The Principles Of One-To-One Marketing

One-to-one marketing is a collection of marketing techniques aimed at selling to individuals. Instead of selling one product at a time to as many customers as possible, the goal is to sell as many products and services to one customer as possible using databases and interactive communication. What matters in one-to-one marketing is how much you know about each of your customers, not how much you know about all of your customers. This means you don’t have to be a giant to defeat one.

Relationship or one-to-one marketing applies to everyone in the ‘people’ industry, particularly tourism. It entails getting to know your customers by asking them questions. The answers are the key to learning about the individual and must be remembered, recorded, and used to give customers new ideas and generate new sales. Often, the client does not know what he wants or what is available, so it is up to the one-to-one marketer to listen to the customer’s needs and adapt the product to his or her needs by making suggestions, guiding the customer, and adding a personal touch. It is the logical progression from mass to segment to direct to one-to-one marketing.

Meeting customer needs individually

Two customers can outwardly seem to be very similar to each-other, they may both want to go to Italy for two weeks, stay in a three-star hotel and have a budget of a thousand pounds but may still want different things from the destination. Nightlife may be important to one visitor whilst the other may only be concerned with museums and art galleries. No two customers are completely alike and this is why one-to-one marketing is especially important to tourism.

Differentiating customers by their needs and then catering for those needs individually is a new tendency showing a move from mass marketing to segmentation, to a focus on the individual. In the past customers were put into groupings and marketing towards the clusters was standardized; however, now tourism is moving towards a de-grouping and treatment of the customer as a single entity. One-to-one marketing is also a powerful step towards increasing customer loyalty and as a result, unit margins.

Knowing your customers and their value to you

Customers have different, individual needs, which hold different values to a destination. The collection of customer information is a means to discovering
the customer’s needs and therefore value. To compete in this, the interactive age we have to treat different customers differently and to do this we must understand customer differences. The value determines how much time and investment should be allocated to that customer, and a customer’s needs represent the key to keeping and growing that customer.

Aggregate marketing treats all customers the same. They all receive the same product benefits, are all charged the same price and are not in individualized interactions. However, each customer is unique and some are more valuable than others. The actual valuation of a customer is his or her ‘Life Time Value’ (LTV), the stream of expected future profits, net of costs, on a customer’s transactions, discounted at some appropriate rate back to its net present value. Remember that the profit on a customer’s relationship with a destination is not solely derived from the future purchases the customer makes.

Customers also benefit the destination or product in other ways such as referrals of other customers, knowledge of other customers’ tastes and preferences and help in designing new products or services. Maintaining any sort of relationship with the customer will involve cost – phone calls, faxes, e-mails, personal sales calls and setting up information systems necessary to track and remember; interaction all cost money. Those who call in to customer service the most will cost the company more money to serve. However important LTV is, it is essentially a forecast based on probabilities and we can never know precisely what a particular customer will do in the future. However, what is certain is that keeping existing customers is more profitable than trying to turn new prospects into customers.

The benefits of calculating LTV are not just to understand the average customer’s valuation but to create an accurate ranking-order system, allowing a company marketing a destination to differentiate its customers by their individual valuations and to add more marketing time and effort to retain the most valuable customers. Because one-to-one marketing treats its customers as individually as possible, it aims at understanding the relative valuation of each of them. Customers are individually different, and have individually different values to a company, and the most accurate picture of a customer’s value is LTV. It is important to decide which are the most valuable customers and establish a maximum amount of money to be spent on retaining these customers. Those of high value must be invested in; those of medium value must be encouraged to buy other products and services from the company. Customers of low value should either be dropped or made to pay for the services they receive.

Defining the right strategy

A customer base is characterized by customers who have a diverse set of values and/or a diverse set of needs. The customer base can be highly differentiated on both counts or on neither. The nature of the customer differentiation of a company is a guide to an appropriate marketing strategy. By comparing a company’s capabilities with its customer base a new strategy can be mapped out, aimed at improving those capabilities needed to turn the business into more of a one-to-one enterprise. If a business has customers with widely varying tastes and preferences, they must be differentiated by their needs. The more the customers differ from one another in needs, the more benefit can be gained from offering a variety of products and services and customizing right down to an individual level.

Let us take the example of the tourism destination once again. The needs of the customer are incredibly diverse. A back-packer is going to have completely different preferences to an elderly couple, just as honeymooners are not going to want the same package as a family with young children. The destination remains the same but the package must be varied to become customized to the individual’s needs. It is a case of examining the customer’s needs and tailoring the product to suit those needs, whether it be offering a family hotel with children’s activities or a weekend city-break incorporating city tours and cultural visits. Equally, in tourism customers are bound to have different values for the destination.

Obviously backpackers on a shoestring budget are worth less than honeymooners who may have been saving for years to fulfill their dream holiday. However, it is important to remember that the backpackers may be opinion leaders, they are often students and will travel again in the future, probably with a larger budget, and therefore have a high potential valuation. Thus, if one-to-one marketing is implemented, contact can be maintained with these potential customers throughout their travelling life.