
and opportunities to demonstrate their passion. Doritos held a contest to let consumers name their
next flavor. Converse asked amateur filmmakers to submit 30-second short films that demon-
strated their inspiration from the iconic sneaker brand. The best of the 1,800 submissions were
showcased in the Converse Gallery Web site, and the best of the best became TV commercials. Sales
of shoes via the Web site doubled in the month after the gallery’s launch. 61
Even business-to-business firms are getting into the action. PAETEC provides telecommunica-
tions services to hotels, universities, and other companies. It has grown into a $500 million
company in six years, and its growth is due entirely to customer evangelism. PAETEC’s primary
marketing strategy: Invite current customers and key prospects to dine on PAETEC’s tab and meet