Remove the Burden of Choice

By Don Peppers and Martha Rogers, Ph.D.

This is not to say choice is a bad thing – it’s just that variety is not as effective as customization. Consider the case of a shopper who wants to buy a couch. She could visit a furniture warehouse filled with thousands of sofas, in hundreds of fabrics. The cost to this consumer of buying furniture isn’t just on the price tag – it’s in the time and energy she must invest to screen out unwanted choices.

A marketer who realizes this could create a loyal customer by forging a "learning relationship" with her – a relationship that gets "smarter and smarter" with every interaction, until the customer finds it more convenient to remain loyal than to go somewhere else and have to re-teach a competitor what she’s already taught the original firm. Suppose the furniture store were to begin by interviewing the customer, perhaps even going to her home to analyze her taste in décor and to document the furniture she already owns. Then, based on this insight into the customer’s tastes and budget, the firm provides just a few selections to begin with – one or two dozen perhaps, but not thousands. The customer gives some feedback on these selections and the marketer proposes some more, closer to the mark. Soon, the customer and the marketer will have collaborated so much that the customer would not dream of trying to go somewhere else and start from scratch.

It may in fact be difficult to apply this customization if you are a furniture retailer, although we are likely to see similar ideas implemented shortly on the Web. But consider business-to-business applications. A few years ago, US West Direct – a publisher of Yellow Pages directories – began a major effort to retool the way it pitched its advertising services. Every business phone customer was entitled to a one-line ad, but the real revenue came from additional ad sales. US West had a million business-customer prospects, and it traditionally segmented its effort by advertising product or directory title.

Now let’s look at this from a business customer’s perspective. If you wanted to take out a Yellow Pages ad, a sales rep would guide you through the entire list of possibilities. Full page? Color? Special coupons? How about multiple ads with a different phone number on each one, so you can track responses? Or how about a single-line listing in several different categories, just in case customers look for you elsewhere? The process of making a choice was time-consuming because the sales rep focused on products rather than your individual needs.

Were all those choices necessary? No. US West commissioned a research survey to try to determine what each customer really wanted the Yellow Pages to do for their business. Customers were then grouped into a handful of "clusters" based on these individual needs. For example, growth-oriented customers typically required highly noticeable ads with different numbers to track ad effectiveness. Niche marketers usually requested smaller ads in numerous locations, so a customer could find them easily. Non-growth-oriented customers and business-to-business firms had separate needs.

The result was a series of two or three questions a US West sales rep could use to quickly map a prospect into the appropriate category. Once a customer’s basic needs were evaluated, the sales rep would then ask specific questions designed to sell that customer more advertising. The pitch was geared to that customer’s unique circumstances, giving the customer more value and the sales rep a better shot at a sale.

So what is going on here? Fewer choices, more sales. Sales reps were asking fewer questions and were generating more revenue. Customers were less confused and more able to satisfy their needs quickly. In addition, by interacting with individual customers and then tailoring its sales pitch to individual needs, US West was able to create learning relationships with individual customers. Because the customer information was entered into US West’s customer database, next year’s sales call started where the previous year’s process had left off. "OK, Mr. Customer, let me show you some more things US West can do to grow your business rapidly…"

But doesn’t this cost US West a fortune? In a word, no. In fact, one of the customer types identified in the salesperson’s interview is designated by US West as a "maintainer." A maintainer is usually a mom-and-pop business that plans to maintain its ad from the previous year. They look at their Yellow Pages ad simply as a necessary cost of doing business and, while they don’t like the expense, and they don’t plan to increase their spending, they wouldn’t dream of cutting their ad either. A substantial number of the firm’s customers were identified as "maintainers," and instead of a sales call the next year, a maintainer gets a phone call. So virtually the entire program was paid for in the form of a reduced cost of sales.

As compelling and powerful as these benefits are, most companies continue to act as mass producers. They have the technology to fulfill individual desires, but they aren’t using it. A company that aspires to give customers exactly what they want must first change its philosophy: it must become a one-to-one marketer that gathers information about each individual’s preferences, and then uses that information to lock in the customer’s loyalty by delivering a more tailored product or service.

Here are a few fundamental principles any business can use to begin building such a learning relationship:

PAY ATTENTION TO THE DESIGN INTERFACE In a make-to-order world, marketers need a convenient but accurate way to learn exactly what a customer wants. You should make it simple for customers to communicate their needs to you.

CREATE A CUSTOMER-SPECIFIC MEMORY A basic tenet of 1to1 marketing is that you never require a customer to tell you the same thing twice. A smart marketer manages data so that information vital to customizing service is tracked and accessible. One of the secrets of a good sales force is that it uses automation to permit customers to provide feedback in a cost-efficient way. In other words, the design interface encourages interaction – and a customer-specific database then locks those individual interactions away in a silicon memory.

INTEGRATE THE KNOWLEDGE This is where the rubber meets the road. A lot more is involved than just configuring a product properly, so that the widgets fit the sprockets correctly. Integration requires one department to be able to act on customer knowledge acquired by another department. Every point of your organization that touches a customer must be able to generate feedback, and every other department must be able to act on that feedback. To create this kind of relationship with a customer you have to be willing and able to use what you know about the customer to change the way you treat that particular customer.

In a world crowded with choices, the most promising future is the one in which you simplify your customer’s life. If you do that, the distraction of other choices will – well, what other choices could there be?

DON PEPPERS and MARTHA ROGERS, PH.D., coauthored Enterprise One to One: Tools for Competing in the Interactive Age (Currency/Doubleday, 1997), and The One to One Future: Building Relationships One Customer at a Time (Currency/Doubleday, 1993). Their consulting firm, Marketing 1to1 / Peppers and Rogers Group, is based in Stamford, Connecticut. They are indebted to their colleague B. Joseph Pine II, author of Mass Customization: The New Frontier in Business Competition (Harvard Business School Press, 1993), for his insight into the fact that customer choice can be, in fact, a burden.

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